Mental Model of L2s Dealing with MEV, w/ a Deep Dive in Starknet
56:19 Share

The first quarter of 2024 stands out as a period of remarkable growth for Layer 2 solutions (L2s). During this time, gas fees on L2s continued to decline, daily activities on select L2 platforms began surpassing those on the Ethereum mainnet, and a wave of innovative L2s with modular designs emerged. The prosperity of L2s also brings sequencer decentralization into the spotlight. With a multitude of both anticipated and unforeseen innovations shaping the L2 landscape, the evolution of MEV warrants closer examination.

In this episode, Stephanie (@stephaniiee_ho) delves deeper into her MEV series alongside guests from Nethermind: Jorik (CTO of Nethermind) and Conor (@ConorMcMenamin9, a protocol researcher at Nethermind). Together, they explore a range of pertinent topics relating to L2s and MEV. This includes discussions on how MEV is extracted within the current centralized sequencer setting, the array of solutions for sequencer decentralization today, MEV opportunities and mitigation strategies in the era of sequencer decentralization, the mental models surrounding L2s addressing MEV, and the emerging options of outsourcing block proposal to a third party. Additionally, as part of Starknet’s design team, they provide insights into implementation considerations, which involve navigating realistic and complex challenges.

While these discussions may appear premature given the many unknowns and ongoing projects still under construction, the real value lies in the mental models shared. These insights offer a glimpse into how protocol designers navigate the intricate and interconnected elements of MEV and L2 dynamics, providing a tangible understanding of the current landscape and its trajectory.

--

Wen Building is supported by Antalpa Labs. Antalpha Labs is a Web3 developer community dedicated to push the boundaries of crypto space by supporting the innovation and success of open-source projects.(https://labs.antalpha.com/hackerhouse/))

This episode is also supported by Starknet | 中文 (@Starknet_ZH), a Starkpilled Chinese community.

--

Timestamp

02:13 Introduction

03:50 Tx life cycle on Starknet in the centralized sequencer setting

06:24 MEV extractions on Starknet

08:54 Unique MEV opportunities on L2

11:15 The risk of reorg in zk-rollups

13:27 A measure of L2 finality risks to be expected on L2beat

14:42 An overview of the L2 sequencer decentralization solutions

17:20 Introduction of Based Rollup

18:28 Starknet's solution and rationale

24:35 MEV extraction space after sequencer being decentralized

28:06 Mental model of L2s dealing with MEV

33:42 Is PBS necessary on L2? If yes, in what sense?

39:40 Different options for outsourcing block proposal to a third party?

46:05 Starknet's current priorities

49:40 The perspective of protocol design

52:40 Projects of Starknet and Nethermind that need your engagement

--

Disclaimer: Any projects or tokens mentioned in Wen building don't construe any financial advice. This podcast is just for informational purposes.

--

Resources:

Nethermind: https://www.nethermind.io/)

Starknet docs: https://docs.starknet.io/documentation/)

Starknet forum: https://community.starknet.io/)