The cost of artificial latency in the PBS context
ArXiv ID: 2312.09654 “View on arXiv”
Authors: Unknown
Abstract
We present a comprehensive analysis of the implications of artificial latency in the Proposer-Builder Separation framework on the Ethereum network. Focusing on the MEV-Boost auction system, we analyze how strategic latency manipulation affects Maximum Extractable Value yields and network integrity. Our findings reveal both increased profitability for node operators and significant systemic challenges, including heightened network inefficiencies and centralization risks. We empirically validates these insights with a pilot that Chorus One has been operating on Ethereum mainnet. We demonstrate the nuanced effects of latency on bid selection and validator dynamics. Ultimately, this research underscores the need for balanced strategies that optimize Maximum Extractable Value capture while preserving the Ethereum network’s decentralization ethos.
Keywords: Proposer-Builder Separation (PBS), MEV-Boost, artificial latency, Maximum Extractable Value (MEV), Ethereum, Cryptocurrency
Complexity vs Empirical Score
- Math Complexity: 4.0/10
- Empirical Rigor: 7.5/10
- Quadrant: Street Traders
- Why: The paper introduces formal metrics (e.g., normalized bid ratio R) and discusses economic concepts like LVR, but the math is relatively accessible compared to deep theoretical models. Empirical rigor is high due to the use of a live pilot on Ethereum mainnet, proprietary data analysis, and specific statistical metrics (e.g., quantiles, regression) to validate findings on bid dynamics and profitability.
flowchart TD
A["Research Goal<br>Analyze artificial latency impact in PBS on Ethereum"] --> B["Data & Inputs<br>Ethereum Mainnet MEV-Boost Data<br>Chorus One Pilot Dataset"]
B --> C["Methodology<br>Empirical Analysis of Latency Manipulation"]
C --> D["Computation<br>MEV Yield Modeling<br>Bid Selection Simulation"]
D --> E["Key Findings<br>Increased Profitability vs.<br>Network Inefficiency & Centralization Risks"]