Eliminate PriorityFee Restrictions in Fusion Settlement Extension

Simple Summary

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

Abstract

This proposal aims to remove the gas fee restrictions imposed by the priorityFee cap in the 1inch Fusion smart contracts. With Ethereum gas prices consistently below 1 gwei (below 0.1 gwei at the time of writing) and the Exclusive API preventing resolver gas price wars, the priorityFee cap is no longer necessary.

Motivation

The gas fee limitations implemented with 1IP-43 were designed for a different gas market. With current Ethereum gas fees consistently below 1 gwei and the Exclusive API granting resolvers exclusive execution windows, these restrictions no longer serve their purpose.

With such low baseFee and the priorityFee cap enabled, it becomes difficult to manage block inclusion as other market participants (not only Fusion resolvers) set higher priority fees. This cap puts Fusion resolvers at a disadvantage compared to other market players competing for block space.

This proposal follows 1IP-60 which received 98% support but failed to reach quorum in September, 2024.

Removing the priorityFee cap will:

• Adapt to the current low-gas environment
• Allow highly gas-optimized resolvers to operate without constraints
• Enable competitive block inclusion against other market participants
• Enhance the efficiency of 1inch Fusion

Specification

This proposal signals the 1inch DAO's intent to 1inch Labs and 1inch Foundation to:

• Remove the priorityFee cap from the Fusion smart contracts
• Deploy a new settlement extension
• Update enforcement terms for Resolvers

Rationale

The Exclusive API prevents gas price wars by granting exclusive execution slots to resolvers. Combined with the current low-gas environment (below 0.1 gwei at time of writing), the priorityFee cap is obsolete and disadvantages gas-optimized resolvers.

Considerations

This change requires redeployment of the Fusion settlement smart contracts with thorough testing to ensure no negative impact on gas costs and order execution efficiency.