[CONSTITUTIONAL] - Adopt Timeboost + Nova Fee Sweep

Abstract

This AIP proposes to combine two separate actions into a single on-chain vote for the ArbitrumDAO to consider: the adoption of Timeboost and a Nova Fee Sweep action. Timeboost introduces a new transaction ordering policy for Arbitrum One and Nova. The Nova Fee Sweep action will forward historical transaction fees to the ArbitrumDAO Treasury, a task leftover from the Nova Fee Router Proposal.

As a recap, Timeboost enables auctions for the rights to an express lane on both Arbitrum One and Nova, giving the winner a time advantage for transaction inclusion. Use of bid proceeds from the auction will be at the discretion of the ArbitrumDAO, with the ArbitrumDAO having already signaled strong support for collecting bids in ETH in the temperature check vote on Snapshot.

Meanwhile, the Nova Fee Sweep action applies to historical Nova transaction fees currently held in the L1TimelockAlias; these fees will be swept into the DAO Treasury with the use of the modernized fee collection infrastructure outlined in the Nova Fee Router Proposal. The full balance of ETH–currently 1,885 ETH–will be transferred to the DAO Treasury on Arbitrum One using established smart contract infrastructure.

Motivation

Timeboost

Arbitrum Chains currently order transactions on a First-Come, First-Served basis (FCFS) basis. The original motivation to implement FCFS was threefold:

1. Easy to understand and implement,
2. Replicate Web2 user experience for instant transaction confirmation, and
3. Protect users against front-running.

Unfortunately, relying solely on FCFS transaction ordering is not an ideal long-term solution. This is because when opportunities to profitably arbitrage across exchanges arise on Arbitrum, “MEV Searchers” race to get their transaction included before anyone else so that they can capture this profit. This latency race involves a lot of spam, placing stress on chain infrastructure and causing searchers to wastefully invest off-chain in faster hardware. Furthermore, none of the MEV generated is captured by the chain and instead all profits are collected by searchers.

Timeboost is a new transaction ordering policy that retains many of the great benefits currently in place for Arbitrum chains, including frontrunning protection and fast block times, while allowing the chain to reduce negative externalities from the racing behavior induced by MEV searchers. Additionally, it can socialize the benefits of the transaction sequencing market back to the ArbitrumDAO.

Nova Fee Sweep

Historically, Nova transaction fees accumulated to the L1TimelockAlias address, which required a lengthy constitutional proposal process for the ArbitrumDAO to access or spend. The successful passing of the Nova Fee Router proposal redirected these fees to a system of "fee routers" that automatically transfers funds to the ArbitrumDAO treasury, reducing quorum requirements, reducing delays, and simplifying accounting by consolidating funds directly in the treasury. As of 28 August 2024, Nova transaction fees began accumulating to a series of RewardDistributor contracts as outlined in the Nova Fee Router proposal, streamlining the revenue collection process for the DAO.

However, transaction fees that accumulated to the L1TimelockAlias before the Nova Fee Router change went into effect remain in the L1TimelockAlias, totalling 1,885.79 ETH. This proposal intends to sweep these historical Nova transaction fees from the legacy L1TimelockAlias address into the new fee collection system. This will be a one-time task because funds collected after 28 August 2024 have been, and will continue to be, automatically forwarded through the new fee collection system to the ArbitrumDAO treasury.

Rationale

Timeboost

Sustainable: Timeboost offers the ArbitrumDAO an opportunity to capture additional revenue that does not come at the expense of users, since the value being captured is already being collected by winning latency races on-chain.

Technically-Inclusive: Timeboost allows any user to benefit from faster transaction inclusion via an autonomously-run auction that is open to all users.

Neutral and Open: The auction for the express lane is permissionless and participation is open to everyone, where the highest bid wins but pays the 2nd highest bid.

Empowerment: The ArbitrumDAO can configure all aspects of Timeboost, including enabling or disabling it, the auction’s design, and how to handle proceeds.

Nova Fee Sweep

Operations:**** Collecting historical transaction revenue from Nova enables the DAO to continue funding general operations.

Transparency: Transaction fees will be forwarded to the DAO Treasury with the use of verifiable on-chain actions and audited smart contracts.

Key Terms

Timeboost

• Auction Contract: A smart contract that handles the state, accounting of funds for bids, and various operations of the Timeboost auction. The contract is deployed on the target chain for which Timeboost is enabled.
• Autonomous auctioneer: Off chain software that receives bids from Timeboost auction participants, processes and validates bids, and then posts the top valid bid (or top two valid bids in the case of a tie) to the Auction Contract to resolve the Timeboost auction. The autonomous auctioneer, for a given chain, is provisioned & deployed by an entity designated by the chain’s owner.

• Express lane: A separate endpoint for submitting transactions to the sequencer that has priority access compared to normally submitted transactions.
• Express lane controller: An address, defined in the Auction Contract, that is granted the privilege to use the express lane. These privileges are granted after verifying that the incoming transactions were properly signed by the express lane controller, among other checks.
• First come, first serve (FCFS): A type of transaction ordering policy used by the sequencer in Arbitrum chains whereby incoming transactions are sequenced into a block in the order that the transactions arrived.
• MEV: Maximal extractible value. In the context of Timeboost, MEV refers to the maximum amount of profit someone could make by including their transactions slightly faster than anyone else.
• Timeboost: A transaction ordering policy in which entities can bid for the right to access an express lane on the sequencer for faster transaction inclusion. See the research specification to learn more. 
• Transaction ordering policy: The rules and logic employed by a chain to order incoming transactions into a block.

Nova Fee Sweep

• L1TimelockAlias: address that historically accumulated Nova transaction fees but was replaced by RewardDistributor contracts as a part of the Nova Fee Router Proposal to upgrade the fee collection infrastructure; historical fees held by this address are the subject of this proposal. 
• ChildToParentRouter: smart contract that, when called, creates an L2-to-L1 message which sends the contract’s full ETH balance; once the message is executed, the ETH is transferred to a ParentToChildRouter smart contract on L1
• ParentToChildRouter: smart contract that, when called, creates a retryable ticket which transfers the contract’s full ETH balance from L1 to the DAO Treasury on Arbitrum One

Specifications

Timeboost

The full specification for the Timeboost auction can be found here: https://github.com/OffchainLabs/timeboost-design.  

The implementation consists of an auction contract, autonomous auctioneer, and changes to

... please visit link below to view full proposal

https://tally.xyz/gov/arbitrum/proposal/14881197137069494959448952699217598923721993392617887469969318742509097999570