Discussion Draft for Lido on Ethereum Block Proposer Rewards Policy

Department of Decentralisation
4

A proposal with an updated version of the proposed policy has been put forth for consideration by DAO members. The proposal can be found here:
https://snapshot.org/#/lido-snapshot.eth/proposal/0x3b1e5f9960e682abdc25c86624ad13acb88ee1cea18db9be99379b44750c7b36

The full text of the policy is available both in the updated hackmd document (hackmd stores changes so those can be retrieved if needed) and pinned on IPFS, here: Lido on Ethereum Block Proposer Rewards Policy - HackMD

Changes made:

  • Some spelling / grammar / etc mistakes
  • Adding some references to other relevant Lido Improvement Proposals
  • Updated section D.5 (new text is below)

D.5 Currently prescribed solution(s)

This section will be reviewed by the DAO and updated on an at-least yearly basis and more often if needed. It details which block production solutions may be used by Node Operators at the current time.

Applicability period: Merge date - 2022/10/31
(Unless otherwise overriden by a more recent DAO vote)

Summary: Post-Merge soft-rollout of MEV-Boost

Lido should aid Ethereum in moving towards its stated goal, PBS.

From any time following the Merge (slated to occur between 10-20th of September), Node Operators have roughly six weeks (until the end of October 2022) to test and implement MEV-Boost such that blocks produced are sourced from DAO-vetted relays (see LIP-17 for details about where the vetted relay information will be stored and how they may be retrieved by Node Operators). This period constitutes a soft-rollout so that Node Operators may properly test and configure their infrastructure prior to the policy being fully in effect.

The below summarizes the prescribed solution to work towards within the soft-rollout period:

  1. Validators operated by Node Operators participating in the Lido protocol should produce blocks via the MEV-Boost infrastructure as detailed in Appendix A.1, by obtaining sealed blocks from the maximum possible number of relays (to be determined by each Node Operator based on their own risk and legal assessment) from Lido’s “must-include list” and an optional number of relays from the “allow list”.
  2. If using MEV-boost infrastructure leads to any operational failures/difficulties (e.g. failing to produce valid blocks, blocks at all, received rewards being incorrect, or lack of availability of appropriate relays), the Node Operator may fall back to building blocks via the “Default” block-building method.
  3. Blocks produced by the validators will be monitored as per Monitoring & Penalties section and the monitoring section of the relevant Appendices.
  4. Node Operators acting in violation of the policy are subject to penalties as described in the Monitoring & Penalties section.

Prior to the end of the soft-rollout period, the DAO will review and update (via a vote) this policy, in order to:

  • re-confirm or amend the prescribed solution if deemed necessary and set the new applicability period for the policy;
  • stipulate the values for the MEV Monitoring & Penalty parameters; and
  • indicate the finalized Monitoring Mechanisms.
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