The Blocknative team is live at ETHDenver to meet with BUIDLers and the community at large. We’re soaking in all the discussions and will be highlighting a few of our favorite presentations from each day. Be sure to check back tomorrow for a new round of topics and follow us @Blocknative on Twitter for live updates!
Day 2 Highlights
Block Building and MEV: What’s Now, What’s Next & #ShareTheMEV
MEV continues to be a hot topic for the industry and it is a primary focus for Blocknative as well. Our CEO Matt Cutler led this talk on the post-Merge block building landscape and how the modularity it has enabled can lead to a more equitable future for MEV.
Why it Matters:
Since The Merge, MEV has emerged as a more foundational force in the Ethereum network. Today, the value MEV produces flows away from the transaction originators that create the opportunity - end users, dapps, wallets, and more. That does not need to be the case. Block Builders now have the opportunity to take recirculation of value into consideration when building blocks. Instead of giving the proceeds from MEV all to the validator, they can instead choose to share it with the transaction originators.
- MEV has become a more important factor in the Ethereum ecosystem after The Merge due to the issuance reduction of ETH that occurred with the shift to Proof-of-Stake. The relative economic influence of MEV is high because it is a key revenue source for validators.
- There are interesting dynamics at play with the economics of MEV-Boost that not everyone predicted pre-Merge. For instance, there is a lack of relay diversity for certain large stakers and many block builders are subsidizing blocks for inclusion. Further discussions are needed around the best ways to improve and innovate this space for maximum decentralization.
- One area where Blocknative is looking to lead the charge is with our new project Wallet-Boost. It represents our proposal for a new protocol that will enable wallets to recirculate MEV back to users.
- We are also paying attention to research spaces beyond MEV including products to optimize access to blockspace. New, modular, pre-chain layer capabilities are coming to Ethereum and we look forward to providing the infrastructure that will support these advancements.
Commitments and privacy in the MEV supply chain
Flashbots are a research and development organization at the frontlines of mitigating the externalities that MEV poses for Ethereum. Flashbots Head of Product Bert Miller led this presentation that reviewed what has been learned from the launch of MEV-Boost and how the community can apply these lessons to future development efforts.
Why it Matters:
MEV creates a centralizing force on the Ethereum network due to the sophisticated nature of the task. Flashbots believes that two potential outcomes can come from this centralizing force: MEV dystopia or MEV utopia. They believe the path to MEV utopia must be taken by enabling trustless collaboration and maximizing competition in the MEV supply chain.
- The path to MEV utopia is not easy. MEV-Boost is a case study the community can learn from because MEV-Boost was able to successfully unbundle certain pieces of the MEV supply chain in a permissionless manner with block builder privacy guarantees, data revealing guarantees, selective data sharing, and economic commitments.
- Now that MEV-Boost has solved the supply chain issues in communication between builders and validators, other areas of the chain need focus. In particular, Flashbots believes that their new proposal MEV-Share can bridge the gap between searchers and users by introducing the concept of a "matchmaker" in the same way MEV-Boost introduced the MEV relay.
- There are still gaps to fill in fully decentralizing the MEV supply chain picture so Ethereum can reach MEV utopia. SUAVE is Flashbots' project to create a fully permissionless and transparent ecosystem for MEV extraction.
Staked ETH Withdrawals: A Step-By-Step Overview
Ethereum's Shanghai update that enables staked ETH withdrawals is right around the corner. Christine Kim of Galaxy gave a presentation on the technical underpinnings of staking withdrawals and the essential facts that validators need to understand.
Why it Matters:
Many people understand that Ethereum staking withdrawals are important, but there are surprising nuances in how they will function that many validators or potential new stakers may not understand. Because staking is responsible for the health of the network and withdrawals will be closing the loop in the validator lifecycle, network actors must be fully informed regarding the process.
- There will be two types of withdrawals available to validators on Ethereum: full withdrawals and partial withdrawals. Partial withdrawals will happen automatically and be set to a specific Ethereum address designated by the validator once every ~100 hours. Full withdrawals will represent complete exits from the Beacon Chain of a validator's entire 32 ETH stake.
- Because the system for withdrawals was not set in stone at the beginning of the Beacon Chain's launch, many validators do not have a withdrawal address set that can receive these partial withdrawal payments. It must be a specific type of address and, for validators that have not properly set it, they will need to update after the Shanghai upgrade is completed. This one-time process is critical to receiving their rewards and if it is not set properly, validators will need to exit and restake to set the address once again. Full information can be found here.
Staked ETH Withdrawals: Expectations & Associated Risks
Christine Kim of Galaxy followed up her solo presentation on the technical aspects of withdrawals with an excellent withdrawals panel featuring a number of staking ecosystem experts. It included Nixorish from EthStaker, Alex Stokes of the Ethereum Foundation, Pablo Villalba from Diva, and Darren Langley of Rocket Pool.
Why it Matters:
How the Ethereum staking economy will react to the ability to withdraw from the Beacon Chain is one of the biggest question marks facing the industry. Because staking is responsible for the health of the network, understanding what to prepare for allows staking protocols, infrastructure providers, and users to safely prepare for this unknown. This panel offered an inside look at how developers, protocol designers, and average users are collaboratively approaching Shanghai.
- Nixorish shared that, from what EthStaker is hearing, most solo stakers are not planning to withdraw from the chain as they view their operations as long-term investments and commitments to the health of the network.
- Darren stated that Rocket Pool is prepared for full withdrawals, but that further work will be needed to meet the needs of partial withdrawals. However, they should have no problem meeting the Shanghai deadline.
- Because the Shanghai upgrade is contributing the final piece of the puzzle in the validator lifecycle, liquid staking token (LST) providers and distributed validator technology (DVT) projects are able to move full speed ahead with technology to further decentralize and lower the barrier to entry for participation in Ethereum validation.
- Validation has become more complex than when the Beacon Chain was first launched, and questions were raised regarding whether or not this should be a concern to the community. It was made clear that this is something worth monitoring, but also that there are items on the Ethereum roadmap designed to also lower the barriers to entry for validation.
- Alex Stokes made it clear that, while the Shanghai upgrade is a significant undertaking, the Ethereum development community is not as nervous as they were when completing The Merge. He noted that the robust testing and review process that was put in place to allow The Merge to happen seamlessly is now a powerful tool in the development community's toolkit when approaching big technical changes such as Shanghai.
- All panelists agreed that the future of decentralizing Ethereum's validator set will depend on improving the UX of becoming a validator and lowering barriers to entry for potential participants in the community.
Blockchain 201: A Deep Dive Into Transaction Machines
Blocknative Chief of Staff Sean O'Connor took to the ETHDenver Bunny Slopes stage to give a presentation on how to better understand blockchains by viewing them as transaction machines.
Why it Matters:
Despite the huge success of the web3 industry, many new users still struggle to understand why this technology is important. Breaking blockchains down to their more basic form (machines for transactions) allows new participants to understand the efficiency gains in using this exciting new technology.
- While most people may not understand the concept of a "protocol", you've likely used one recently. For example, email runs on the SMTP protocol. It is an agreed-upon industry standard for sending messages over the internet. Blockchains are simply another type of protocol, but in this case, they are used for sending transactions.
- This is important to fulfilling the original vision of the internet because payments were intended to be a part of the protocol, but were never built. With blockchains, we now have a way of seamlessly integrating payments within the web.
- Web3 is allowing users to own their data and to choose how it is shared, as opposed to the current Web2 model where centralized conglomerates control user data.
- NFTs and DAOs represent the next frontier of how these transaction protocols will change human interactions online (and offline). There are massive opportunities for those who are willing to embrace this exciting new world!
Blocknative Highlights of the Day
Naps are one of the best ways to make it through @EthereumDenver. Highly recommend the ZenZone if you haven’t been.— Joules | thisisjoules.eth (@ThisIsJoules) March 3, 2023
Stop by the @blocknative booth and say hi if you’re here! pic.twitter.com/Rm2zPmUtgP
It wouldn’t be @EthereumDenver without the MEMES! 🤪— kaleb leija @ETH denver (@kalebjake) March 3, 2023
Awesome to catch @aseoconnor’s super-informative and meme-filled prez this morning at the #ETHDenver Bunny Slopes stage
Also - love that custom @blocknative swag shirt! pic.twitter.com/qQn7niCfsC
Keep Track of ETH Denver on Social
- Official 2023 Hashtags:
- #ETHDenver #BUIDL #CommunityInnovationFestival #YearoftheSpork
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Whether it's boosted MEV rewards for validators, programmable infrastructure for builders and searchers, or our Web3 Onboard for dapps and wallets, we provide real-time infrastructure that's helping shape the bright future of Ethereum. Our team will be at ETHDenver in force and we want to meet with you to hear what you're building with Blocknative and how we can help. You can schedule time via the form at the bottom of our official ETHDenver page.
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