Ethereum MEV Extraction and Rewards - Discussion & Policy Groundwork

Following up on the topic of relay management specific to MEV-boost, we have clarified with Flashbots that currently:

  • The block proposer and MEV-boost software in general is not able to evaluate and assess (e.g. via simulation) whether the reward in the block received from the block builder is correct, so cannot drop “bad” or “underpaid” blocks
  • As an immediate practical solution, Relays will basically need to be trusted to do this, which is in part why FB aims to build a monitoring + reputation system for relays (Relay monitoring & preventing continued relay errors · Issue #142 · flashbots/mev-boost · GitHub)

Given the above, I think the allow-list proposal for relays continues to make the most sense, but I want to clarify that at least in my mind the allow-list should not be static. I would propose:

  • All relays utilized by Lido NOs should be public (so that builders are aware of them and may send blocks to them)
  • Relays utilized by Lido NOs should be based on an allow list maintain by the DAO, but allow for NOs (and other parties) to request additions / removals from the list, via a to-be-determined governance process (something via Easy Track may make sense).

I foresee the possibility of various types of relays being created (e.g. even “vanilla” relays that just expect their builders to select from tx pool(s) and order by gas price), and I don’t see any reason that these builders and relays should not be able to accessible to Lido validators.

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