Implementing MEV strategies to increase APR

I was listening to Vitalik on Lex Friedman’ podcast talking about MEV.

If PoS leaves room for stakers to extract more economic value than simply getting rewards, then Lido could increase rewards by implementing MEV strategies.

Curious what the thoughts are around this:

→ How could the DAO pick or decide on MEV strategies?
→ Is it ethical to run MEV strategies?
→ If MEV strategies are implemented, what could be the potential increase in rewards?
→ What are the risks with implementing MEV strategies

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Lido devs are interested in incorporating MEV strategies that would increase stETH apr. All this stuff is still hypothetical and nothing to call home about until more details are flushed out.


My take is that

  1. dao can but is not really qualified, ATM at least. MEV is very fast, competitive and requires galaxy brain chads to run, so the Lido’s best bet is to align itself with a good team that is qualified and ethically aligned.
  2. it is unethical not to run a fairly large subset of MEV, but we should work on minimizing the attack surface. I agree with Phil from flashbots on this point.
  3. That’s really up in the air, but I think that MEV will be 30-50% of rewards. Not very sure in that estimation.
  4. The biggest risk here is poisonoing DeFI.
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Can you elaborate on that?

It’s possible to extract MEV so fully and aggressively (e.g. with multi block MEV) that defi loses it’s efficiency edge vs. tradfi.

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Thanks for the reply @frontalpha and @vsh.

@vsh it seems based on your answer that implementing MEV strategies is inevitable for Lido. Thinking about some potential next steps:

→ well funded hackathon around MEV on PoS to meet potential talent for Lido DAO
→ List potential partners/projects and start talks/proposals, would be cool if they could be open to the community.

Might be a bit early for the above, but better sooner than later.

We’ve worked with Flashbots on Global Ethereum hackathon back in may. It’s a bit to early to commit right now, but I’m definitively keeping an eye on the space

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Continuing the discussion from Implementing MEV strategies to increase APR:

Good idea :wink::+1:ETH​:tada::sunglasses::calling::iphone::electric_plug::robot::satellite::dollar::yen::euro::pound::sheep:

It can get really exciting, imagine LIDO provides choices of reward strategies devised by the community, kinda like Yearn. For example:

→ vanilla staking rewards 6% APR
→ Flashbots MEV strategy 9% APR
→ Chad MEV strategy 12% APR

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