Description
When the proposer commits to a block hash and a builder, the builder essentially obtains a “free option”, i.e., they can decide either to deliver or not the payload when they are supposed to. The builder could set up a profitable trade in their block, and decide not to execute it by not delivering the block. We could as a result have a lot of missed execution slots from builders who choose to exercise the option to not reveal their payload.
Mitigations
- The builder incurs the cost of their bid, so the option is not free, but the price of this option may be orders of magnitude lower than the payoff from not executing the trade after all. If all builders internalize this option into their bidding strategy, in equilibrium, one would expect the price of the option to be commensurate to the payoff.
- To analyze the frequency of missed execution payloads, it is only relevant to look at when a builder might withhold their block or not. This is independent of the price of the option.
- Time-aware base fee calculation (a.k.a. EIP-4396) could help recover lost throughput gracefully.
Resources