Solving the MEV problem is about the formulation of block space allocation rules, which is related to the Ethereum block production supply chain. In the article "The current game between Ethereum consensus and MEV starts from the day when PoW switched to PoS...", we talked about some proposals of Ethereum on handling MEV before and after Merge (PBS, ePBS, PEPC). In this article, we will continue to introduce two other proposals - Execution Tickets and Execution Auction.
The underestimated importance of Ethereum proposals
The Ethereum roadmap and Ethereum proposals both play a leading role in the development of the Ethereum ecosystem. This involves the interests of all stakeholders. Today, Ethereum has become a public good, and the governance of public goods should not only be in the hands of the Ethereum Foundation and senior professionals, but should be decentralized. The determination of the direction of the rules is like Schrödinger's cat. Once the route is determined, you can only see the results of the black box under this route. The Ethereum proposal and roadmap are related to the formulation of Ethereum rules and the strategic direction. Decentralized governance is not just a slogan.
Execution Tickets
At the protocol level, Execution Tickets sell the right to build blocks in the form of tickets. If you want to build an execution payload, you must first purchase Execution Tickets to obtain the right to build. The right to build a block is selected randomly. Here, Execution Tickets is equivalent to an admission ticket for the right to build a block. The right to build a block can be obtained by simply purchasing Tickets, without staking and becoming a validator.
The valuation of Execution Tickets is approximately the opportunity cost of the original proposer proposing a block. Assume that the funding cost of the validator is 3% per year and the issuance reward is 2% per year. Then the annual opportunity cost of the validator is 1%. Assuming that Ethereum has 2,628,000 blocks per year and 890,000 validators, each validator has about 3 chances to be selected as a proposer per year. That is, the cost of becoming a proposer is about 0.33% of 32 ETH, 0.11 ETH. This is the approximate price of an Execution Ticket. The price of the Ticket will be dynamically adjusted according to the number of circulations, and the Ticket can also be resold to the protocol to reduce the number of circulations. Unused Tickets can be circulated, but once the ticket is assigned to a position, it cannot be resold in the primary market and can only be circulated in the secondary market. How the fees for selling Tickets are distributed has not yet been determined. They may be distributed to validators or destroyed to achieve the vision of mev-burn.
In general, Execution Tickets creates another market rule that is different from PBS. In PBS, a market rule is created to let the proposer select the block submitted by the builder according to the profit size. In Execution Tickets, the proposer's responsibilities are simpler than PBS. The proposer is only responsible for proposing the blocks built by the selected Execution Ticketss holders who have the right to build blocks. Validators will not be direct participants in MEV incentives. This will greatly reduce the proposer's motivation to participate in timing games. Because the proposer cannot obtain additional profits from the proposal. (But it may be different if IL is added). But for block builders, since block building rights require the purchase of tickets and the price of tickets will fluctuate, but the actual profit of MEV may be uncertain, there may be certain risks.
Execution Auction
Unlike Execution Tickets, which randomly selects ticket holders to obtain block construction rights, Execution Auction auctions the block construction rights of slots 32 slots in advance, and the highest bidder obtains the block construction rights of the slot. The proposer is responsible for proposing the block, and the attester witnesses the block proposed by the proposer and confirms whether the block content is built by the highest bidder.
In Execution Tickets, there may be a situation where an execution proposer buys multiple tickets to increase the possibility of obtaining a building block. However, Execution Auction is a single slot auction.
Both Execution Auction and Execution Tickets are designed to simplify the proposer's duties - to make proposals to the right holders who will eventually obtain the right to build. The advantage of Execution Auction is that it can achieve precomfirmation to some extent. From the perspective of simplicity of implementation, Execution Auction is better than Execution Tickets. The randomness problem that Execution Tickets need to consider is skipped here. From the perspective of mechanism implementation, Execution Auction is more feasible. If you want to compare the trade-offs of these two proposals, you can also look at which solution may be better from the perspective of protocol benefits or from the perspective of all stakeholders.
This article is authorized to be reproduced with permission from "Ethereum MEV Proposal Sequel: Understanding Execution Tickets and Execution Auction in One Article" Author: Tia
