Is it an issue for the builder to filter out the withdrawal transactions from their block?
Why is this an issue? There is no way to prevent a builder from subsidizing their blocks regardless of the scoring method used. I don’t think Flashbots want’s to be in the position of deciding which payments are “legitimate” and which are “illegitimate”. This undermines the credible neutrality of the system and requires differentiating between “ethical and unethical” mev.
The CL provides mev-boost with the parent hash as part of getHeader call, so the block header on the parent can be validated trustlessly by mev-boost regardless of where the data comes from. The options are: bring from relay, bring from CL, bring from EL. Requesting the parent header from the relay as part of the payment proof seems like the most natural approach to me.
Sure builders could filter it out, but would really need to be forced to, for not lower their bid value. The question is whether the algorithm is actually sound if such a workaround is needed to arrive at a comparative scoring.
I’d like to understand why you feel block balance diff is preferable over payment transaction value?
Is there then no way for an outside observer to account for MEV? The feeRecipient is on-chain, but the “fee recipient” is private. Hence, by observing the chain, we cannot distinguish between the builder paying the proposer and the builder paying themself (or even versus no builder, just a proposer transferring out). As such, there seems to be no secure way to mirror a staking pool payout inclusive of MEV, without private information about the staking pool’s beneficiary addresses.
Inclusion of withdrawal amounts in bid values are currently causing incorrect bids to be selected.
Example is slot 7914991: the bid was 0.466032380614827 ETH but the actual payment outside of withdrawals was 0.0268737436148266 ETH. A rival bid that didn’t include withdrawals but came in around the same time offered 0.0777436185616146 ETH, so the proposer lost out on 0.050869874946788 ETH by the relay giving it an incorrect bid.
I think that the arguments for using balance delta ultimately fail because they aren’t providing the expected number, which is the value of the execution transactions in the payload to the proposer. Transaction-based value is the only solution here that provides a useful number for proposers.
Tracing the block and working through each transaction to obtain the actual value to the proposer isn’t very difficult, and if it takes too long to do this during the slot it could be done after the fact if relays are prepared to ban builders that report incorrect bids. But at the moment the field is distorted, relays are providing non-optimal bids, and this should be addressed as soon as possible so that bids provided by relays can start to be trusted again.
While balance delta is helpful in having a robust way for relays to technically make sure bids are “accurate” in a relatively efficient manner, it’s probably not intended (in spirit) and definitely not practical or useful for bids to include in the bid score (and thus how bids are ordered in terms of the value that they provide) things such as CL->EL withdrawals (which @thegostep astutely pointed out as a possible side effect earlier, I think we just didn’t realize that builders would utilize this on purpose).
If we want to keep the balance delta approach, I think we should try to agree that there are certain kinds of things which should be excluded when composing the bid score for bids when utilizing this approach (withdrawals for starters, but there may be other things that make sense in the future, too). Basically, it should be accounted for to make sure the bid is correct, but IMO it should not be incorporated into the bid value itself.
Otherwise, a concerted effort by relays to work through each Tx for block scoring as Jim says may end up being better in terms of avoiding these bid value irregularities.
Do we have a way to estimate how difficult it would be to timely simulate payloads to the extent necessary to fully construct the bid value from payload transactions and if it would meaningfully affect current timings on the relay side? Given that a lot of relays are using an optimistic model now, this can help to offset this as the simulation can happen later.
There are 196463 blocks proposed by our relay in that period.
Out of them:
had withdrawals to the fee recipient in the same block: 498 (0.25%)
had direct transfers to fee recipient: 95 (0.05%)
had transfest out of the fee recipient: 510 (0.26%)
Note that proposer is not loosing anything because this does not give any builder advantage. They all can include these values into the bid.
Removing withdrawals from the calculation is very easy, others is a bit harder but still possible. But note that this still affects only 0.5% of the blocks and it does not give any builder advantage at least if builder know about it.
and if it takes too long to do this during the slot it could be done after the fact
builder should obey any bid calculation rule that relay enforce so this does not work. Especially so if you propose to ban them for incorrect reporting
The proposer is definitely losing funds at current, I gave an example above where the flashbots relay provided a non-optimal bid.
The percentage is largely irrelevant, as long as it is >0: it generates a number of false positives that make it harder to check for real discrepancies (although I would argue that these are also real discrepancies; a block with 0 transactions would still return the withdrawals so it shouldn’t be considered builder-provided value).
And every builder adding in the withdrawal value would impact the current min-bid functionality within mev-boost, so I would hope that this wouldn’t be considered as a solution.
@jgm I think that Flashbots is sympathetic to your point of view that withdrawals should not be accounted. It’s why we originally went with a payment-tx validation model. That’s been eroded over time not because it’s what we wanted, but because it is what the market has wanted. We’d be happy to change how our relay works to subtract withdrawals, but unfortunately that will need to be coordinated with other relays in order to be effective. One relay accounting for withdrawals a different way would strictly dominate the others. Moreover, we’d prefer that validation was more uniform across the market so that there aren’t slightly different rules across the relay market. So, we are sympathetic, but we’d like to move in a coordinated way with others and that will require their buy-in too.
At current I believe there is only a single builder that is generating bids with withdrawal values included, so it seems like a relatively simple thing to contact them and ask them to stop doing so (or block them if they refuse). You could then fix this in your relay codebase and approach maintainers of other codebases to do the same.
I understand that co-ordination is important, but so is taking the lead. Relays are meant to be trusted entities, and doing the right thing in situations like this helps to maintain that trust.