Proposal: Join the Flashbots Eth2 Working Group

Summary

In order to support the research and design efforts around identifying the desired path forward with regards to MEV (“Maximal Extractable Value”) in the post-Merge Ethereum landscape, Lido should join the “Flashbots Eth2 Working Group” (“the WG”). While joining the WG does signal an intent to participate in the Flashbots ecosystem post-Merge, this is a non-binding commitment and this vote is solely to determine whether the DAO agrees to join the WG or not.

Further governance discussions and votes will follow, which will serve to clearly indicate the DAO’s chosen strategy with regards to MEV extraction (e.g. “Does Lido agree to participate in the extraction of MEV?”, “Are Lido Node Operators all in alignment?”) and which mechanism(s) will be utilized for extraction and reward distribution.

Details

The purpose of joining the WG is to help Lido explore and answer a series of questions with regards to how Lido will approach MEV generally in the future. Specifically, Lido’s involvement in the WG would be focused on mechanisms surrounding how MEV-bearing blocks will be created, communicated, and proposed, as well as how fees and rewards will be distributed across the relevant stakeholders.

As the Merge approaches, it behooves Lido to understand the technical and operational activities that would be required for the DAO and relevant node operators to undertake in order to participate in such a mechanism, whether these activities can be managed and implemented in an open and transparent manner, and ensuring that the execution of these activities does not in any way compromise the security and effectiveness of protocol and node operator operations.

Currently the proposed implementation by Flashbots (MEV-Boost) seems to be the one most closely aligned with the ethos of the greater Ethereum community as evidenced by the parties which have joined the WG, such as leading node operators, staking pools, etc., as well as the Ethereum client teams’ willingness to support changes in specs that MEV-boost would require to function properly.

Lido’s participation in the WG will ensure that Lido has a voice in the design, testing, and possibly implementation of Flashbots, and it is important that this participation happens

For further context and information:

• Forums proposal for joining the WG: https://research.lido.fi/t/join-the-flashbots-eth2-working-group/1451

• Flashbots medium post on WG announcement: https://medium.com/flashbots/announcing-the-flashbots-eth2-working-group-599b2b92634b

• Ethresearch post on MEV-boost: https://ethresear.ch/t/mev-boost-merge-ready-flashbots-architecture/11177/