Missed Slot Penalties [Temperature Check]

[fradamt]

@MicahZoltu

If we aren’t going to try to align incentives on this, then why bother doing anything on this front? As @potuz said, just adding flat penalties for things will adjust the timing game calculus slightly, but it won’t align incentives between stakers and the externalities of their decisions. It will just make people add a handful of milliseconds to how long they wait.

At current levels of MEV (which have been stable for quite a while) timing game incentives are quite weak, it wouldn’t take much to make a meaningful difference. Another solution in this direction are retroactive proposer rewards.

@MicahZoltu

With a flat fee, we should expect people to increase their delay in times of high demand because priority fees would be high and thus the profitability of building a bigger block increases. This is the exact opposite of the effect we want, which is that during times of high demand we want them to become more aggressive at getting blocks out to the network ASAP.

On the other hand, the opportunity cost of losing the block becomes higher when priority fees are high.

@MicahZoltu

If we were to make a change like this we should give a huge amount of warning to stakers and do everything in our power to alert them of the change. However, I am very much in favor of aligning incentives even if it drives some people away from staking (in fact, that is part of why I favor it). Staking on Ethereum isn’t a money printer, it is a job that requires you put in effort. If we lose too many stakers because doing their job is hard and risky, we can increase the per-staker ROI curve to attract more. My guess is that on net it will cost the network less money to have incentives properly aligned, even if we have to pay 25% APR to stakers for them to be willing to take on the risk, because we’ll have less stakers and the stakers we do have will be more robust and reliable.

The issue isn’t losing too many stakers (we likely wouldn’t, because for a pool this wouldn’t change things too much), it’s that we would primarily lose solo stakers. How many I don’t know, but it’s a pretty dramatic change in the potential downside of staking and I don’t think we can just hand-wave the issue of solo stakers away.

If the execution rights were to be auctioned off instead of being given to stakers (through some form of slot auctions, e.g. execution tickets), I think this proposal would likely be perfectly ok as is.