Updates on previous entry with current changes

docs/_sidebar.md

@@ -4,6 +4,7 @@
 - **Study Group**
 - [EPFsg overview](/eps/intro.md)
 - Schedule
+
   - [Week 0](/eps/week0.md)
   - [Week 1](/eps/week1.md)
   - [Week 2](/eps/week2.md)
@@ -57,9 +58,11 @@
     - Sharding
     - Statelessness
     - Purge
-  - MEV
+  - [MEV](/wiki/research/PBS/mev.md)
     - [PBS](/wiki/research/PBS/pbs.md)
-    - Censorship
+    - [Current State](/wiki/research/PBS/current-state.md)
+    - [mev-boost](/wiki/research/PBS/mev-boost.md)
+    - [Research and Solutions](/wiki/research/PBS/research.md)
   - Proof of Stake
     - [Upgrades](/docs/wiki/research/Beacon%20Chain%20Upgrades.md)
     - SSF

docs/wiki/research/PBS/current-state.md

@@ -22,7 +22,9 @@ Proposer-Builder Separation (PBS) also introduces a more intricate relationship
 1. **Builders:**
    - Builders are specialized entities that focus on constructing blocks with optimal transaction ordering and inclusion. They compete with each other to create the most profitable block for the proposer, taking into account factors like gas fees, transaction priority, and potential MEV (Maximal Extractable Value).
    - Builders do not directly interact with the blockchain. Instead, they submit their constructed blocks to relays.
+   - This submission includes the block's data (transactions, execution payload, etc.) and a bid that they are willing to pay to have their block proposed.
 2. **Relays:**
+   - Relays receive blocks from multiple builders, confirm their validity and submit the valid block with the highest bid to the escrow for the validator to sign.
    - Relays act as intermediaries between builders and proposers. They receive blocks from builders and forward them to proposers.
    - Relays can perform additional functions like block validation and filtering to ensure that only valid and high-quality blocks are sent to proposers.
    - Some relays may specialize in specific types of blocks, such as those with high MEV potential.
@@ -31,12 +33,39 @@ Proposer-Builder Separation (PBS) also introduces a more intricate relationship
    - Once the proposer selects a block, they propose it to the network for validation and inclusion in the blockchain.
    - Validators are still responsible for securing the network and ensuring consensus on the blockchain's state.
 
+This whole process is illustrated in the figure below. See [Flashbots' docs](https://docs.flashbots.net/) for further explanations.
+
+<figure style="text-align: center;">
+  <img src="../../images/mev-boost-architecture.png" alt="MEV-Boost architecture">
+  <figcaption style="text-align: center;">Outline of the communication between the MEV-Boost PBS participants. Source: <a href="https://ethresear.ch/t/mev-boost-merge-ready-flashbots-architecture/11177">ethresear.ch</a></figcaption>
+</figure>
+
 This separation of roles creates a more dynamic and specialized block-building process. Builders can focus on optimizing block construction and extracting MEV, while proposers can focus on selecting the best block and maintaining network security.
 
-However, this new relationship also introduces new challenges:
+However, this new relationship also introduces new challenges.
+
+### Relay Concerns
+
+A case can be made that relays oppose the following Ethereum's core tenets:
+
+- Decentralization: The fact that [six relays](https://www.relayscan.io/overview?t=7d) handle 99% of MEV-Boost blocks (that being nigh on 90% of Ethereum's blocks) gives rise to justified centralization concerns.
+- Censorship resistance: Relays _can_ censor blocks and, being centralized, can be coerced by regulators to do so. This happened, for instance, when they were pressured to censor transactions interacting with addresses on the [OFAC sanction list](https://home.treasury.gov/news/press-releases/jy0916).
+- Trustlessness: Validators trust relays to provide a valid block header and to publish the full block once signed; builders trust relays not to steal MEV. Although betrayal of either would be detectable, dishonesty can be profitable even through a one-time attack.
+
+### Third party dependency
+
+On a similar note, the fact that PBS entails outsourcing the building of the blocks to entities that do not directly participate in Ethereum consensus could potentially lead to unexpected or unwanted consequences stemming from relying on third parties, such as trust issues, operational dependency and the introduction of single points of failure. Particularly the fact that the use of MEV-Boost is so widespread could be viewed as a dangerous third party dependency, since such a huge portion of Ethereum's new blocks are created using Flashbot's software.
+
+### Security Concerns
+
+As seen in this entry, PBS involves many different entities taking part in the process of adding new blocks to the chain, which inevitably increases the number of potential attack vectors that could be exploited.
+
+As opposed to vanilla block creation in which the validator builds the block and adds it to the chain, PBS brings to the table many possible points of failure, such as the relays or escrows, which could potentially act maliciously or fail in their mission to provide data availability, disrupting the block proposal process, favoring certain builders, etc. Also, the commit-reveal scheme in escrows, if exploited, could give rise to MEV opportunities being stolen from the rightful block builders, undermining their performance.
+
+Of course, validators are still in charge of verifying the data in the blocks to make sure that builders adhere to the rigorous standards that make the Ethereum protocol robust. Thus, the aforementioned concerns are not likely to cause critical issues like the network halting. Nonetheless, the potential for these possible vulnerabilities to impact the fairness and security of block production suggests that they should not be overlooked and further research should be done to have them prevented.
+
+### Undermined Censorship Resistance
 
-- Security: Introducing new actors and dependencies can create new attack vectors and vulnerabilities.
-- Centralization: If only a few powerful builders or relays dominate the ecosystem, it could lead to centralization and censorship concerns.
-- Coordination: Effective communication and coordination between builders, relays, and proposers are crucial for the smooth functioning of PBS.
+Another issue builder centralization might bring is putting at risk Ethereum's censorship resistance and integrity, as these dominant builders could, in theory, collude or be coerced into manipulating transaction flows or excluding specific transactions from being included in blocks, undermining the open and permissionless nature of the Ethereum network.
 
 It's important to note that the specific roles and responsibilities of relays and builders may vary depending on the specific PBS implementation.

docs/wiki/research/PBS/mev-boost.md

@@ -23,6 +23,19 @@ Here's how mev-boost works:
    Validators running mev-boost software act as proposers. They receive blocks from relays and choose the best one based on predefined criteria, typically the block that offers the highest reward.
    The proposer then proposes the selected block to the network for validation and inclusion in the blockchain.
 
+## PBS Block Creation
+
+The process of block creation through PBS works as follows:
+
+### Block Construction
+
+- Builders continuously monitor the transaction pool (mempool) for new transactions. They assess these transactions based on potential MEV opportunities. They select the transactions that best align with their MEV optimization criteria. Also, block builders can take transaction bundles from private orderflows, or from MEV searchers, just as miners did in PoW Ethereum with the original Flashbots auctions. In the latter case, builders accept sealed-price bids from searchers and include their bundles in the block.
+- Once the transactions are selected, builders assemble them into a block ensuring that the block adheres to the Ethereum protocol's rules, e. g., txs are valid, the gas limit is not surpassed.
+
+### Block Auction
+
+Instead of builders directly offering their assembled blocks to validators with a specified price, the standard practice is to use relays. Relays validate the transaction bundles before passing them onto the proposer (validator). Also, implementations can introduce escrows responsible for providing data availability by storing blocks sent by builders and commitments sent by validators. The auction process works as follows:
+
 ### Benefits of mev-boost:
 
 - **Increased validator rewards:** By outsourcing block building to specialized searchers, validators can potentially earn higher rewards through optimized transaction ordering and MEV extraction.
@@ -41,7 +54,3 @@ Ongoing research and development are focused on addressing these challenges and
 
 It's important to note that mev-boost is just one implementation of PBS. Other implementations with different designs and features are also being developed and explored.
 Overall, mev-boost represents a significant step towards realizing the potential benefits of PBS in Ethereum. However, continuous research and development are crucial to address the challenges and ensure a secure, decentralized, and efficient implementation.
-
-### Challenges and Solutions
-
-PBS presents several challenges, including potential security vulnerabilities and the risk of centralization. Ongoing research focuses on addressing these concerns through innovations such as enhanced PBS (ePBS), inclusion lists, and the Proposal Eligibility Proposals Committee (PEPC).

docs/wiki/research/PBS/mev.md

@@ -1,4 +1,19 @@
 <!-- @format -->
 
-Maximal Extractable Value (MEV) refers to the profit miners or validators can earn by strategically ordering, including, or excluding transactions in a block. In Ethereum, MEV has gained greater attention as validators extract increasingly more value, especially in DeFi (Decentralized Finance) applications. This can lead to negative consequences, such as frontrunning, increased transaction fees, and unfair advantages for large-scale miners or validators.
-Proposer-builder separation can change the dynamics of MEV extraction in that there could be a redistribution of MEV between the two roles, potentially changing the incentives and rewards associated with each. Since block builders are responsible for transaction ordering and inclusion, they may develop new strategies or promote increased competition that could result in more efficiency and fairer distribution of MEV across the network.
+# Maximal Extractable Value (previously Miner Extractable Value)
+
+Maximal Extractable Value (MEV) refers to the the maximum value that can be extracted from block production beyond the standard block reward and gas fees by strategically ordering, including, or excluding transactions in a block.
+
+In Ethereum, MEV has gained greater attention as validators extract increasingly more value, especially in DeFi (Decentralized Finance) applications. This can lead to negative consequences, such as frontrunning, increased transaction fees, and unfair advantages for large-scale miners or validators.
+
+[Proposer-builder separation (PBS)](/wiki/research/PBS/pbs.md) can change the dynamics of MEV extraction in that there could be a redistribution of MEV between the two roles, potentially changing the incentives and rewards associated with each. Since block builders are responsible for transaction ordering and inclusion, they may develop new strategies or promote increased competition that could result in more efficiency and fairer distribution of MEV across the network.
+
+## Evolution of MEV
+
+Maximal Extractable Value (MEV) originated during the proof-of-work Era, where it was known as "Miner Extractable Value." This terminology reflected the miners' ability to influence transaction processes, including their inclusion, exclusion, and sequencing. Following Ethereum's transition to proof-of-stake with The Merge, validators have taken over these critical functions, rendering mining obsolete within the protocol. Despite these changes, the mechanisms for value extraction remain in place, leading to the adoption of the term "Maximal Extractable Value" to address these activities.
+
+Although MEV has been around since the inception of Ethereum, it gained significant attention with the Rise of DeFi and Introduction of Flashloans. In the early days, MEV opportunities were primarily seized by outbidding rivals in the public mempool, marking the era known as Priority Gas Auction or PGA. Details about this chaotic era is captured in [Flashboys 2.0](https://arxiv.org/abs/1904.05234).
+
+In the Post-Merge world, the concept of Miners ceased to exist. Validators were now the entities responsible to add blocks to the chain. Anticipating the changes after The Merge, Flashbots, alongwith the client teams and the Ethereum Foundation commenced the development of [mev-boost](/wiki/research/PBS/mev-boost.md). mev-boost is an out-of-protocol implementation of Proposer-builder Seperation.
+
+See the [Next Section](/wiki/research/PBS/pbs.md).