Hey everyone,
Taking into consideration three parameters which guide an optimal min-bid choice: amount of blocks produced locally, change in Lido’s protocol APR and percent of validators who do not opt-in to use min-bid functionality, we developed a model. The key driver in the model to determine an appropriate min-bid is the expected usage of min-bid across Lido validators.
Based on an approximation that ~60% (i.e. 40% do not) of all Lido validators opt-in to using min-bid, the model yields a recommended min-bid value of 0.07 at which an estimated minimum 28% of all blocks produced by Lido validators will be produced locally, with a maximum protocol APR decrease of 15%.
Indicatively, the model yields that if 80% or greater of Lido validators opt in to using min-bid, the min-bid value could also be set to 0.05 with similar results with regards to % of blocks produced locally and a maximum APR decrease.
Model
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