Latency is Money
Yesterday we published a new essay on HackMD.
The essay focuses on Ethereum timing games, in which validators intentionally delay blocks to earn higher rewards. We take a critical view of discourse in the ecosystem while attempting to explain why these games are played and how they can realign incentives in a positive way.
We encourage you to read it.
tl;dr
In an effort to allow decentralized consensus participation, the Ethereum network inadvertently rewards latency to the benefit of less efficient block proposers. High-quality validators are intrinsically penalized by the system and struggle to compete on yield unless they simulate latency by playing timing games.
Although these games are frequently vilified for degrading the health of the network, proposer sets (ex-CoinSpot) that intentionally delay their
getHeader()requests empirically see few of their blocks reorged. By contrast, large entities like Coinbase often have extremely high-variance setups and see their blocks frequently reorged despite not playing timing games.— Latency is Money by Data Always