Centralization in Block Building and Proposer-Builder Separation
Fuente:
arXiv
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Preprint |
| Published: |
2024
|
| Subjects: | |
| Online Access: | |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1866910304853557248 |
|---|---|
| author | Bahrani, Maryam Garimidi, Pranav Roughgarden, Tim |
| author_facet | Bahrani, Maryam Garimidi, Pranav Roughgarden, Tim |
| contents | The goal of this paper is to rigorously interrogate conventional wisdom about centralization in block-building (due to, e.g., MEV and private order flow) and the outsourcing of block-building by validators to specialists (i.e., proposer-builder separation):
1. Does heterogeneity in skills and knowledge across block producers inevitably lead to centralization?
2. Does proposer-builder separation eliminate heterogeneity and preserve decentralization among proposers?
This paper develops mathematical models and results that offer answers to these questions:
1. In a game-theoretic model with endogenous staking, heterogeneous block producer rewards, and staking costs, we quantify the extent to which heterogeneous rewards lead to concentration in the equilibrium staking distribution.
2. In a stochastic model in which heterogeneous block producers repeatedly reinvest rewards into staking, we quantify, as a function of the block producer heterogeneity, the rate at which stake concentrates on the most sophisticated block producers.
3. In a model with heterogeneous proposers and specialized builders, we quantify, as a function of the competitiveness of the builder ecosystem, the extent to which proposer-builder separation reduces the heterogeneity in rewards across different proposers.
Our models and results take advantage of connections to contest design, Pólya urn processes, and auction theory. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2401_12120 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Centralization in Block Building and Proposer-Builder Separation Bahrani, Maryam Garimidi, Pranav Roughgarden, Tim Computer Science and Game Theory Cryptography and Security Distributed, Parallel, and Cluster Computing Theoretical Economics The goal of this paper is to rigorously interrogate conventional wisdom about centralization in block-building (due to, e.g., MEV and private order flow) and the outsourcing of block-building by validators to specialists (i.e., proposer-builder separation): 1. Does heterogeneity in skills and knowledge across block producers inevitably lead to centralization? 2. Does proposer-builder separation eliminate heterogeneity and preserve decentralization among proposers? This paper develops mathematical models and results that offer answers to these questions: 1. In a game-theoretic model with endogenous staking, heterogeneous block producer rewards, and staking costs, we quantify the extent to which heterogeneous rewards lead to concentration in the equilibrium staking distribution. 2. In a stochastic model in which heterogeneous block producers repeatedly reinvest rewards into staking, we quantify, as a function of the block producer heterogeneity, the rate at which stake concentrates on the most sophisticated block producers. 3. In a model with heterogeneous proposers and specialized builders, we quantify, as a function of the competitiveness of the builder ecosystem, the extent to which proposer-builder separation reduces the heterogeneity in rewards across different proposers. Our models and results take advantage of connections to contest design, Pólya urn processes, and auction theory. |
| title | Centralization in Block Building and Proposer-Builder Separation |
| topic | Computer Science and Game Theory Cryptography and Security Distributed, Parallel, and Cluster Computing Theoretical Economics |
| url | https://arxiv.org/abs/2401.12120 |