With discussions currently ongoing regarding how Lido should implement MEV-Boost’s min-bid functionality, the Lido Analytics team prepared the following analysis as posted on the forums.
Taking into consideration three parameters which guide an optimal min-bid choice: amount of blocks produced locally, change in Lido’s protocol APR and percent of validators who do not opt-in to use min-bid functionality, we developed a model. The key driver in the model to determine an appropriate min-bid is the expected usage of min-bid across Lido validators.
Based on an approximation that ~60% (i.e. 40% do not) of all Lido validators opt-in to using min-bid, the model yields a recommended min-bid value of 0.07 at which an estimated minimum 28% of all blocks produced by Lido validators will be produced locally, with a maximum protocol APR decrease of 15%.
Indicatively, the model yields that if 80% or greater of Lido validators opt in to using min-bid, the min-bid value could also be set to 0.05 with similar results with regards to % of blocks produced locally and a maximum APR decrease.
OP: https://research.lido.fi/t/lido-on-ethereum-relay-voting-proposal/3135/52?
In response to this analysis, we put together a survey to determine roughly how many Node Operators are interested in using the min-bid feature for their Lido validators.
While some Node Operators provided more nuanced responses (e.g. their decision whether to use min-bidor not depends on the impact to protocol APR, impact to Ethereum censorship, etc), directionally the data suggests up to ~ 64% of Node Operators would be interested in utilizingmin-bid under certain scenarios.
Next Steps
Discussion is currently ongoing in the Lido Node Operator MEV Boost min-bid guidance thread, with an initial proposal for the DAO to make min-bid > 0 an opt-in measure with a value of no more than 0.07.
The impact of this change will be analyzed over the coming months, with the potential to tweak the min-bid value range depending on the impact to protocol APR and overall censorship.
For more information and to ask questions or address comments, please weigh in on the min-boost guidance or Block Proposer Rewards Policy threads.