Flashbots Community: Does not support Ethereum reorganization, which is not good for all players in the space

Source | Flashbots

Author | Philip Daian

Translator's Note: According to the Ethereum Foundation blog post "Chain Reorganization Depth Expectation", reorganization (reorg) refers to when a node in the Ethereum network finds that the part it thought was the authoritative chain no longer belongs to the authoritative chain, and the transactions that no longer belong to the authoritative chain will be rolled back and replaced transactions will be executed. On July 8, a member of the Flashbots community named Edgar Aroutiounian created a personal codebase on Github that coded how to facilitate payments to miners to destabilize blockchain consensus. Shortly thereafter, Twitter user “0xbunnygirl” announced their own codebase called “Request for Reorg” for extracting MEV via block reorganization. This article is Flashbots' response to the incident.

Recently, there has been a lot of discussion in the Ethereum community about "chain-reorgs-as-a-service", including its relationship with MEV, ETH2's merger (The Merge), and other important ecological developments.

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Restructuring is a negative-sum game

Frankly speaking, we think that the miner reorganization will only end up being a negative and unstable game, hurting all participants in the crypto world. The following is an approximate, non-exhaustive list of reasons:

• Erosion Settlement Guarantee: With the reorganization, more confirmations are required for a given blockchain transaction, which means that the Ethereum network becomes less secure and less stable against attackers. This hurts everyone who uses this network to transfer value, including users, developers, and miners.

• System benefit: Reorganization events may also reduce cryptocurrency prices, possibly through attacks, instability of external or centralized infrastructure, or a malicious PR. This could affect all cryptocurrencies whose prices are linked, not just the hacked blockchain.

• Miners' income decreases: Generally speaking, everyone thinks that the role of miners is to receive block rewards and provide network security. But by actively attacking the network for short-term gains, miners accelerate their migration to other systems that may reduce miner influence. As an example, after Ethereum was hacked, other blockchains that also had MEV might want to purge miners.

• HurtFlashbot: We believe a two-sided MEV market that takes into account both miners and searchers is the key to democratizing and illuminating the MEV world. Reorganization allows Seekers to modify, reorder, censor, or possibly steal transactions or bundles of transactions, to the detriment of Flashbot's bots and miners. In doing so, reorganization reduces long-term miner profitability by reducing the efficiency of the extraction engine responsible for generating MEV. We believe that in the long run, a positive-sum game of value extraction can be achieved in Flashbots. Our current searchers and miners are separated, which can bring a democratic, independent, and permissionless ecology to MEV, and these are the values ​​we want to focus on protecting.

• Game Theoretic Instability: There is absolutely no game-theoretic analysis behind the reorganization. Consider an example of a subset of reorganized metagames—selfish mining. In order to understand how to optimize reorganization, it is necessary to understand how to optimize selfish mining with static rewards. Although this is an unsolved problem! Recent research has shown that selfish mining goes from profitable to unprofitable when most miners engage in selfish mining, and the same is almost certainly true for all miners involved in restructuring. Therefore, any miner attempting to use this strategy can only be profitable at best until others also participate.

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Reorganization issues are easily resolved

There are many protocol-level, social-level, and technical-level measures that the community can deploy to thwart this attack and greatly increase the likelihood that it will amount to a cash burn. Subjective fork selection rules, more complex rules to dampen new forks, exchange-level measures to suspend deposits during prolonged reorganization events, and more expedients to question the profitability of reorganizations.

Additionally, the Ethereum community has a notable mitigation strategy: accelerated merges. In a reorganized environment, if in order to ensure the security of the system, it will be forced to deploy the proof of stake hastily, so that all miners in the system, including miners who use hardware to try to achieve reorganization attacks, will lose money, because when it is necessary to safely deploy the merger They will lose months of income while testing.

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The Flashbots Promise

We reiterate that Flashbots was created to democratize MEV,and mitigate MEV’s negative externalities on Ethereum and its users. Achieving our goals requires aligning the incentives of every actor in the cryptocurrency ecosystem and building a sustainable long-term future for programmatic finance that can survive the merger. This requires a sustainable incentive structure for users, dapp developers, protocol developers, miners, arbitrageurs, bot operators, and researchers.

To protect these norms, and in the spirit of our mission statement, we commit to the following public actions in the near and mid-term future:

• Product Stability Development: We will investigate the possibility of releasing a complementary or combined product with MEV-Geth, aimed at improving network stability. This includes researching and advocating fork choice rules that inhibit or penalize reorganization, working with client developers and researchers on incentive issues, and implementing market design changes that align the incentives of existing participants with the long-term protection of a democratic market for MEV. harmonize with one goal.

• Protect two-sided markets: The marketplace for Flashbots is key to the democratization of MEV. We are committed to ensuring that searchers and miners who act honestly in this system are treated fairly and rewarded fairly. While we cannot be sure what enforcement will look like given the decentralized nature of our system, we are committed to spending our resources on technical and political changes that ensure the existence of two-sided markets and protect them.

• light up the dark forest: We are committed to providing reorganized data to the entire community. There are no answers to open questions about whether restructurings are already taking place, whether they are benign or malicious. We are committed to investigating the impact of the reorganization on miners, searchers, users and other participants in the ecosystem, quantifying any harm the reorganization may have done to the Flashbots market and Ethereum users in general.

• study the future: It is believed that the upcoming ETH2 merge will significantly mitigate reorganization attacks due to its use of a prover-based fork selection rule. We commit to further research on this, and to express our position and give a clear answer on how much risk of reorganization remains after Eth1 transition to Eth2, and how much coordination is required to achieve such an attack.

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Flashbots as an Antifragile Research Collective

Some people in the community thought that Flashbots supported reorganization. While there are contributors and users in the Flashbot ecosystem who take this stance, it's not the Flashbots stance.

As a collective, we support individual freedom and self-expression. There are many people in the Flashbots community who are not affiliated with the Flashbots organization, and many people who are affiliated with the Flashbots organization also have projects and work outside of Flashbots.

We don't think constraints on talent are appropriate for open source development, especially in adversarial environments. We also encourage our members to leave the Flashbots collective at the appropriate time to pursue work that is inconsistent with, or even conflicts with, Flashbots, and our organizational structure is designed to facilitate this easy exit.

As mentioned, we don't think there will be room in our organization to develop retooled clients right now. There is no Flashbots-approved restructuring client, and we do not currently have, and do not plan to allocate resources to, the development of such clients. We have and will continue to encourage anyone wishing to develop such a client to leave via our easy opt-out mechanism.

Note that running unlicensed modifications or forks of the Flashbots code is risky, as Flashbots spends considerable engineering resources ensuring the stability and security of its modifications to consensus clients. We would never recommend modifying or running any modified version of the Flashbots code without the proper level of validation.

Due to the diverse and ever-changing nature of our collective, we encourage all members of the community to follow our official accounts on Medium, Github, and HackMD to stay updated on the latest work on behalf of the Flashbots research collective.