Stephane Gosselin: Frontier Research - Solving Ethereum's MEV Problem. Ep. 511

Transcript

welcome to epicenter the show which talks about the Technologies projects and people driving decentralization and the blockchain revolution uh I'm Brian Crain and I'm here with Felix Lodge and today we're going to speak with Stefan gosla he is the founder of Frontier research Frontier is a sort of new Mev focused company but he was also previously one of the co-founders of flashbots and I think sort of the lead to architect I think if that's correct or product designer or something like that add flashbot so thanks so much for joining us Stefan yeah thank you it's always a pleasure to get the chance to come back on this podcast and chat with you guys yeah absolutely it's not the first time

actually maybe you can just get started in there I think it's a great question so 2020 uh you wrote the blog post a post on Eve research titled flashbots front running the Meb crisis so this is now three years ago and I'm curious just if you can like reflect a little bit sort of looking back I mean you you called it back then like Mev crisis I'm curious you know what what did you what was your understanding of like the Mev crisis and like what does it look like today are we in an Meb crisis I was forced to like think back on this actually earlier today someone asked like do we actually have a counter

factual to PBS like what would have happened if we hadn't launched math boost would we actually have a significant different distribution of concentration on the validator side or would it look like pretty similar the Mev crisis was basically the thesis that said if there wasn't action taken by the community and early flashbots members who've sort of felt responsible to take this this action there would be an increasing concentration of hashing power because um the level of activity on ethereum was increasing to the point where Mev became

meaningful all right if you remember during summer 2020 D5 summer we had all of the so start of the yield farming and like really you to swap getting traction for the first time with all the liquidity mining programs um is it yam finance and and all this this this good stuff and so it was clear that you know whether it's token sniping Arbitrage whatever else there was an advantage of operating this at the validator level and validators weren't currently doing it the activity was happening through the transaction pool through sort of gaming the the algorithm that the miners

run for for packing blocks um so the crisis was well it's very clear that miners have the advantage in doing these games they are likely to like start to invest into running things themselves or run custom clients make Partnerships with trading firms to be able to extract some of that value and that has the potential to lead towards more concentration because there's sort of increasing returns to being the ones that play this role maybe there is a better mechanism that can develop and and launch that enables to maintain transparency over um over what is uh is sort of happening in the system maintain open access to it so make it so it's not doesn't require a

special deal with validators but you can freely connect and participate and finally have some way to sort of redistribute the value um to the actors in a way that's like welfare maximizing or whatever definition that you can have so that's that's the Meb crisis you know you sort of mentioned like hey you wrote this post so you made it on eth research and then I'm like thinking back to like the last three years of my life and I feel like all I did was write two posts and like everything else was like fluff right like I wrote this shunt running the Mev crisis which was like a spec for MAV Geth which was like the client that that we developed and then ended up getting adopted by by Miners and the second one that I wrote was introducing meth boost as a as a spec and then

maybe like I should have just written those things and just like you know went to the beach and did nothing else the rest of the time because like those specs alone I feel like move the needle into like what the infrastructure looks like um and and uh and we're like the most impactful things that uh that I really did so yeah I sort of there's this like really fun progression from you know they're not being in the infrastructure to now having gone through two major cycles of of the immediate infrastructure changing anything and do you feel like these uh both of these things had the impact that you hoped it would in terms of mitigating the Mev crisis yes yeah

not really um not really I mean it's it's like hard to say there's no way else is that what's happened or yeah I mean it's like it achieves the like the outcome in terms of like it's a system that go adopted and like everyone got excited about it and and you know introduce a new industry and ecosystem with a lot of people that are having open discussions about these things and implementing alternative solutions to them that may be crisis in itself I mean one can debate whether it's a crisis at all if it ever was actually there um or if it's just like a natural way that an industry evolves and whether you know whether it was Mev Geth Med boost

or something else would have happened the end results would have been the same and would have ended up in the same location I got the at the end of the day I don't know that the amount of concentration that we have at the stake level today is like meaningfully different than what we would have if we didn't have PBS or like any sort of mbb infrastructure maybe we have more transparency and how the system works because you know we have sort of this open pricing mechanism where the information is being like routed through you have like a dollar value for like the price of blocks and you have some nice dashboards that like allow us to show it like maybe there was some path dependency there that's different but in terms of like how things are evolving it seems like pretty inherent to the way

that blockchains are designed that the end result will end up being um being very similar maybe maybe just maybe just commenting here one thing I at least I do feel like reasonably confident that Mev did not increase validator centralization in a meaningful like was not a meaningful driver for validator centralization on ethereum I think that's pretty clear yep so I think from that perspective if you take if you take like you know concentration on the validator level then I think if that's the kind of criteria then I would

say like yeah I think it worked out right like that that didn't happen oh it happened to some extent for other reasons that were unrelated to me I think right right it didn't fail yeah we don't know if it was necessary but we know that it didn't fail I think the thing I'm the most excited about in the end and in particular with the introduction of math boost like so MAV Geth was like a really simple solution it was like get flashboss to run a server and then like route all the mevs through this server and then like Multiplex it to like the miners right and it'll just

like introduce like flashbots as like a server that like runs the Mev Market MAV boost is a much more sort of open system where you have a lot of different layers um to it and a lot of room for individual entities to compete and offering additional Services right so the just the introduction of the the block Builder role um and the relay role has sort of meant that this thing of operating uh an Mev Market that flashbots was doing now is being done by like I know six seven eight companies and there's quite a bit of turnover I think in the like um and the dominance of um of these parties they're like

trying to figure out how to like make it sustainable how to have a revenue model and uh competing for features that they develop I think that's all very positive because it brings a lot more diversity to the way that these systems are being iterated upon um and just a number of different perspectives they're being reflected into the the architectures that they get adopted so that that to me has been like quite successful if nothing else just having more different stakeholders are involved in developing and competing against each other for developing this this infrastructure providing services on top of it that seems like a quite a decentralized way to approach infrastructure development

so it's almost like the third thing you did right like I guess formalizing this Mev supply chain with the different actors and how you can break them apart and then how you can like separate the roles did did anything change in in that perspective from how you looked at the Mev supply chain during Mev boost and like nowadays or has anything to do you haven't foreseen or something I don't think there's anything that I haven't foreseen I think what I've been trying to introduce as like a reframing of the Meb supply chain is to think of it less linearly and think of it more as sort of a chaotic set of games I presented a little while ago and we wrote this this blog post with with

Frontier about um about infinite games and uh introducing this idea of of a transaction supply network so instead of of thinking of Mev supply chain as being like users originate Mev and then it sort of gets sort of funneled through this system of of extraction all the way to the validator um inside me instead do you think about a cluster a bunch of different infrastructure components that yeah it originates with with users but depending on you can see they're intense like whatever they're trying to achieve and interacting with the chain they get routed through different sets of specialized infrastructure that leverage tools like auctions I leverage tools like privacy

um to provide those services and and capture that those systems like reflect that value back to the user and provide the utility that the user is looking for it's got like this this thing to say like okay me V is like a lens through as you can see the world right um and once you start to look at like Bridges you look at um changes you look at all these different things from the Mev lens it's like a toolkit that allows you to analyze them and understand how how do the Dynamics play out if you set this up in a decentralized setting um I think it's useful to have this lens but still look at all these components individually all these games individually as opposed to

say like there's only one game here and it's like Mev supply chain and like that's the only thing that matters I'd rather look at individual components can you talk a bit about your vision for Frontier research like what do you hope to build as a like what kind of organization do you hope to build and what kind of impact do you hope to have on you know the Meb landscape or crypto more generally yeah um Frontier research so I left flashbots at the end of of 2022 like um and beginning of the fall of 2022 and uh I so took some time off and decided like is this something I want to continue

working on do I want to continue working on on Mev I felt like there was still some contributions I had to make to the space and so started sort of a research organization around this that where it helps working with various different teams that are um are participating across the entire um the entire ecosystem of muv infrastructure helped um sort of up level the level the their understanding and mental models around Mev helped do some analysis over the system that they produce and advise on go to market and whatnot um so we've been doing that for quite a few months now since um since the beginning of of this year now we've we've started

looking more actively like okay where are the opportunities for developing products we've started incubating uh block Builder called um called Faith Builder that participates in this game um I sort of see very abstractly um the set of games as being an abstract set of two two roles you either have a message passing system with some rules over how these messages are handled and aggregated and you have individual agents that can be called like solvers or Searchers or block Builders or whatever else that aggregate these messages and then solve them uh optimize them according to some

objective function and so the block Builder that that we're running we see as being sort of fundamental to enabling the development of all these different games across the ecosystem and participating in them and helping them bootstrap to provide these better user Services um so it's a to generalize solver that aims to participate in all of these different these different blockchain games um so yeah that's that's sort of a a venture that we're that we're incubating from uh from the frontier team so this means like it's it's a builder in the flash was muv boost because somebody could also be a solver maybe you know I don't know for for cow swap

or like you know other products like that is that correct there are very similar games at the end of the day um they they achieve similar objectives and they sort of are architected and um in ways that benefit from participation in multiple of these of these games I mean the move of activity and like the trend this is like one Trend that's that's interesting to discuss is how how much rfqs are going to gain in momentum and adoption um over the course of the you know next 12 months can you explain rfqs yeah I can give like

maybe I can give like an Mev explanation to it sure please yeah and then I'll give the like the maybe I'll give the the user explanation and then the Meg explanation as well so the user explanation is you're used to doing trades on top of D5 by going to like uswap.com and like requesting a swap what happens then is you're tapping onto amm liquidity that's on chain but you um have a lot of inefficiency in uh the prices that you obtained so the liquidity that's on chain is stale it um isn't by professional counterparties um and you're susceptible to

um sandwiching attacks and like exploitation of your orders if you if you um if you routed through there so it doesn't give you very good pricing essentially to interact with with uniswap relative to the pricing that professional Traders would be able to get by interacting with all the different liquidity venues RFQ just allows you to Outsource the work of routing through a bunch of different liquidity venues to some solving system it says hey we're going to introduce a Marketplace of service providers that are going to compete to give you the best price

and they can do the complex work of figuring out how to access liquidity wherever uh wherever it is of the user side it's great you have the same experience of doing a swap and getting the tokens that you want but you can also expect to get better pricing on on the trades that that you do the Mev lens is uh rfqs like recapture value does being leaked sort of down the supply chain right so if you look at the distribution of validated revenues today over 50 of it comes from basically Arbitrage against Union swap LPS right

and so you saw LPS put a bunch of capital into into their amm pools and they're relying on c5d5 arbitragers to update the prices that they offer uh relative to the prices on other liquidity venues like binance and whatnot um and Arbitrage was capturing significant remote value the amm LPS are losing that value and this is called lvr um loss versus rebalancing there's a service that these arbitrages are offering which is to maintain prices on chain it comes at a significant cost for the LPS and a lot of that value ends up being captured by by validators well RFQ does is it says okay thank you very much

for like the system that was like generating a lot of value for validators like we as The Originators of this order flow would rather recapture this value either for ourselves or for our users and so we're going to create the system that enables us to internalize essentially the liquidity and provide uh that value back to uh to our users so the sort of trend on on this RFQ stuff is for more and more of the liquidity to move off chain to move away from from amm contracts and be sort of accessible by these professional market makers these professional solvers that um that can get better price improvements to the users and better

quotes the users um and uh and expose less of that sort of down towards uh towards validation and then in this RFQ example so let's say uh I'm on ethereum you know I want to trade some e for usdc for example then I'm making this request for quotation or something and then it's like hey I want I have if I want uscc it this also means that somebody could come and say hey I'm a Trading Company and I can make that trade on binance and here's how many uh you know uscc I will

give you for this eve and you know it nothing ever settle I mean of course they're gonna send me the uscc on ethereum but um but the trade actually gets executed on finance so this would be this would be possible or that's like yeah that's mostly how how rfqs work um Traders don't necessarily need to make the trade on on binance at the end of the day like they hold a bunch of tokens on chain and they like head to their exposure on on other venues um so basically it's like they have inventory on ethereum that they are providing within their Market making and their goal is to keep this inventory within some range of parameters that's

like in line with their hedging on on the centralized exchange and yeah whenever this inventory goes like too far in One Direction or another that they lose money but so long as it stays within a certain range that they they make mine maybe let's talk about block building I feel like block building is something that's very poorly understood I think by most people uh even probably even ethereum uses they have like no idea right that like balance or not actually building the blocks and it happens in some other way and and how that's happening so can you just explain what what is the the what's block building and what is the the block building landscape in

ethereum at the moment yeah so block building is um is basically validators Outsourcing the job of putting transactions into a block to a Marketplace anyone can be a bullock Builder anyone can like spin one up not everyone can be a good block Builder because block Builder is very dependent on having access to order flow um so there's a trend here which is increasing amounts of private order flow that's being routed to block Builders interestingly enough right like a lot of the discussion there was initially like oh no block Builders are going to get exclusive order flow deals and uh become super dominant and it'll be centralizing

towards um towards a chain because you'll have just like one party that produces all the blocks um realistically I think that's there's a lot of economic dynamics that mean that that's not going to be the case what is happening is there's an increasing adoption of um order flow aggregation systems um so more and more of the transaction flows being routed through systems that um say we will directly send to block Builders we'll send to all the block Builders but we'll directly send to the block Builders and never touch the the public transaction pool and so essentially if you're if you're a block Builder you have to connect all these different private sources of order flow to be able to build competitive blocks

you compete on this access of the order flow compete on the efficiency of the merging and then submit blocks to to validators for for inclusion there's sort of two types of block Builders there's block builders that generate their own order flow themselves which you could call Integrated sort of Searcher Builders a lot of the dominant block Builders to date have been of this kind um they you know don't really monetize from playing the role of the block Builder the block Builder is sort of a way for them to execute trades um that they would that they would want to execute anyways and have some Edge in in providing this execution

um and then the second type of block Builders are sort of neutral block Builders and they're the ones that don't generate um order for themselves they don't do trading themselves they just aggregate the trading has done by by a bunch of of other Searchers Traders um and provide sort of fair execution across all all that uh that flow and that's like one of the big questions right now on the Block building side is is it inevitable for Block Builders to be Traders or can neutral block builders provide uh services and and be competitive so if you if you think about a business model of the Builder Searcher I guess they make the money through their own searching

and the neutral block Builder has to sort of come up with some way to to make money from the private order flow or how do you kind of attract the order flow just by being a neutral party is that basically the the strategy or you know I guess whatever you can share or how how do they compete with this like integrated Builder I mean either you're like doing the trading yourself or your or you're providing some service to someone that wants to sell transactions on chained right let's say that you're a traitor right you're you're considering like running a block Builder it's not easy to run a block Builder like not everyone can do it not everyone can get access all the private order

flow that's required um so you have like some some cost right like you have some some potential Revenue versus cost calculation that says like are we going to do trading or not or do block well they are not um so they're they're willing to pay for someone else to provide that service if they don't have to sort of spin up themselves I think this exists with several other systems as well um where like they would be willing to um to submit flow to uh to block Builder if they can get certain guarantees or a partnership on on how it works I genuinely don't think block building alone is a very good business um to run it's like very competitive Marketplace and um unless you're able to get some

um some very like special deals basically the the profits get competed away so the model is not is not necessarily super attractive so what what is going to be the the kind of future of block building so you think there's like other products that are going to be built um by block Builders and what do you think are the most promising ones like I think there's two trends that are worth keeping an eye on one is a transition of order flow from um from public venues to uh private to the news in particular like just the transition of you to swap order flow

from the mempool to use swap X um that will influence a lot of different things I think that will mean that Searcher Builders become less competitive and less important and neutral Builders will become more more prominent hey can you explain why and and maybe just also explain what is the unit swap X because I think many people will not be okay there's that unusual packs is like the RFQ platform basically that's unisop launched um Works similarly to uh to one inch uh Fusion similarly to the castle swap in

some ways as well it aims to use all sources of liquidity to be able to provide price improvements through running an auction with a bunch of professional uh private market makers uh for the right to settle a swap so what this does is it transitions a lot of activity away from the public transaction pool so you can say sort of goodbye to all the Sano Chang which is great uh great for users but also reduces sort of the opportunity space for those trades to take place it makes providing liquidity as a passive LP and amms a lot more difficult

because you have active market makers that have first look on all the retail orders and the chance to settle those and so as a liquidity provider in amm you sort of just get all of the leftovers that for whatever reason the um the professional market makers aren't selling so you have to ask yourself like why aren't the professional market makers selling this and why do I why am I as a retail you know do I believe that uh I'm making money off of off of this trade um the answer is like probably you're not um and so I expect there to be just like a decrease in the amount of liquidity that's available on um on on layer one

um amms and more and more of that that trading to sort of settle on on this either um private liquidity or or Layer Two this in turn like sort of reduces the Arbitrage opportunity between the layer one and like other trading venues right like if you have less liquidity that's available to be targeted um you will expose less value separately there's like you installed before and like Hooks and like other like mitigations are being developed to be able to reduce the amount of lvr that are exposed by passive LPS um essentially all these microstructure changes that you swap is introducing reduce the amount of Mev that gets

exposed in the system and reduce the opportunity for integrated Searcher Builders to sort of you know have a significant portion of the value of the blocks um so more and more of I think the value of the blocks is going to be distributed towards other other use cases relative to just arbitraging you to swap that will cause this the shift away from from surgery Builders towards one neutral building and then how do like neutral Builders differentiate I guess maybe we went into a bit but is it mostly on this like so offers they can make for private order flow or what other like dimensions are

there to differentiate for neutral building I don't really think that there is I think it's like a knife fight I think just do it better and um what are your thoughts on um decentralizing the block Builder is this do you think this is uh is it possible to build a decentralized block Builder that would be competitive and is there a reason to do it um I'd say it's I mean I don't know that much I will say about what the centralized block building actually looks like and uh the designs that I've seen or the attempts

at it have been like unconvincing there's like this bigger question mark which is like what does decentralization actually mean that like needs to be answered when you're even like trying to tackle these questions and the answers I've seen haven't necessarily made much sense to me this is like a very deep rabbit hole into like dive into um I I see all of these things as like games that you that you're developing and and the main metric to me about um how decentralized it is is what are the barriers to entry and the advantages to like to scale or to network effects that the system

um uh involves and I think the definitions and like proposals for decentralized Block buildings to mirror like trading off what is like a competitive market with individual agents for uh like a Network that has Network effects and to me that doesn't necessarily feel more decentralized um maybe there's there's something I'm missing but it is susceptible to same centralization pressures of different nodes of the network as any participant in a latency system have um and so while it may have properties and look like a network it doesn't necessarily seem very

decentralized to me so I don't know I don't know where decentralized block building is is headed I think there'll be a lot of experiments and attempts at developing it um I would tend to believe that there's there's some something promising to be said for um adding more constraints to the way that block building Works um and essentially giving validators the more control um over the policies of what they um accept as blocks and maybe you could say that sort of decentralizes the the role of block building a little bit by constraining them

to some set of rules that are enforced at the validator level um and so you are leveraging sort of more distributed validator set and the requests that those values may have while still having the block Builder role to to actually enact those those requests that might be like a a direction for for more trustless block building but yeah is there like a specific approach to decentralized block building that you've looked at I mean it's I I guess there's a few reasons why this I have not looked at this in any depth but

but there is some some things that sort of like triggered this a little bit I mean one thing is that you know there was like so much effort and thinking that kind of went into oh let's try to make ethereum you know as decentralized as we can that there's lots of different validators now did that work or not versus like other proof of State chains you can debate right there's some aspects in which ethereum is maybe more decentralized some aspects maybe it's like similar or to other networks but you know it's still it's pretty centralized right when you look at the um that would say the validation level and then but now we've had the segregation of taking the rules apart and then you have this block building and all of a sudden if you look at this block building well it's it's sort of like you have a few

block builders that produce most of the blocks and um and and as you said right I I guess at the moment the ones that are kind of dominant there is the search of Builders which means they're you know they're also looking for what is the optimal transaction ordering and and and finding their own things and and the ones best able to do that are kind of trading company so either also trade and centralized exchanges so from it's just to sort of okay what do we want the system to look like having a few companies like that that in the end have this critical role maybe doesn't seem like the most desirable outcome so this is like one thing and then the other thing uh has to do with

you know some people talking about and I think this is also true for Faith Builder if my if my understanding is correct of being like in neutral Builder right where where basically okay let's say there's like some Builders and they kind of maybe use the information against you when you send it to them but then there are others and they say ah we promise we don't do that right like so yeah trust us but of course that also seems like a bizarre thing right because all of a sudden the whole thing is about building like trustless systems right with crypto and and cryptography and you know t-san trans networks and stuff so if then you have at the core of this whole thing you have these block

Builders who you know claim that they do things with a certain you know following a certain process and that's why people use them but actually it's based on trust and you can't like verify that you don't have like the kind of guarantees that we generally have in crypto networks that also seems a little bit weird and it seems like the kind of thing that often you'd be like oh let us replace this trusted thing of the neutral block Builder with something that's you know actually trustless uh and then of course decentralizing it uh is often is I guess generally the way that this is approached I I do think that there's a difference

there between providing better trust guarantees and decentralizing so like you could do block building in a centralized way while still providing strong privacy guarantees right and so you can have this um what is like filled through trust but like hey I won't front run you I promise be enforced cryptographically while still being operated in a centralized manner um I think that's a Natural Evolution that things will will go towards um I think the like decentralized component of it is the part that I'm I'm not seeing how it'll how it'll take place the other like question is like let's say that we decide that we don't

like that there is five whatever block Builders um and we don't like that they're sort of a you know a parallel distribution and dominance between them we want block building to be uniform distribution the way to do that is by creating centralization somewhere else you say okay then you put all of the order flow within a single system and you sort of selectively distribute it to various different block Builders and then Force the fact that this uniform distribution happens on the Block building side but you've just introduced a problem at a different layer which is the order flow irrigation layer and then are you happy to have as like you know two three different order flow systems that

process all of the order flow and and ethereum is that better is that like a meaningful Improvement yeah I think those those like end up being the directions of inquiry that that I get that I get concerned about I we also wanted to talk I guess about the PBS system in general is this the right direction in your thoughts I guess we already covered it a bit but giving you know Brian me you both like say there's like different chains and there's like different approaches to how mbb is treated I think obviously ethereum was sort of the first instead of like the main venue where the liquidity is and everything and um yeah we wanted to capture your

thoughts on like would you do it again like this or is PBS the right way or should should it be done differently on other chains so for example um you know in Cosmos there is like different ways to to try and handle Mev um I don't know how familiar you are with them but like yeah I guess just wanted to hear your thoughts on spbs the right direction for for proof stake that works or are there other ways to to handle this I don't know I don't know I think it was Rachel ethereum I think it was right for ethereum at the merge like they needed enough boost and like that was that was probably good um like they needed an muv solution at that time and it worked out is it right

for ethereum in the future is it right for other chains right for layer twos um it's not clear to me um I mean you guys have looked at this a lot right like what do you guys think so if you look at like Cosmos chains then it seems like there are way easier ways to address this issue I mean I think in the cosmos chain right you already have the situation that you know you have validators and the validators depend on the token holders to state with them and the token holders of course want this chain to like work properly they want their token to do

well so if now you have some vowel letter that says oh I'm going to you know sandwich it you know like let's say you have some sort of Dex chain and then some value that says I'm gonna sandwich everyone then then the token holders are like what the hell this is like undermining my project I'm not gonna stake with you right so that this is like one thing uh so I think that makes it like way harder for someone to say oh I'm going to run this kind of strategy that you have on ethereum right because an ethereum I think you just have a very different landscape so I think that's one thing and yeah I guess you've had a few different experiments on on Cosmos right like for example osmosis where they have

uh basically some in protocol Mev capture where they're you know they're basically running some Meb Bots and then it goes kind of goes back to the stakers and uh mostly and then and then I guess I think in dydx right where we have we've done this report where uh there is a committee that oh wait it's like okay you cannot about it is not allowed right to do basically Meb and then there will be some kind of taking looking at data and trying to detect things and then the ability to have you know slashing of file that is who who do it anyway so these things

feel like pretty straightforward and easy solution that actually solved the problem pretty well for the foreseeable future maybe at some point it will break down in some ways but there it seems like proposal Builder separation it adds a huge amount of complexity uh it doesn't really seem to does it solve the core problems any better than that I don't think so so it doesn't feel like the right way for at least for let's say Cosmos chains now okay you have other things again Solana I don't know difficult it's again very different so yeah I think the one thing that's that PBS is is sort of

validators rejecting their power right in many ways like they're saying like all these systems of that are that do like lunar selection they essentially say wow they're you have you have power you have all the power and like you have to like figure out what to do with it and and PBS is kind of like rejection of this power it's like oh like no we don't want to use this power but we want to get paid for it and we're just going to like give this power to the highest bidder right that's sort of uh that's sort of what it says but is that actually what's like Max you know utility for the end user or is there some other approach to dealing with the power that these these validators

receive and and the leader selection process that uh provides guarantees are more useful for end users and that's you know that's how I would frame what you're discussing if validators opt for constraining the types of activity or types of blocks that they produce based off of some you know slashing mechanism or whatever else you may be able to generate more more utility for for the end users whether it's uh first and first outsystem or um or you know other other sort of rules like I mean even censorship rules at the end of the day are like policies are

enforced by the validators um and so you can come up with sort of a framework for thinking of policies that the validators subscribed to an offer to uh to the consumers of the the block space that they offer so so that was also what you mentioned earlier that this way if you would have this sort of system like different block Builders could serve different constraints for the validators and in that way you centralize more it's that correct yeah exactly yeah very interesting I do think that there was there's this like tendency ride like write what you said with the Dex chain and people saying if you sandwich everyone you're destroyed the project but I guess

at the same time if you delegate to that validator who does it you might get a higher yield right so I guess there's like a sort of issue there where if you if you just do it and then I get to this validator it probably you just benefit and the chain doesn't like go to zero but um yeah I was wondering if if that maybe is what drives it I mean you you could have you could of course have like yeah say hey I'm gonna launch a violator and I'm I'm gonna be like maximum maximization violator and you know maybe you can generate higher returns and maybe people stake with you it's just the challenge is if you have if you have like governance I mean it is very easy then for someone to say hey we're gonna

make a governance proposal and we're gonna say like hey this this guy here he's like messing up our project so I don't know we just slash them or we say this is not allowed or we we take some action that um goes against that I mean I think this is maybe a little bit I guess that's also where the whole app chain world you know can be a bit different from the um ethereum world right ethereum world is really doesn't really allow for that uh and you know pros and cons on that right this of course it tells us its advantages have you looked at Melbourne and do you have thoughts on it

we were gonna ask you for your thoughts on it uh I I don't really have I mean I've I am like aware at the at the highest level of sort of like what it its intention is but I I don't have I yeah it would be great if you could explain first of all what MB burn is and then what your thoughts are and so one of the benefits of PBS is that you have a public price for the value of blocks that are being produced right which is not something that I existed in a pre-mev boost pre PBS world um prior to that you should you could see the amount of transfers to coinbase

that were taking place and you could like you know Summit I guess and like see um out of bounds like what it looks like but that wasn't the price the venue for for the price Discovery to take place right like if a miner wanted to have a different approach to collecting fees like they could do so and it wouldn't reflect the value of the blocks that they produce similarly we sort of saw a lot of miners say like we're only Distributing like block rewards to to the miners in our mining pool and we're keeping all of the Mev rewards to ourselves as like our monetization and in some ways like that was possible because the miners didn't see sort of this one number that said like okay here's like the value of the block that

I mined um you know you just know that the blocker war that was included in that block so now we have we have this public value for for the blocks um and the question is like how does this value get distributed right right now it's sort of left to to the mining pool operators or node infrastructure providers to decide how they want to distribute that to their constituents um most of the time it's they keep a percentage of those rewards and like distribute the rest there's still some incentive to like optimize this in some way and whatever else and there's more and more discussion about like oh maybe

this like value should be redistributed to the network and not necessarily to um to validators so meth burn is essentially saying hey we see this public value is there a way to enforce that this gets burned similar to eip1559 rather than distributed to um to validators there's like intro just from token holders like etholders to do this um and I think there's some arguments for like Network stabilities and stability as to why why why this should be done um for my view it seems to be net negative for for anyone who runs a validator in terms of the yield that

they're going to be able to generate yeah it's interesting it seems it's beneficial for etholders that don't stake right and maybe discourages staking since the yield will be much lower um and I guess I personally also probably saw movie as like one of the revenue sources for moving away from you know inflationary total increase so enough when I think it is similar to what you know I guess in osmosis or or these models where essentially the map is captured by the chain and like redistributed to the Token itself so I know I I think it's it's important that like you know people do steak and infrastructure providers

do run nodes so like somewhere this Revenue has to come from and probably maybe is like a pretty good place for that yeah I guess the questions are also and I think you'll have a much better understanding of this but you know if something like Mev burn was created you know are there ways to kind of Route around that uh you know to through some sort of you know off chain like basically trying to pretend to the chain that this block doesn't have a lot of values that little is burned but actually it has more value that then is distributed in some way between block builders validators in some way yeah what do you what do you focus on that

yes I mean both the AP 1559 and like map burn to me is increasing the uh potential value of collusion is like a way to um to think about it these mechanisms all have some sort of assumption that there's some price to collusion that's that's higher than the benefit of it and you know therefore the collusion isn't going to um to take place it definitely seems to me that with my burn there's a pretty strong incentive to the attempt to bypass it again Nev burn is like there's like a few ideas for how it's it's implemented and and it depends on the

specifics of it and and the model that that is deployed um but the incentive is there is is it significant enough to cause a change in Behavior given both economic incentive and social political incentive I don't know it's to me so like what what does it solve what does math burn actually solve it's not clear I I mean I guess one thing I've heard was more that well if if Mev that it Smooths you know that you don't have like huge returns being made on some blocks and that then this sort of incentivizes more concentration and staking pools or

something because like if you just run a few validators then you know it's going to be very rare that you earn like a lot of money for maybe me and and so but I don't know that I'm not sure that's how convincing they are giving this to me this moves it by removing it right okay so it's like a it's like an entice taking pool thing I heard that as one I think maybe Justin Drake uh gave that as as one explanation for it but yeah I think if you sort of look at it on a high level or maybe we should talk more about that

actually if he loses a area we haven't really talked about we'd love to dive into it a bit so right now you know we talked about block Builders and how they are basically capturing a bunch of value uh but of course we have uh maybe other places where they can happen too right so one would be the wallet uh or another one might be you know let's say some ethereum app that a little bit like what what uh unisop or chaos Opera doing you know to building some kind of thing that also circumvents the Mev I'm curious how do you what do you feel like it's gonna be the role of maybe wallets or some of these other players in the Meb supply network

has always been that um muv is best mitigated at the application layer actually build better applications that deal with Mev you're able to provide better user guarantees and Superior user experience because of that and to me a wallet and an application are are one of the same the venue that the user is interfacing with to um to get their um their preferences expressed um the role there's this like interesting role that the wallets have have played historically which is to be both the assigner and an RPC provider right with like a nice UI around it

um but not really try to provide the um the experience of what the user actually wants to do right let's say you know that's a that's a the metamask thing like we are browser extension we work on all the different apps um we're sort of agnostic to the type of activity that um that you do all we do is we provide the signing we provide the RPC service a lot of Mev now is about oh maybe the RPC service is becoming more complicated there's all these different private venues through which you can route not just to the public transaction pool the type of RPC service that you use and the guarantees that you get from them is more closely tied to the type of

activity that the user is doing and so as an application developer who really cares about the user experience and like really understand what the user is trying to achieve I would be in a better position to understand which RPC to use so how do I negotiate this with the fact that right now that service is being handled by some external product I want to bring that level of control over the user experience within my uh my application there's a bit of a tension between applications and and wallets in this way and so I think that the natural result is we'll see more sort of separation between these things like more applications launch their wallets while wallets have an application feel and sort of integrate the full sort of

user life cycle within their own their own system the role that they play in any views is the same right like they want to provide the best guarantees to their users to retain them increase the level activity that they have that could mean protecting them from mvv it could mean giving them better prices it could mean selling their order flow for monetization reasons there's a bunch of different things that um that applications can do for I I want to ask uh another top like one maybe one last topic here so this is another area that this gets a lot of attention in the moment which is intense

and I mean what are intents we've if we before spoke about this RFQ thing which I think is a great example of an intent right whereas basically someone saying instead of saying you know transaction that's like you know okay do exactly this on chain uh I guess mostly with trades right swap X for y you say like hey uh I want uh I want this kind of outcome you define some sort of criteria for outcomes and then uh and then you know there will be a job for somebody else to figure out what is the best way of satisfying that outcome and you know there's some blockchains that are very much focusing on this I guess like enormous one example but some

others and then of course there's uh intense applications doing things like that in ethereum do you think intense are going to have a major impact on this Mev supply network yes and no I think intents are confusing because the way that it's Being Framed is as opening up like a very broad new set of possibilities in a way that I'm not sure how broad it is there's a quip about intense which is an intent is no longer an intent when it once it has product Market fit so an intent is called like an RFQ if it's like a a swapping uh use case right or an intent is called like a bridge

transaction if it's about going to a different chain so I think intense where there is a need is a like more advanced transaction types that allow for performing types of activities that you aren't able to perform otherwise that constrain the execution space based off of things are either inefficient or have difficult trust boundaries to enforce directly on a layer one and those seem mostly like standards to me an intent that's able to have conditional execution on multiple different chains

um and able to bring constraints on external state is fairly interesting as a sort of a model whether or it will be developed in a generalized case or a specific case um to me is is sort of a key question so in this sort of infinite games uh transaction supply network uh framing of things all these different transaction types all these different message types are being passed around are intense right they are ways of communicating some preferences over what solvers on the other side are doing and how they're

re-aggregating those uh those messages together the exact format and like use cases are all these different messages going to use the same standards for being expressed or are they going to be very use case specific I would tend to believe that it's more likely to be use case specific while like intense can be like a very useful generalized framework for thinking about the um the expressivity of these messages and sort of pushing for more expressive systems I think the development will be use case driven and it'll be about what is this more expressive message type enabling to build as an application

rather than you know the the message type being the the focus cool well thank you so much chiffon for for coming on I think Meb feels like one of these rabbit holes that's just like complex and changing at a really rapid rate and also really fundamental uh for you know how all these systems are going to work in the future so it's really great to you know have you back on and talk about these things I'm excited about the work you're doing in Frontier and and all the all the things are going to come out of that so thanks so much yeah always a pleasure to come back on hope I had a few insights that were interesting absolutely cool thanks so

much and thanks for listening to look forward to being back next week