Join the Flashbots Eth2 Working Group

I propose that Lido join the recently founded Flashbots Eth2 Working Group. See announcement post here and thread here.

Context

Over the past two years, MEV has become an important part of miner revenue. In order to protect the credible neutrality of Ethereum, block production cannot be allowed to degrade into a game of who is best at extracting that MEV. To that end, Flashbots’ mission is to make the most valuable block accessible to all block producers while also protecting users from the harmful forms of MEV like sandwich attacks.

Goals of the Working Group

Flashbots have been critical in leveling the MEV playing field on PoW Ethereum with over 90% miner adoption but with the switch to PoS, we are facing a reset in the MEV game. It is important that we can reach similar amounts of adoption among PoS validators. To assist in this adoption, we have created the Flashbots Eth2 Working Group.

The goals of the group are to

  • Assist in the design process, extensive testing, and ultimately implementation of Flashbots in PoS Ethereum.
  • Signal the intent to participate in Flashbots on Ethereum after the merge. This does not come with any binding responsibility to actually run Flashbots in the future.

Why should Lido join the Working Group?

Joining the Flashbots Eth2 Working Group should be in Lido’s best interest in both the short and long term.

Once Lido node operators take over the role of current miners for the Ethereum chain, they will face the same challenges of finding the most profitable block. This working group would be a good catalyst for Lido to kickstart a discussion and figure out their own approach to MEV in the future.

Given that Lido may use a block marketplace like Flashbots going forward, there is value in actively shaping the development of such a system early on. Joining the working group would allow Lido to ensure that the interests and requirements of their clients are taken into account in the design and implementation of Flashbots post-merge.

As the largest liquid staking provider, Lido also has a vested interest in the long-term health and credible neutrality of Ethereum. Flashbots can only provide fair access to the best block if it is adopted by validators, users, and searchers alike. As the largest liquid staking provider, Lido’s participation in the group and intent to run Flashbots post-merge would create an important Schelling point for other stakeholders to participate in the system as well.

Thanks for your consideration, please let me know if you have any questions or concerns, I will try to address them - Hasu

18 Likes

I think that working with Flashbots here is a must. Two reasons for that:

  1. I believe that at this point in time Flashbots are the best possible mitigation to MEV actually works; I also believe that Flashbots will stay true to their values and be well-aligned to Ethereum, and the ethos of decentralization.
  2. Lido doesn’t have an option to not choose the MEV strategy: MEV is a fact of life and staking protocols that do not distribute it to the stakers will lose. We only have the option of choosing the flavor of it.

This brings up the question of working with node operators to actually run Lido-approved MEV extraction software, a monitoring solution to understand if that’s actually happening and what do we do if they won’t run it.

10 Likes

Given that it seems like this proposal is generally supported and without objection, we’ve just launched a snapshot, so please vote!
https://snapshot.org/#/lido-snapshot.eth/proposal/0x12d75092ac4eb3037e321b00a4fa165726aad8d03540fa1cd1305a5eb70f79aa

3 Likes

The relevant snapshot has passed, with ~85.97m votes for and 0 votes against.

2 Likes