Podcast Summary
Multi-proposers for Ethereum: Ethereum researchers are exploring multi-proposers, a concept introduced by Max Resnick through the Braid framework, to address MEV and centralization. It allows multiple people to co-create a block, potentially leading to fairer transaction ordering and efficient MEV management.
Ethereum researchers are exploring a new concept called "multi-proposers" as a potential solution to address the issue of MEV (Maximal Extractable Value) and its centralizing impact on the Ethereum blockchain. Max Resnick introduced the Braid framework, which allows multiple people to co-create a block together, aiming for fairer and more efficient transaction ordering and MEV management. This concept is relevant to Ethereum's ongoing efforts to tackle the MEV problem, which has been a long-standing issue. While the Braid framework is not yet complete, it has sparked interest among other mechanism designers and auction thinkers in the crypto space. Charlie and Georgios are cautiously optimistic about the idea, while Max holds stronger convictions. MEV is a complex issue with deep roots in Ethereum's history, and this episode delves into its background and the current state of research.
MEV infrastructure evolution: MEV infrastructure on Ethereum has evolved from trusted miners auctioning off parts of blocks to powerful builders constructing almost all blocks, with research focusing on maintaining fairness and preventing centralization. Solutions like Proposer Builder separation and inclusion lists are being explored to tackle these issues.
The evolution of MEV (Maximal Extractable Value) infrastructure on Ethereum has led to various solutions addressing concerns around centralization and censorship. From MEV-Geth in proof-of-work days, where trusted miners auctioned off parts of blocks, to MEV Boost in proof-of-stake, where block builders bid on full blocks, the focus has been on maintaining fairness and preventing validators from becoming HFT firms. However, this has resulted in the emergence of powerful builders constructing almost all Ethereum blocks, introducing a new potential centralization point. The research community is now exploring solutions like Proposer Builder separation and inclusion lists to tackle these issues incrementally. The ongoing conversation revolves around improving short-term censorship resistance to ensure decentralized financial applications can function effectively.
Proposer Monopoly and MEV: The Proposer Monopoly, a temporary 12-second advantage for proposers to include transactions in a block, can lead to MEV, where entities extract value from the network. To improve outcomes, it's crucial to introduce competition and stronger mechanisms to address censorship and MEV, while considering trade-offs and backward compatibility.
The discussion centered around the importance of strong censorship resistance in decentralized finance (DeFi) on Ethereum, with a focus on the Proposer Monopoly and its impact on MEV (Minimum Viable Extractable Value). The Proposer Monopoly refers to the temporary 12-second monopoly held by proposers to include transactions in a block, creating a bottleneck for inclusion and potential censorship. This monopoly can lead to MEV, where entities extract value from the network through front-running or other means. The speakers acknowledged the challenges of addressing MEV and the potential for it to move to different parts of the system. However, they emphasized the importance of introducing competition to reduce monopoly rents and improve mechanisms to achieve better outcomes. They also discussed the potential for stronger research and mechanisms to address censorship and MEV, as well as the importance of considering trade-offs and backward compatibility when proposing changes to the Ethereum protocol. Ultimately, the goal is to make Ethereum a better platform for decentralized finance by addressing the Proposer Monopoly and its impact on MEV.
Censorship resistance in DeFi: Proposed solutions to reduce MEV in DeFi transactions include giving proposers more agency in the block construction process to distribute power and reduce privileged position of the builder, but challenges lie in technical implementation and potential limitations
Solving censorship resistance is a crucial step in reducing MEV (Maximal Extractable Value) in decentralized finance (DeFi) transactions on blockchains. The discussion highlighted the importance of ordering rules and the issue of censorship, which can allow certain individuals to manipulate the order of transactions to their advantage. The proposed solutions include giving proposers more agency in the block construction process, such as inclusion lists or multi-proposer systems. These approaches aim to distribute the power and reduce the privileged position of the builder, making the system more fair and frictionless. However, the challenges lie in the technical implementation and the potential limitations of these solutions, such as the timing advantage and the ability to stuff the block with unwanted transactions, which still provide advantages to the builder. Ultimately, the goal is to create a system where everyone is treated equally and censorship resistance is strong, significantly reducing MEV and ensuring fairness and efficiency in DeFi transactions.
MEV issue in Ethereum: Current Ethereum approaches don't effectively address the MEV problem, leaving sophisticated traders to exploit the information gap and disenfranchised transactions to rely on the inclusion list as a last line of defense.
The current approaches like Fossil and Multiplicity don't effectively address the MEV (Minimum Excellent Value) issue in Ethereum. These approaches primarily focus on preventing the censorship of transactions and reducing latency, but they don't tackle the MEV problem where sophisticated traders exploit the information gap to make profitable trades. The inclusion list, a side effect of these approaches, is not an attractive option for traders due to the risk of adversely selected trades. The builder's monopoly on MEV-relevant transactions remains unchallenged, and the inclusion list serves as a last line of defense for disenfranchised transactions. The discussion also touched upon the possibility of implementing an ordering rule in the inclusion list to make it more suitable for MEV transactions. However, the conversation shifted towards Max's proposal, Braid, which aims to replace the builder with multiple proposers and an ordering rule. This shift marks a significant departure from Ethereum's traditional leader-based system, as it proposes an entirely new construction for Ethereum research. The research is still in its early stages, and much work remains to be done before any definitive conclusions can be drawn.
Braid protocol, execution consensus separation: The Braid protocol allows for multiple concurrent proposers to create and validate blocks, offering strong short-term censorship resistance, but requires overcoming challenges like ensuring validators have the same financial information and implementing robust cryptography.
The Braid protocol aims to create a blockchain system with multiple concurrent proposers, allowing for simultaneous block creation and transaction validation. This design, known as execution consensus separation, enables all validators to interpret and confirm transactions in real time, then combine and order them using a deterministic rule to create a single block. This process, called simultaneous release, offers strong short-term censorship resistance. However, achieving this requires overcoming challenges like ensuring all validators have the same financial information and implementing robust cryptography. The weak version of this concept, which focuses on keeping transaction content hidden, is considered feasible, while the strong version, which includes financial information, remains a work in progress. The potential downsides include the need for advanced cryptography and the risk of collusion among validators.
Blockchain centralization: While commit reveal schemes can mitigate front-running and censorship resistance, they may not prevent sophisticated adversaries from gaining significant power and creating potential monopolies, leading to ongoing debates about the best ways to maintain decentralization and fairness in blockchain networks
While commit reveal schemes in blockchain networks can help mitigate the issue of front-running and maximize censorship resistance, they may not be effective against sophisticated adversaries with significant latency advantages. This can lead to a situation where all sources of order flow collapse onto the most sophisticated proposer, creating a potential monopoly and undermining the decentralized nature of the system. The debate around the merits of different blockchain proposals often involves considering the trade-offs between centralization and improvements in the mechanism. While some argue that a longer last look or more deterministic ordering rules may lead to less centralization, others caution that these advantages may not be the only factors at play and that more sophisticated proposers may still hold significant power in the system. Ultimately, the meta game of blockchain networks is complex, and power and revenue can concentrate in various ways, leading to ongoing debates about the best ways to maintain decentralization and fairness in these systems.
Braid protocol scalability concerns: Critics raise concerns about potential manipulation in the Braid protocol due to last look opportunities in a multi-proposer system, while proponents believe differences in sophistication between proposers and bidders won't lead to a significant delta compared to Ethereum's current ecosystem. Formal proofs and ongoing innovation are planned to address concerns.
The proposed Braid protocol, designed to improve Ethereum's scalability, has raised concerns about potential manipulation due to the existence of last look opportunities in a multi-proposer system. Critics argue that this could lead to sophisticated participants gaining outsized power and creating a metagame that deviates from the intended interaction. However, proponents of the protocol believe that the differences in sophistication between proposers and bidders will not result in a significantly larger delta compared to the current Ethereum ecosystem. They plan to provide formal proofs to back up their claims and encourage a truth-seeking approach to the ongoing research conversation. Additionally, the growth of new projects on the Mantle Layer 2 and the emergence of distributed validators through the Obel Collective demonstrate the ongoing innovation and development in the Ethereum ecosystem.
Uniswap Wallet and Ethereum Evolution: Uniswap's new wallet extension simplifies crypto trading across multiple chains. Concurrently, researchers discuss improving Ethereum's efficiency with a multi-proposer system, aiming to tackle complexities and ensure fair conditions in decentralized finance while addressing miner extractable value (MEV) issues.
Uniswap Labs has launched a new self-custody wallet extension designed to simplify the process of trading cryptocurrency across multiple chains like Ethereum and Arbitrum. This extension allows users to manage their digital assets without losing their browsing place and supports seamless integration with other Uniswap products. Meanwhile, a conversation on improving Ethereum through a multi-proposer architecture called "braid" emphasizes the potential benefits of reducing complexities in decentralized finance (DeFi). Researchers are exploring the feasibility of this design, which could improve transaction efficiency and reduce the reliance on single leadership structures in blockchain. The objective is to enhance Ethereum's capabilities while ensuring a fair playing field among participants, addressing issues like miner extractable value (MEV), which can manipulate transaction outcomes. Strong focus is on maintaining integrity and trust in the evolving DeFi landscape through research and discussion.
Multi-proposer architectures in Ethereum: Multi-proposer architectures in Ethereum could make the blockchain more powerful, enable new possibilities for decentralized finance, and potentially shift the priority of execution towards layer one. Base roll-ups and compression are also important considerations.
Ethereum is exploring various methods to improve censorship resistance and multi-proposer architectures could be a potential solution. This could have significant implications for decentralized finance (DeFi) as it could make the Ethereum blockchain more powerful and enable new possibilities. Multi-proposers could also impact the relationship between layer one and layer two solutions, potentially leading to more decentralized execution environments on layer two. The implementation of multi-proposers on Ethereum's layer one could also shift the priority of execution towards the layer one, but it's not clear if this would significantly change the amount of activity on each layer. The conversation also touched upon the importance of compression and the potential for base roll-ups to define arbitrary objective functions. Ultimately, Ethereum continues to make significant changes, and the implementation of multi-proposers and statelessness upgrades are two major upcoming developments that require careful evaluation.
Braid multi-proposer system, block times: The Ethereum community is exploring Braid multi-proposer system to improve block times, reduce censorship and enhance UX, but concerns over potential centralization effects are being addressed through ongoing research and collaboration.
The Ethereum community is actively exploring ways to improve block times and reduce censorship, with a particular focus on the Braid multi-proposer system. Lowering block times is seen as a desirable goal for enhancing base layer UX and censorship resistance, and potentially making rollups more efficient. However, concerns have been raised about the potential centralizing effects of certain mechanisms, such as last look, which could concentrate power in the hands of a few validators. The community acknowledges these concerns and is actively researching ways to mitigate them. Another key point discussed was the importance of leader rotation in achieving shorter block times, with Braid being seen as a potential solution. Overall, the conversation highlighted the importance of ongoing research and collaboration to address these complex issues and build a more decentralized and efficient Ethereum network.
Reth project's goals: The Reth project is a scalability solution for Ethereum that aims to provide stability, break performance barriers, and facilitate experimentation through an SDK for building nodes and infrastructure. It's modular, enhances compatibility and security, and aims to import and run existing Ethereum code on other platforms.
The Reth project, a scalability solution for Ethereum, is a significant focus for Ethereum's developers, aiming to provide stability for Ethereum L1, break through performance barriers, and facilitate experimentation. The project is an SDK used to build various Ethereum nodes and infrastructure, and it's designed to be modular, enabling fast development and collaboration. The Reth project also aims to import and run existing Ethereum code on other platforms like SP One, enhancing compatibility and security. The ultimate goal is to make Ethereum more efficient, accessible, and adaptable for the growing ecosystem.
MEV improvements: Addressing smaller improvements like setting a reserve price for blobs and adjusting execution gas parameters can significantly improve Ethereum's network efficiency and reduce costs.
The ongoing debate within the Ethereum community about the MEV issue, specifically regarding the pricing of blobs and gas fees, is a positive sign of progress towards a shared understanding and achievable solutions. While larger proposals like braid receive more attention, the speaker emphasizes the importance of addressing smaller improvements, such as setting a reserve price for blobs and adjusting execution gas parameters. These changes, though seemingly minor, can significantly improve the network's efficiency and reduce costs. The community's focus on these issues is a promising step towards optimizing Ethereum's infrastructure.
Ethereum specification: A clear specification for Ethereum's consensus layer facilitates a smoother development process, better collaboration, faster onboarding, and a more decentralized system.
Having a well-defined specification for a decentralized system like Ethereum is crucial for its development and understanding. Ethereum's consensus layer, which is formally specified, allows for a clearer development process and better collaboration among developers. The importance of having multiple clients and understanding the intended behavior of the protocol was also emphasized. The availability of a clear specification enables faster onboarding for new researchers and developers, making the system more accessible to a wider audience. The Ethereum team's focus on formal specification is a step towards creating a more transparent and decentralized system.