Additionally, we have edited the first post and included more details under the Specifications section.
Access to the express lane would be auctioned off in one-minute rounds, with the auction happening 15 seconds before the round begins. Bids are kept private until after the bid submission deadline, and the auction winner will pay the same price as the second-highest bid of that round. There are two reserve prices, which determine the minimum bid one can place, that are configurable by the DAO. The first is a “minimum reserve price,” which is set by governance. The second is a “current reserve price.” An address designated by governance can call the auction contract to change the current reserve price to any value greater than or equal to the minimum reserve price. To start, the proposed minimum reserve price is 0.001 ETH or 3 ARB per round (depending on what currency the DAO votes to collect bids in), and there is no address designated to change the current reserve price. The reserve prices are only meant for establishing a minimum bid, and does not represent what the expected value of the express lane will be. There are two main components that facilitate the express lane auction:
We are definitely excited to see Timeboost will be introduced to mitigate the issues around the L2 MEV landscape and actors while appropriately capturing the revenue opportunity and/or introduction to the burning mechanism for the ARB token.
We are generally in favor of Option 1 in terms of the auction proceeds. We believe the current priority for the DAO is to sustainably manage the DAO treasury as we are currently discussing the Arbitrum gas fee and sequencer revenue. We also like the “split profits” option @DisruptionJoe suggested too, but we consider it the best to keep the ratio of the ETH collection much more than the ARB burning for the short term anyway.
When it comes to the implementation and integration, we would suggest the team to look into what FastLane has been working on as the idea of introducing an Express Lane is very similar to their approach. (Ref: Alex’s post, Disclaimer: Tané’s investment arm is an investor of FastLane)
It might be worth thinking about collecting bids in ARB?
This will make it necessary for MEV to hold the token ARB and thus it will increase the price of the ARB token.
In any case, it is necessary to carry out some justification for the options. What are the pros and cons of each solution. But I still believe that burning tokens is a thing of the past and it’s no longer worth doing that.
It depens , there are offesting incoming unlocks to be liquidate as well , dear @cp0x burning is also a tools , that keep
EIP1559 monetary policies align with the interest of the ultrasound features of gaz . Think more like tools that is can be use as monetary policies when it is needed (for contraction & expansion of the supply). To keep stuff in check .
“Access to the express lane would be auctioned off in one-minute rounds, with the auction happening 15 seconds before the round begins.”
Does it mean we expect searchers to bid continuously in advance, expecting opportunities to happen 1m later, rather than “in real time” opportunities (I see something → I submit an arbitrage tx with priority)?
Blockworks Research will be voting in favor of the option to COLLECT ETH
We approve of Option 1, especially since the DAO is currently lacking treasury diversification. As we have stated elsewhere, the BoLD validator bootstrapping will take half of the DAO’s current ETH, leaving us in a position to replenish.
Understandably, we recognize the potential for driving value to ARB, though, we believe the DAO should prioritize replenishing reserves in ETH, before introducing value accrual mechanisms. That consists of stablecoins and ETH. We can better lay out the path for ARB once we begin to lay out expenses in stablecoins and gain staking yield from ETH. The DAO should be in a stronger position with its treasury before launching other initiatives with ARB. Moreover, the clarification about governance being capable of setting the min bid price is attractive, and should be revisited on a later date.
We are in favour of adopting Timeboost and will be supporting the option to collect bids in ETH. Our preference for collecting bids in ETH is twofold:
For prospective auction bidders, dealing solely with ETH for both transaction fees and auction bids offers a simpler & more predictable experience.
Collecting ETH provides greater optionality for the DAO.
On point 2, we are strong advocates for efforts that continue to grow Arbitrum’s Treasury in non-native tokens. The DAO has high expenses which consistently lead to large outflows of ARB resulting in large selling pressure. By collecting ETH vs burning ARB the DAO grows its treasury, diversifies its treasury, and most importantly provides optionality for future expenditures, staking programs, yield generation, etc.
We can always buy back and burn ARB if we collect bids in ETH, but we can’t grow the treasury in a diversified manner if we collect bids in ARB.
In discussing this at EthCC, I realized many didn’t understand why I’d suggest this solution.
Collecting ETH fees pays out 1:1 - there is not difference in the speculative ferver us collecting ETH fees will pay and the value collected.
However, even a small amount of ARB utility is a strong market signal at a smart time saying we are willing to find ARB utility. This could payout 10:1 - or at least more than 1:1. It is a unique opportunity I think we should consider.
I am in favor of adopting the timeboost proposal and will be voting for the option to collect ETH. Why ETH?
When we talk about burning in general, it means we are sharing value or dividends with all token holders, including speculators and those who don’t care about the protocol or the DAO at all. Although this is a great way to avoid regulatory hurdles and create a burning narrative within the community, it will result in leaking value to the speculators. At some point, we can decide to do so, but it requires a rich treasury. Considering the 50% allocation of our ETH treasury to the BOLD validator, helping toward the diversification and strengthening of the treasury would be a more efficient option and will have a more positive impact and flexibility on the DAO.
I don’t see much difference. If ARB is burned, arb gains value and the amount of ARB that will go from Dao decreases again. As a result, payments are made on a certain $ scale. For example, need $100M and $arb is $1. Then you need to spend 100M $arb. If $arb is $2 then you will spend 50M $arb.
On the other hand, the collection of fees as $eth will create a second topic of discussion. What should we do with the collected $eth, should we distribute it to stakers, should we buy arb, should we buy $arb and burn it? There will be a lot of discussion. Instead, burning $arb is simpler and will contribute to the value gain and block to spend much arb from Dao.
Buyback and burn are mechanism that, economic wise, usually work better in bear markets: it basically creates a constant bid that helps the price. But is not properly perceived by users compared to a direct distribution of incentives. We can see this example in rollbit that, despite having a huge buyback and burn mechanism, is having poor but also kinda stable-ish price action performances.
On the other side, collecting in ETH does indeed need the adding of a second step if we want to accrue this revenue back to holders, either through a staking program, an investment program or others.
As it is now, collecting in eth and later deciding how to utilize it could be the idea that gives us more optionality.
Hey everyone, here are the follow up responses to the new questions that have not been previously addressed.
Timeboost is at the beginning of the governance process and must undergo forum discussion here, a Snapshot vote, and an onchain vote (Constitutional AIP) before being adopted on mainnet. Collecting feedback from potential participants and the community is essential throughout the governance process. Changes to the design and/or implementation may be made to address feedback and impact the timelines.
It is worth clarifying that the participant would have to predict the amount of MEV generated between 15s and 1min 15s in the future - not 1 minute later. This is because the auction is closed and resolved at a maximum of 15 seconds before the start of the next round (in the current proposal). Willing participants are expected to bid continuously for the right to use the express lane in advance so that they (the participants) can profit from both (1) MEV opportunities they predict between 15s and 1min 15s in the future and (2) MEV opportunities in real time during the period of time that the participant is in control of the express lane (proposed duration: 1 minute), if the participant wins the auction. If the participant does not win control of the express lane, opportunities that they see in real time can still be exploited, but with a 200ms delay like all other txns (since only the express lane controller has experiences no delay for their txns).
We acknowledge FastLane’s work and the perceived similarity in approach, but we believe the design of Timeboost is fundamentally different from FastLane’s design. We further believe that both designs were aimed at solving different problems. It is our understanding that FastLane sold advantage separately for each AMM market and in txn propagation among peers. Timeboost, on the other hand, sells an advantage in txn inclusion timing and therefore sells the opportunity to profit from MEV altogether.
I have a question about how the formula used to get the timeboost value came about. According to your outdated article, the formula looks like a reversed exponential decay function.
I am wondering if there are any technical details about how this function was created. Was it a simple design choice, or were there specific reasons for not choosing a sigmoid function or something similar?
The design outlined in the original Mar 2023 blog post (that features the aforementioned formula for the “time boost”) has evolved and is completely different than the one outlined in this AIP. This change in design is an outcome of further research conducted by the Offchain Labs team. We believe the new design (i.e. the current approach) leads to more efficient DeFi markets because it allows faster block times.
Hey everyone, we have made a new section under Timeboost Implementation Adjustments in the original post, which has also been highlighted at the top of the post.
We also want to highlight the change here so that it is maximally visible to the DAO. This will be included in the Snapshot post that will be going live next week.
Timeboost Implementation Adjustments
Timeboost’s design is the culmination of over a year of research and development by the team at Offchain Labs. While the on-chain implementation will be independently audited by Trail of Bits before the Tally vote, the long term performance of Timeboost can only truly be evaluated with real-world data - data that can help hone and fine-tune Timeboost’s design for the benefit of the ArbitrumDAO.
To that end, although the auctioneer will function autonomously, this AIP proposes granting the current sequencer operator the below rights to make the following adjustments from time to time for a period of two (2) years. The rights described below are expected to only be exercised in circumstances where doing so would enhance Timeboost’s long-term stability, preserve or improve the user experience for those using Timeboost-enabled Arbitrum chains, increase the security posture, resiliency, or stability of the chain, and/or otherwise help increase revenue for the ArbitrumDAO:
The right to adjust the NonExpressDelayMsec parameter, which is the default delay that non-express lane transactions would be subject to. The default is 200ms, but adjustments could be to any value between 100ms & 500ms, inclusive.
The right to change the maxBidsPerSenderInRound parameter, a limit on the number of bids per participant per auction round, to mitigate against active or perceived Denial-of-Service (DoS) attacks on the auctioneer. The starting default will be 5.
The right to change the reservePrice to respond quickly to opportunities to increase the DAO revenue from Timeboost bid proceeds and/or to mitigate the risks of bidders colluding. To start, the reservePrice will simply be the minReservePrice.
The ability to rotate the auctioneer’s key for submitting bids and the reserve price setter key for changing reservePrice.
The right to impose a minimum balance/deposit requirement on Timeboost bidders in order to mitigate against active or perceived Denial-of-Service (DoS) attacks. The Arbitrum Foundation and Offchain Labs commits to sharing publicly post-mortems and analyses should this scenario arise.
The right to disable Timeboost entirely in the event of a security risk or otherwise malicious attempt to harm Arbitrum One and Arbitrum Nova node operators, existing deployed applications, and/or end users. The Arbitrum Foundation and Offchain Labs commits to sharing publicly post-mortems and analyses should this scenario arise.
Modifications to other Timeboost parameters, including to values outside the specified ranges and to those not already listed above, but which are otherwise listed in the design specification, will require a constitutional governance vote, in accordance with the ArbitrumDAO Constitution.
Additionally, it is important to emphasize that for Arbitrum One and Arbitrum Nova, the DAO-elected Arbitrum Security Council can, at any time, perform either Emergency Actions or Non-Emergency Actions to execute software upgrades, perform routine maintenance, and other parameter adjustments to Timeboost, in each case in accordance with its existing powers. These actions can include, but are not limited solely to, exercising the rights proposed above for the current sequencer operator. More information about the Arbitrum Security Council and their scope of powers can be found in the ArbitrumDAO Constitution.
Interesting discussion in support of the proposal.Timeboost assigns a fairer priority to transaction execution by combining the time factor with the Gas fee paid by the user, which helps to reduce the manipulation problem in the current transaction ordering and improves the fairness and efficiency of the network.
However, I have some opinions about this place from the user’s point of view. Although Timeboost improves the fairness of the network, the complicated sorting mechanism may affect the transaction experience of some users. It is recommended that Timeboost be implemented with a clearer user interface that allows users to understand the logic of how their transactions are sorted, as well as an optional setting to adjust the sensitivity to the time factor.
How to effectively balance
This AIP is proposing that the current sequencer operator has the autonomy to make the following changes only in circumstances where doing so would enhance Timeboost’s long-term stability, preserve or improve the user experience for those using Timeboost-enabled Arbitrum chains, increase the security posture, resiliency, or stability of the chain, and/or otherwise help increase revenue for the ArbitrumDAO
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Proposed parameters up for the current sequencer operator to change without having to go through a governance vote:
The right to adjust the NonExpressDelayMsec parameter, which is the default delay that non-express lane transactions would be subject to. The default is 200ms, but adjustments could be to any value between 100ms & 500ms, inclusive.
The right to change the maxBidsPerSenderInRound parameter, a limit on the number of bids per participant per auction round, to mitigate against active or perceived Denial-of-Service (DoS) attacks on the auctioneer. The starting default will be 5.
The right to change the reservePrice to respond quickly to opportunities to increase the DAO revenue from Timeboost bid proceeds and/or to mitigate the risks of bidders colluding. To start, the reservePrice will simply be the minReservePrice.
The ability to rotate the auctioneer’s key for submitting bids and the reserve price setter key for changing reservePrice.
The right to impose a minimum balance/deposit requirement on Timeboost bidders in order to mitigate against active or perceived Denial-of-Service (DoS) attacks. The Arbitrum Foundation and Offchain Labs commits to sharing publicly post-mortems and analyses should this scenario arise.
The right to disable Timeboost entirely in the event of a security risk or otherwise malicious attempt to harm Arbitrum One and Arbitrum Nova node operators, existing deployed applications, and/or end users. The Arbitrum Foundation and Offchain Labs commits to sharing publicly post-mortems and analyses should this scenario arise.
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Modifications to other Timeboost parameters, including to values outside the specified ranges and to those not already listed above, but which are otherwise listed in the design specification, will require a constitutional governance vote, in accordance with the ArbitrumDAO Constitution.
I don’t know much about the underlying technology, but I have always been in favor of technological advances that can improve the fairness and efficiency of the network, and this proposal will greatly improve the user’s transaction experience, so I’m all for it! And collecting bids in ARB And burn is a great idea!