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

Proposals
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In anticipation of Timeboost progressing to an on-chain vote before the end of the month, Offchain Labs has created this explainer and expectations post to help educate voting delegates.

Arbitrum Timeboost: Explainer & Expectations

Introduction

Timeboost is a novel transaction ordering policy developed for Arbitrum chains. Designed through extensive research and collaboration with over 20+ teams from DeFi Projects, traders, MEV searchers and infrastructure builders, Timeboost aims to address key challenges such as spam inefficiencies and Maximal Extractable Value (MEV) while providing significant value to the ArbitrumDAO and the Arbitrum One and Nova chains. With engineering testing nearing completion and audits finalized, it is poised for consideration as a transformative feature for each chain.

Key Principles & Expectations

  1. The DAO Is in Control
  • The Arbitrum DAO retains ultimate authority over Timeboost, including its goals and parameters. Additionally, any revenue generated from Timeboost will be at the discretion of the DAO. This ensures alignment with community priorities and long-term sustainability.
  1. Data-Driven Transparency
  • As a novel policy, Timeboost should be closely monitored to enable chain owners to take a data-driven approach to decision-making around Timeboost’s parameters and goals. For Arbitrum One and Arbitrum Nova, Offchain Labs will collaborate closely with third-party data analytics and MEV experts to provide high-quality data and insights. This commitment to transparency for Arbitrum One and Arbitrum Nova lays the foundation for productive discussions to refine and optimize Timeboost post-launch on the DAO-owned chains.
  1. Gradual Adoption Expected
  • Early participation may be modest as MEV participants adapt to the new system. However, over time, adoption is expected to grow as participants refine their strategies, learn from shared data, and understand how to leverage Timeboost effectively.
  1. Continuous Improvement
  • Offchain Labs will continue leveraging feedback from users and Arbitrum DAO members to refine and improve Timeboost over time. Offchain Labs is exploring a collaborative research initiative with Espresso to ensure Timeboost is compatible with distributed sequencer setups in the future. Offchain Labs aims to share valuable insights as we progress, enabling each chain to make well-informed decisions.

Recap of Core Features

  1. Express Lane Auctions
  • Timeboost adds an off-chain auction for the right to get transactions sequenced earlier/faster during one-minute intervals called “rounds.” The auctions for a future round run for 45 seconds and close 15 seconds before the start of each round, allowing participants to bid strategically based on expected MEV opportunities.
  • When a bidder wins an auction, transactions from everyone else (who is not otherwise the winner) will be delayed for 200ms, prioritizing the winner’s transactions. This ensures that the winner’s transactions are included in the block sooner.
  1. New Potential Revenue Stream
  • Proceeds from auctions will flow to the ArbitrumDAO treasury, creating a new potential revenue stream.
  1. Prevents Front-running
  • Just like the Arbitrum sequencer today, the mempool will remain private, removing any possibility of frontrunning. There is no change in frontrunning protection; with Timeboost, users of Arbitrum cannot see other users’ pending transactions, preventing users from being front-run and frontrunning others.
  1. Ecosystem Benefits
  • Timeboost reduces transaction spam and network congestion by incentivizing searchers to bid for a time advantage instead of spamming.
  • This novel transaction ordering policy encourages more efficient DeFi markets by rewarding sophisticated MEV strategies while maintaining fast block times and continuing to protect users from harmful MEV, like front-running.
  1. Continuous Improvement
  • Timeboost is implemented to allow for ongoing adjustments, empowering the Arbitrum DAO to fine-tune parameters based on community needs and market dynamics.

Expected Outcomes

  • Efficiency Gains: Introduces a way to capture healthy MEV and disincentivizes opportunistic spamming by searchers, likely reducing spam.
  • Revenue Generation and Enhanced Ecosystem Participation: Greater adoption of Arbitrum by sophisticated actors and developers building innovative tools will improve treasury inflows from auctions to support Arbitrum DAO initiatives.

Timeboost is not just a technical innovation but a new paradigm for balancing fairness, efficiency, and economic value within the Arbitrum ecosystem.

Learn More: If you have questions, visit the Timeboost FAQ page for additional information and quick answers.

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