Traditional blockchains like Bitcoin and Ethereum use a "first-come, first-served" ordering, with transactions being added to the blockchain in the order they are received. However, this can be manipulated by adversaries through methods like transaction censorship or front-running. Front-running, in particular, is a significant issue in decentralized finance (DeFi) platforms where an adversary can see a profitable transaction, create a copy of that transaction with a higher gas price to have it processed sooner, and thus benefit from the original transaction's market impact.
One proposed solution to this problem is the concept of "batch auctions" or "batch processing". This involves collecting a set of transactions into a batch and then processing that batch in a single block. However, this method also has its limitations, as you've noted.
Several promising research directions include using cryptography (like verifiable delay functions), or economic game theory (like MEV auctions), or even designing new consensus algorithms to try to address this problem. Some approaches use secret or encrypted transactions that are only revealed and ordered after they are included in a block, but these can come with their own sets of issues and trade-offs.