foreign
[Music]
great
uh hey everyone good afternoon uh I'm
Alex Stokes a researcher at the ethereum
foundation
and yeah you know the title here says
block building up for the merge there's
like a subtitle which is Mev mov moving
forward
uh you'll see in a bit I have another
kind of variant of this talk that looks
at more I'd say like the technical side
of things and I hope today to kind of
communicate uh
like a sense of the landscape around
this topic and like Mev is like the
obvious uh you know uh Buzz phrase here
um but yeah so let's let's dig into what
that means and hopefully by the end
you'll have a sense of again yeah like
the landscape and uh what some of the
concerns might be moving forward so I've
kind of always said that putting
currency into crypto like cryptocurrency
is like this double-edged sword because
like yes you know there's like uh this
like speculative aspect that draws a lot
of attention a lot of talent a lot of
capital to the space and that's great uh
but in the same you know sort of in the
same breath that also means that we're
kind of directly programming with
incentives here we have this sandbox for
you know playing with these different
crypto economic games and uh I guess
hopefully you'll see as we move forward
that uh you know this could perhaps
backfire it could be the case that
short-term incentives that are supported
by protocols like ethereum are perhaps
too great for us to uh sort of resist
and in the context here uh this is an
important point I say secure block space
will be a premier commodity of this
century
so maybe that's like a bit of a
forward-looking projection and maybe you
don't quite buy it that seems to be to
me the direction things are going
I called secure here out in italics
because some people say oh you know you
could just make a new L1 there's like as
much block space as you need but I will
claim that you know there's different
qualities of block space some is much
more secure than others so we have this
thing and if there's this thing called
block space and it is actually so
important it's going to be very valuable
and because it's so valuable we should
expect battles for control over block
space
so uh this is like if anything the
takeaway points I'll just get it out of
the way
um and when I say this I want you to
think about like you know influences
both inside the community and outside
the community there's going to be all
sorts of people who are going to want to
like try to attempt to co-opt ethereum
um and you know that can happen in very
overt ways it can also happen in a very
sort of uh subtle ways so just keep this
in mind I think when we think about any
of this stuff around the protocol what
it looks like how the protocol changes
things around the protocol like Mev and
like a whole separate talk in this event
is like staking pools but when you think
about this stuff just uh have an
adversarial mindset and just yeah be be
careful out there okay so I use this
word block space maybe some of you have
never heard of it so what I really mean
is just the stuff that goes into the
blockchain so today that's like
transactions if you ever used ethereum
or like metamask you've done this you
like have this transaction and uh maybe
you sign it maybe there's some error
maybe there's not enough gas maybe you
didn't pay enough for the gas like a lot
of things that happen
um but you're probably familiar with
this notion of a transaction and so you
know in the very sort of
naive model we have a bunch of
transactions that get packed into blocks
and these blocks go on chain so to speak
which means they're like accepted as
canonical or you know part of the
consensus and then somehow this like
moves the state of things forward I uh
have this like sort of elusive comment
to say tomorrow you'll see in a bit that
this notion of Builders I'm going to
sort of present today unlocks a lot of
sort of abstraction and flexibility
around how we use the protocol and how
we like access his resources
and uh yeah so maybe in the future it
looks a lot more General than just like
the transaction you get the metamask but
so concretely like transactions are you
know like the takeaway here is that
transactions are a way to interface with
the protocol's resources and like what
we really mean when you say that is like
the state like the fact that ethereum is
organized as a blockchain today is like
kind of a detail it's like an
engineering detail almost like the
important thing that we all care about
is the fact that there's this like
shared Global state
um for example the account balance is
everyone in the protocol the state of
smart contracts of uniswap of Ave maker
and you know everything else there's
there's a lot these days and the state
is like the the thing that you know is
sort of the actual valuable thing any
block space to access the state and this
is what everyone you know I claim will
be uh will be battling for control over
and it turns out that you know because
block space at least on ethereum is so
valuable you know it supports this
ability to specialize
so what I mean when I say specialize is
that we're seeing the emergence of this
this role within the protocol
uh called a builder
and
um yeah it's just this entity that says
okay like rather than just like run a
very naive algorithm for like getting
these transactions into the book which
then goes on chain you can do like far
more sophisticated things and if you're
familiar with any of this Mev stuff this
is like one example
um and yeah it's like I really do think
kind of this guy is the limit in terms
of like the Ingenuity people are
bringing to to doing this task
and the takeaway here is that you know
Builders specialize in refining block
space so a hopeful analogy that I've
come across is like thinking of you know
we have like uh actually I think this
yeah so Alpha and algae here is like and
Alex lead to like mining some some
resource like say copper ore you have
copper ore you can like dig it out of
the ground you just have this like thing
you have to like get the Copper from The
Rock and this whole process of
extraction to get to say like refined
copper this copper bar in the middle
here
and then that can be further refined and
to uh you know say copper coins or pick
your thing so this is just like a
generic notion of like taking some raw
asset some raw commodity and refining it
through like a series of of phases and
each phase it's sort of like is more
valuable in the face before it's like
for example if I just like walked up to
you and gave you like a hunk of copper
ore you'd be like okay cool but I don't
really care whereas like if I walked up
and you know hit a bunch of coins you
might care a lot more so this is what I
mean when I say that uh you know there's
this sort of raw asset or this raw
commodity is probably the right term uh
block space and again what we're seeing
is is this this notion of a builder in
the protocol or at least you know around
the protocol that takes block space and
sort of provides these like value-added
services or almost Goods you can think
of them as to go from a less viable
thing to like a more valuable thing and
that's the job of the Builder so
now the question is well okay yeah what
are some examples of things they can do
and there's actually a lot so uh here's
like a list of things there's a long
list of things again this is where I
think all the Ingenuity and creativity
will come in that I think is really
exciting around this space
and I'll just run through some of these
examples here right so like one of them
is like sponsored transactions this is
something people have wanted for like a
very very long time and the idea is that
basically you have this Builder and they
pay for the gas so kind of concretely
what that looks like is you know I have
my transaction rather than making like a
direct ethereum transaction I make some
intent some message something the
Builder knows how to like interpret in
their own way they still have the same
effect on chain but then they can be
responsible for paying the gas and like
end protocol another thing they could do
instant confirmations so this is again
something if you've like you know going
back to our metamask example you might
have seen where you send a transaction
and or you have to sit and wait and it's
like is it on chain yeah like what's
going on like sometimes especially when
there's like volatility and like the gas
market and things like it's it can be
very unclear what's happening you can
like end up waiting a very long time and
that's not fun but uh there's this
almost service or abstraction a builder
can provide which is just to say okay
um you want this Con this transaction to
be in in this block and I can basically
as a builder say I promise you this will
happen
trust me and there's a whole design
space around you know changing what
trust me means but basically I can I can
give you those promises a builder to get
into that block
and in that sense then I can turn around
immediately say yes you're in the block
uh related thing cancellations retries
so the notion here is just saying like
um yeah let's say I make a transaction
and I'm like oh wait like the market
just moved against my unit swap trade
I'd rather just take it back if you're
just sort of sending raw ethereum
transactions today that's really hard to
do because you like gossip them through
this Global event pool and you'd have to
like Yeah It's Tricky
one way people kind of game this today
is they will send a duplicate
transaction or one that will override
the previous one that has different
effects but again that's like
inefficient and you can imagine there's
like this layer around the protocol that
handles this for you
and like in the same bucket there's like
retries so like let's say I want to like
I don't know do a token transfer and for
some reason it fails just because of
like conditions on chain so then I want
to keep doing this you know until it
goes through and rather than me have to
sit and do this like a builder could do
it for me
next one gas Futures so
here the way to think about it is that a
rather than someone you sort of like
block space right now as a builder I
could sell you block space in the future
it's a pretty cool idea and one you know
one reason you might want to do this is
because you know as part of this like
contract that we enter into you're also
selling me at a certain price so even if
like the the gas marker moves against me
I still locked in a price that's nice to
me
and Builders could do this I mean
there's other ways to do this on chain
with like looking at the base fee and
stuff
but yeah so just to give you a flavor
again of what Builders could do uh sell
Futures around block space
uh this was an idea I heard from hasu
you could basically also sell block
space in the past and uh I won't go into
too much detail here because basically
what this means is like selling reworks
which is uh probably something we
shouldn't dig into too much
uh there's like some I'd say moral
hazards around it but the Symmetry
between selling block space and the
future in the past is like I think too
nice to pass up another one is just like
this whole bucket of account abstraction
you might have heard of vip4337 and
basically again it's just this way to
like add more flexibility around the
core protocol so that uh people have
more again flexibility and and how they
used it how they use it
um a simple thing would just be like a
different signature scheme than ecdsa
and then this last bucket Mev I'm sure
you guys have heard about this a ton
this week and you know if you think
about extraction as like the service a
builder could add or well there's a
couple different things but if you think
of extraction then there's like this
whole bucket of you know we can kind of
just shove Mev into this whole notion of
like a builder uh providing the service
to to users whether it's Searchers or
someone else and so then I have a few
examples within you know sort of that
Subspace uh maybe extraction which is
what you usually think of when like a
search is joining some ARB it may be
smoothing the notion here is basically
you know media is very spiky and so
instead what we could imagine is somehow
capturing it within the protocol and
smoothing it out over time then it's
paid out uh to builders to proposers
however that looks
um that'd be pretty cool and you know
you could imagine off-chain
constructions that do this that Builders
offer the last one is like maybe
protection or rebates and the notion
here is like
um Builders kind of would have this
direct pipeline to the protocol and they
could say hey I promise to keep your
transaction private so it can be for
example front run
so there's a lot they can do is is the
point and again there's there's a bunch
more uh there's okay and then like even
looking at a little a little further
forward I'll just touch on this so these
are like you know this this list here I
think is like pretty concrete things you
could do today
and I do think this is painting a
picture of this Builder as this like
generalization that we'll continue to
see in the protocol
um for example you could have rather
than transaction level 1559 you could do
the Block Level
so today when you like send a
transaction you basically have to like
have some amount of heat that you burn
but if you think about it the economics
are the same if the builder of the buck
burns the same amount of beef across all
transactions at the end and the reason
you want this is because again there's
like better ux for users they don't
necessarily need to have Youth and um
yeah again this is the generalization of
like the protocol providing resources
and then the user consuming them
and then a similar thing is Roll-Ups
consuming Bobs and 4844
so you might not know about the CIP but
basically the idea is we're going to add
a bunch of like data space to the
protocol for users like Roll-Ups and
again it's like we don't want roll up
stuff to necessarily like sit and like
manage Bobs and figure out when they get
on chain and things like this
um and so you can imagine there's a
builder some sort of abstraction like a
builder that manages getting blobs from
blow ups or from sequencers of these
Roll-Ups onto the chain uh here's
another talk I'll just quickly point out
where uh the one I mentioned previously
where I went into a lot more of these
use cases in depth you could welcome to
check it out so this sounds cool you
know I am claiming there's this Builder
thing and it gives you all this
functionality and that's great uh but
what's the catch I mean there's probably
a catch and the catch is that the
specialization actually implies
validator centralization and this is bad
because it kind of harms like the whole
health of ethereum like the reason we
care about ethereum is because of this
decentralization of of the consensus
right of the protocol and uh Builder
specialization harms this directly so
let's look at why and why is that you
know this this process has economies of
scale so
right now the like Builder protocol or
sorry the Builder role in the protocol
is tied to the valiator role
and because of that you could have
builders that do their things you'll
have entities that sort of have
validators they partner with to do their
thing as Builders and what happens then
is like better Builders have better
profits and this makes us flywheel where
they have better profits they can get
better building they can scale up their
validation operation and you just get
this like again flywheel that goes until
suddenly like you have these like really
huge actors in The protocol
so again if you're like the best builder
that's great for you
uh but if this you know goes unchecked
then it's actually really bad for the
protocol in the long run because now you
have this like very fragilizing thing of
this like one huge actor that's like
easier to say attack and all sorts of
things so just like a note you know Mev
kind of directly accelerates this
problem uh which is probably why we've
been hearing so much about it this week
so okay what can we do
um there's a couple things one of them
proposer Builder separation uh Barnaby
gave a talk about this yesterday I
believe and I mean the idea that I think
is pretty straightforward just from the
name you I mentioned that this Builder
role and sort of the proposer about air
roll the thing that actually is like
minting the block on chain
this thing these are tied together so
instead we can just separate them and uh
this sounds great the question though is
like how exactly you do it and once you
start looking into this in some depth
there's a bunch of like subtleties and
like open questions that have a lot of
nuance that like still need to be worked
through
so for example
um I think like the leading designer now
is from vitalik where basically we have
two slots alternating proposer and
Builder and the point here is that you
want to have the proposal to do a thing
in a different context have the Builder
do their thing and it sort of firewalls
you know these two these two entities
from each other
and that's great but then you have to
make sure that it's in significant
capacity incentive compatible like you
don't want a proposer to like release
their block too late after they've
accepted a builder's bid and then
because of that the Builder doesn't have
time to like uh you know reveal their
block and it quickly gets to a lot of uh
tricky situations like that
another one is like actually deciding
the mechanism the mechanism of sort of
selling the block space that a validator
may wish to do uh the default thing we
do is like just enshrine an auction
um but then the question is like okay is
that is that what we want do we want
this thing where it's like I'm going to
auction Off My Block space to the
highest bidder there's like a bunch of
different ways to think about this I
will call out again Barnabas very recent
post on each research on Boeing PBS and
he talks about kind of uh maybe pulling
the auction bit out and just having sort
of this notion of like a commitment
Market where the commitment then is like
quite General another point then is like
yeah just the Integrity of this thing
because
kind of like I alluded to there's
there's many actors now and they all
have different incentives and you need
to like line them in the right way uh if
you don't do this properly then well
yeah if you don't do this properly then
you can imagine like people just not
using it so one way you could fix that
is you have a testers go and also test
the chain you know if there's this two
slot process alternating you can have
the testers to test what they see and in
that way they strengthen again the
mechanism
but then it's like okay maybe they could
be bribed like who knows so point being
there's a lot of open research questions
there oh no my emoji didn't show up
anyway
um it turns out that that's not the only
problem so even if we had a great PBS
solution I think like I think the way to
think about it is like you firewall off
all this Mev all this builder stuff from
the batter set so they don't have these
pressures to centralize that's great but
then you kind of Kick the cane down the
road and there's another problem where
again you I mean yeah you really just
get the kid down the road uh to the
builders because now the builders
themselves could centralize
so we don't want to get to a world where
you know there's like
a few actors uh let's say like very
sophisticated actors from tradfy who
are here and uh you know sort of
gatekeeping access to the protocol like
again it'll be a way for them to uh
again violate ethereum's values and that
would be very bad so I think it's even
less clear how to handle this just
because like the scope of the problem is
so big if you thought there's like
incentive issues with the previous sort
of like proposal or Builder citing
there's now like it's I would say even
like less constrained
so that's fun and okay let's let's think
about this for a second like how do we
how do we fix this
um one option is just to say okay we
will have like very centralized Builders
but we just want to make sure they can
compete and the idea is that if there's
like very healthy competition then there
won't be one internship player and that
avoids the situation where there's like
there's very direct gatekeeping where I
have to go through like one or two
entities to get on chain
so to do that we want to keep the
barriers to entry of building very low
um and yeah maybe that's enough we'll
find out but still you know I think if
you look around the world you see
there's like power laws everywhere
and so I think we'll still be you know
even if we do have a healthy ecosystem
it could be the case that there's like
not a great distribution
so we can ask well what next well pretty
much most of us here we can call
ourselves crypto economists so we'll
design a mechanism and what does that
mean well we'll just read off this quote
that I made up what does it mean to
design a mechanism here well we want a
peer-to-peer network with proper
incentive alignment to ensure safety
aliveness of the protocol and now what
does the protocol do well it facilitates
the refinement of block space and this
way I was describing
um so that's great but there's some like
huge caveats the huge caveats are we
want to make sure that
I think there's many but like two ones
to call out right are that the people
who are using this thing like let's say
users who want to like make some trade
on uniswap we want to make sure that you
know when I make a transaction and for
example it has some mov then like I've
actually generated value that wasn't
there before and it seems you know I
think we'd all kind of agree it makes
sense that the generator of that value
should capture most of the value
so that's like a pretty big constraint
on how something like this
block space refinement decentralized
protocol would look like another big one
censorship resistance if you've been
following any of them at Boost stuff
which I'll touch on in just a second uh
you see that this is like a very
critical question because again when you
have just a few sort of
I mean yeah centralized pipelines in the
protocol uh it becomes much easier first
internship to censorship resistance to
Fall by the wayside so I'm just going to
keep going down I kind of want to just
like sketch
this path for you hopefully to jog some
of your maybe like capture some of your
interests or uh you know jagu creative
juices but essentially what would the
centralized Building look like
um I mentioned this FPC conference
vitalik you have a talk uh on this a bit
so I'd also recommend that one
so um but yeah so
for today the you know the ways I've
kind of been thinking about lately are
you have a builder and you want them to
basically
well yeah so there's different contexts
the first context would be in a single
domain and I'll kind of make that clear
in a second but essentially you have a
builder just imagine a builder on one
chain
and rather than this Builder being like
one server somewhere you can imagine it
being split across many servers sort of
implementation wise
um but anyway so that's actually not
what we really care about like we care
about higher level properties like um
we want this builder then to be able to
again be like multiple maybe competing
entities and so what that could look
like is you have agents who are doing
the building and they're now competing
for like order flow for example so if
this is like an Mev context you have
people who are making trades and I'm now
like working or perhaps competing with
other Searchers let's say to to build
the best block but we're doing in a way
that again we sort of enforce this
competition
there I think the more you think about
this there's like a trade-off between
privacy and execution because you know
one thing we could say is as a user
again of my Dex trade for example uh you
know nothing and then it's just like uh
grabbing random batches of transactions
and like putting them into a box instead
you could like kind of be in the setting
today where you see everything and then
you have sort of full uh full
information to even leverage against me
and when people are front running
they're upset about that this is this is
exactly the tension they're getting
towards
um if you're familiar with Cal swap so
like one idea here is like the the
Builder on a single domain context is
you have you know imagine doing your dap
your your D5 app but inside some APC
circuit
um Cal swap has this thing for basically
settling trades off chain before they
land on Chain by just doing uh just the
diffs or just like the remainder
so this could be a cool research
Direction
another one there's this uh
dap I guess maybe application sorry
maybe protocol but either way it's
called Rook
used to be called uh keeper die I think
and either way uh at a very high level
how that works is that they have like a
trusted set of Searchers who have access
to a private pool and because they're
trusted you know we trust them to then
uh
search and extracted maybe but do it in
a way that for the value extracted most
of it flows back to the users of Rook so
what this looks like is you have trades
where you're paid to make the trade
um you can do something like this and
the question then is like how can we
tune this like trust Spectrum uh so that
we minimize trust while giving us all
the nice properties we want another cool
thing now is like you know there's not
just ethereum there are other
blockchains and so now we can think
about me being like across domain
context
and this one quickly gets pretty hairy
because like when you think about it you
kind of now
like if we're going to do this
decentralized building thing across
chains then you now need to like
I mean yeah it's not even really clear
how you do it like you could imagine
like uh some crypto economic layer
whatever that looks like maybe like a
network of State channels uh maybe it
could look like
um
yeah I don't know again this is where
it's an open question but there there's
a lot of things you could do
um and yeah so I think we'll see a lot
of exciting research come out of this
area uh in the future
so yeah I think I've just tried to like
lay on a lot of problems and maybe this
seems like pretty hectic that's not good
um but yeah like I do think this this
these questions around like the Builder
and like how the protocol is used moving
forward or like some of the biggest that
we face as a community so I do want to
call them out and um yeah just just be
aware that uh there's a lot for any
issues here so hopefully you uh are
motivated to work on fixing them
and yeah like I'd like to like and done
a good note like we did the merge you
might have heard of that one and you
know there's really this is like an
existence proof that like progress is
possible like uh I'll steal a quote from
uh Danny Ryan according to Albert knee
who said that ethereum's like an
intellectual gravity well and yeah I
mean I think that's the case like
ethereum is like a really outstanding
community and I think that we're able to
sort of uh adapt to whatever comes our
way so I think I think uh good things
are possible
I'm running a little short on time so
let me see
I think I just had a few slides so yeah
thank you okay my problem
um right so just a few more slides and
uh the first one is I just want to again
call your attention to like yeah how can
we actually start to to work on these
issues
um with this problem of validator
centralization like yeah it's just
supporting r d towards PBS I think there
is some like nice PBS solution that we
could get to and we may realize that
there isn't one and that's also great
but uh the work the work needs to be
done and we'll see what happens
in the meantime we have this thing
called map boost so there's like an off
chain implementation of PBS uh started
by flashbots and uh many others now
they've recently made a call for like
open stewardship of the project so
that's a great way to get involved
I've called out the GitHub repo format
boost there's also some stuff around how
this interface between the core ethereum
software and this Builder network works
and those specs are under this Builder
specs repo uh some things that you know
that Community will be looking at very
soon is like address addressing
sensitive resistance I'm also working on
this notion of a really monitor there's
this like very trusted actor in red
boost right now called a relay and they
can kind of do some bad things and the
idea of the really monitor is to add
some like automated monitoring uh to
figure out when they're doing things we
don't like and that then we'll feed back
into med boost to hopefully uh make the
situation a bit better than it is today
if you're interested to help there's a
repo there that I have and please I
would love contributions
and then yeah I mean you probably get
the sense that this this like Builder
centralization problem is maybe even
poorly defined like I think that's the
first place to start there is just like
defining exactly what we mean because I
think it's like a big umbrella for many
things you could start pulling a bunch
out of it maybe if we can like Define
the problem we can start cutting into
smaller pieces that are you know easier
to make progress on
um you know for example if we do some
sort of like NPC or like some crazy
State Channel thing then how far can we
push the cryptography to like actually
get the properties we want
uh how could we like now in this like
very complex system address uh or
analyze all the incentives to figure out
like okay this this mechanism actually
work
and I think so far flashbots has done a
lot of the thinking here so I just
wanted to call out them uh they have a
form at collective.net and if you're
interested in thinking about this
reading about this research and things
like that uh check that out and that's
it yeah thanks
um there might be just a few minutes for
questions and uh yeah if you want to get
involved just uh here's my Twitter and I
can I'll answer any more questions you
have direct you to the next step all
that
awesome we can ask one or two questions
if there's any questions just raise your
hand quickly make sure it's a short one
we'll pass that mic over there to you in
a second
uh just over there
hey
um my name is Marat I'm part of block
native we build a lot of blocks
um flashbots has a great Searcher
reputation system I mean we can talk
about how great it is and whatnot but
I'm wondering if there's a reputation
system that we can come up with within
the protocol for Block builders in the
future as well
right so I would push back immediately
and ask how much we want actually in the
protocol because like once it's there
it's like very fixed
um but yeah I mean again like a lot of
these I think more like research or like
even you know even even
less formed ideas around distributed
building need to take things like that
into account like you're going to have
some actors who are like helping the
Builder do their job or you can even
think like the Searchers are the
builders in this context and yeah like
that's one way is like
ideally we could have some cryptographic
mechanism where like everyone does like
perfect searching and valid like users
get all the value that is allotted to
them and that's great I don't think the
cryptography is there uh and then
perhaps it will be one day but not today
so then yeah we'll then rely on like
trust reputation things like this in the
short term
um so yeah I mean it's definitely a very
interesting place to uh to look at
amazing that's the time all the time you
have for questions and uh we're ready
for our next talk so please give Alex a
big round of applause
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