Constitutional AIP: Proposal to adopt Timeboost, a new transaction ordering policy

[opmichael]

I think this is a really interesting mechanism but I would love to see more discussion on the following scenario from the @chaoslabs report:

@chaoslabs

Example of potential Timeboost Ordering MEV on liquidation:

1. The express lane owner identifies a liquidatable account on a perpetual futures protocol.
2. The express lane operator maximizes their profit by executing a sandwich attack, taking advantage of their 200ms latency edge (or however Timeboost is configured). This predictability allows them to execute the liquidation unopposed and complete the sandwich strategy:

• They first sell a large number of perpetual contracts on the relevant market, driving the price lower by either consuming order book bids or impacting the protocol’s pricing inputs, such as open interest imbalance.
• They then liquidate the account, further pushing the price downward.
• Finally, they close their position by buying back the contracts at the now-lower price.
• As a result, users receive less collateral after the liquidation than they would have if the sandwich attack hadn’t occurred.

Wouldn’t this create a massive risk for anyone holding a leveraged position or a stop-loss order?

Also worth noting that MEV in general thrives when there is a lot of chaos and volatility in the market. When a single player can capture all MEV for a full 240 blocks on Arbitrum One, doesn’t this provide a big incentive to create chaos onchain (breaking stablecoins, liquidation cascades, etc)?

I fully realize that I may be missing something here but I’d love to know if these kinds of attacks have been considered.