ethrd

Burn incentives in MEV pricing auctions

This post identifies a strong incentive for burning MEV through early bidding in MEV auctions: Stakers wish to prevent competitors from attaining a higher equilibrium yield than them. They will integrate with builders to burn MEV.

Link👇

It has long been feared that MEV auctions such as the simple design by 
@justindrake, execution auctions by @barnabe, and MEV smoothing by 
@fradamt would see insufficient bidding. By incorporating the staking metagame, bid incentives become clearer.

Robust Incentives Group @ Ethereum Foundation

https://rig.ethereum.org

Developing transparent finance for @ethereum

It has long been feared that MEV auctions such as the simple design by 
@justindrake, execution auctions by @barnabe, and MEV smoothing by 
@fradamt would see insufficient bidding. By incorporating the staking metagame, bid incentives become clearer. https://ethresear.ch/t/burn-incentives-in-mev-pricing-auctions/19856

However, giving stakers tools for griefing each other might lead to adverse competition during the consensus formation process, especially if attesters and builders have integrated. There is an incentive to bias the MEV base fee floor in split views—something to be cautious of.

There are also other incentives for burning MEV. A builder might for example do so to provide a public good. Such incentives are also analyzed. The varying impacts on slot auctions (execution auctions) and block auctions (simple design) are finally reviewed.