RIG Update #1 — EthCC[6]
Timing games, supply networks, and what is the role of the protocol in all of this?
Welcome to our first update frens, and thank you for being here ❤️
With a growing team, a growing audience, and the continuing dislocation of spaces for public discourse, we offer you here a single beacon to track our research activities. We aim to publish these updates frequently enough, as new content is made available, usually after a conference has passed.
Be sure to never miss another letter, and hit the enticingly blue button below.
Now, on to business…
Time is money, and money is a b****
Starting strong with our latest publication, Time is Money: Strategic Timing Games in Proof-of-Stake Protocols, a study on the incentives of block proposers in Proof-of-Stake, by Caspar Schwarz-Schilling (EF RIG), Fahad Saleh (Wake Forest University), Thomas Thiery (EF RIG), Jennifer Pan (Jump Trading), Nihar Shah (Jump Trading) and Barnabé Monnot (EF RIG).
You wake up to the sound of the alarm. Your node has picked up a happy piece of news: you will propose the next block in a dozen seconds. No time to waste, you start tallying up the transactions that washed ashore in your mempool, diligently working to pack the best block you can. The alarm gets more insistent, the Protocol awaits your block, it is your turn, right now, and you promised you would send it when your turn comes. Meanwhile, more transactions wash up, each one bringing in its purse a few coins for your services, and you know that the more you’ll wait, the more of these coins you’ll get, isn’t that why you’re here for after all? So what’s a few seconds more? Who will notice, on the network, if your fresh-out-of-the-oven block was released a little late, you’ll just blame the pipes, the Internet is not what it used to be anymore, and wasn’t the Protocol designed to play nice with people who don’t have very good pipes? But a laggard isn’t just a laggard for themselves. If their peers are outstanding people, they’ll punish the laggard for their idleness, sure, but suppose idleness is contagious, no one likes to be a sucker, so perhaps we all start making plans, acting strategically, as if laggards were in our midst, and it won’t be long before the whole well is poisoned.
But our paper has good news. There is an equilibrium where the laggards are punished. They will still wait until the last possible moment, it is in their nature, but at least their madness is localized, and won’t hurt the good folks who must attest to their behavior. Even better news: since our block proposers have decided that they were above picking up beached transactions, they are asking around if someone else might do it for them. And finding that the answer to that question is yes, they trust willing builders to make outstanding blocks on their behalf. Builders are a raucous sort, they congregate in the marketplace and shout their offers to the one holding the keys to the Protocol, the only one powerful enough to make that next block, the proposer. And when the proposer had enough, they’ll simply stamp the builder that shouted the highest number, and proceed with the exchange. Suppose you were standing by the sides of this marketplace, oh how much would you learn from the situation, the timing of these interactions, the money to be had. And so we have, to report the news from the front, and see whether any proposer was not playing fair. We’re happy to report that we have not encountered such people—for now.
Enough with this inspired prose, listen rather to RIG member Caspar relating our results and opening on the hardest question of them all: does this Proof-of-Stake thing work anyways?
If you’d like a second opinion, check out RIG member Barnabé’s take at CryptoEconDay Paris, a conference organized by our fine friends of the CryptoEconLab.
We’re also pleased to report that our paper was accepted at SBC 2023, as well as AFT 2023, so stay tuned for more discussions around our results.
The supply network of Ethereum
RIG member Thomas took to the stage to discuss the state of the Ethereum supply network, the set of pipes connecting users to validators, and refining their blockspace use in the process.
This talk follows previous investigations, starting with our RIG Open Problem #5, co-led by Thomas. Don’t miss his latest Game-theoretic Model for MEV-boost Auctions (MMA) 🥊 , investigating a leading indicator of supply network health, the competitiveness and behavior of builders.
Seeing like a protocol
RIG member Barnabé expanded upon some of the ideas from the “Seeing like a protocol” post. How should we think about protocol credibility? What are the potential sources of misalignment between Ethereum and its infrastructure? All of this and more right here:
And if you haven’t yet, check out the original post:
PEPC Max
PEPC (“pepsi”), or Protocol-Enforced Proposer Commitments, is a design to enshrine the market structure of PBS without enshrining any specific auction model, leaving proposers free to make their own choices on how to engage with third-parties. RIG member Barnabé discussed PEPC among other topics at this Blockswap event on Order Flow Auctions and Credible Commitments.
On the panel too was found Philipp Zahn, fren of the RIG doing some amazing work on auctions with the lens of compositional game theory, as part of a Flashbots Research Proposal (see also his intro of the topic at our first ETHconomics event); Juan Conejero from Runtime Verification; and moderator Matt Shams from Blockswap (who also appeared at ETHconomics!)
On the topic of PEPC, Barnabé released a new FAQ to expand on many interrogations around PEPC. What is PEPC? How does it relate to Eigenlayer, SUAVE or ABCI++? Can we still capture the MEV with PEPC? And could we try it out out-of-the-protocol? All these and more right here!
EthCC from home
FOMO was high for our members who unfortunately couldn’t make it to Paris. But unlike their travelling colleagues, they actually had time to sit down and watch some of them talks (you know? the reason why there are conferences in the first place?)
Here are some of their recommendations, from the Modular Summit and MEVday.
Julian
MEVday Paris Panel: The Orders Must Flow
The panel gives some insights into how existing ideas from market microstructure carry over to blockchain settings and provides ideas of where new research might be useful.
Mike Neuder @ Modular Summit: Ethereum PBS R&D Roadmap
The talk by Mike was very nice and relevant.
Davide
Patrick McCorry @ Modular Summit: PBS Across the Layers - from L1 to L1000
Patrick has a nice framing on what decentralization setup is plausible for rollups and the need to adapt PBS to that setting.
Vitalik Buterin @ Modular Summit: Builders and More Advanced Forms of Aggregation
Vitalik's talk points at a way to efficiently use base layer data using recursive SNARK proofs.
Extra bytes
RIG member Davide released Latency in Blockchains and Ethereum L2 Migration, exploring the trade-offs and possibilities of low-latency applications, and where to build them.
Yaoqi Jia (AltLayer) released Exploring Protocol-Enforced Proposer Commitments (PEPC), reviewing arguments made in the original PEPC post and the new FAQ.
Jon Charbonneau (DBA) released Endgame: Proof of Governance, a new post exploring the possible future of Proof-of-Stake given the emergence of liquid or delegated staking. The last section observes what re-staking would look like in a world of PoG, and discusses use cases of Eigenlayer vs PEPC.
Next stop
Thank you for reading our news, and see you all at SBC!
In the meantime, why not check out our archives?