[1IP-60] Removal of PriorityFee Cap in Fusion Mode Smart Contract

Simple Summary

• Deploy a new settlement extension that eliminates the priorityFee cap for Fusion mode Resolvers

• Signal to 1inch Foundation to update the enforcement terms for Resolvers to reflect this change

Abstract

The proposal aims to remove the gas fee restrictions imposed by the priorityFee cap in the 1inch Fusion mode smart contracts. This change is motivated by the implementation of the Exclusive API, which mitigates Resolver gas price wars and makes the priorityFee cap unnecessary.

Motivation

Current gas fee limitations that were implemented with [1IP-43] are no longer needed due to the introduction of the Exclusive API, which grants resolvers an exclusive window to execute orders without competing in gas price wars. The current priorityFee restrictions disadvantage highly gas-optimized resolvers and lead to inefficiencies.

Removing the priorityFee cap will:

• Ensure a level playing field for highly gas-optimized resolvers.

• Enhance the overall efficiency of the 1inch Fusion mode.

Specification

This proposal serves as a signal from the 1inch DAO to 1inch Labs and 1inch Foundation.

Elimination of the PriorityFee Cap:

• Modify the 1inch Fusion mode smart contracts to remove the priorityFee cap linked to the block’s baseFee.
• Deploy a new settlement extension

If passed, this proposal signals to 1inch Foundation to update the enforcement terms for Resolvers to reflect these changes.

Rationale

The Exclusive API grants an exclusive slot for the best quote from a Resolver to execute a Fusion mode order, preventing gas price wars that mandated the priorityFee cap.

This change ensures:

• Alignment with the new system where gas price optimization no longer benefits from the cap, making it redundant.

• Gas-optimized resolvers are not disadvantaged by the caps.

• Fair chances for all resolvers to execute orders efficiently.

• Less value is lost to block builders.

Considerations

This change requires an update and redeployment of the Fusion mode settlement smart contracts. All changes should be thoroughly tested to ensure no negative impact on gas costs and order execution efficiency.