This article addresses this common argument. It might convince you to think about MEV and mining differently.
Discussion
Remind me of this when most pools are using Stratum v2.
Sorry for the late response, I read it at your suggestion, I think all these points are argued against by shinobi in his recent episode with stephen livera.
The article presupposes that sidechain blocks will be built by proposers, rather than miners. The miners have an economic advantage in creating sidechain blocks because they are already bringing the hashpower, so they dont need to pay what the proposer would to get that block approved, winning a higher profit, so I would expect that the sidechain block production will be dominated by mining pools. Pools that have better tools to exract value from mining sidechains will dominate the mining industry, and make it unprofitable to mine without sidechain mining, let alone mining for anybody but the top pools.
The miners have an enhanced ability to reorg the sidechain too, and proposers lose their spent bitcoin in that case, but miners never needed to pay to create sidechain blocks because they mine it themselves.
You could say, as this article does, that every miner is engaged in finding these side hustles that effect the profitability of mining for everyone. Its not a *good* thing that mining companies are finding economies of scale or side gigs that screw with the economics of bitcoin, it causes miner centralization. We shouldnt look at that and step on the gas pedal, like "ah fuck it, lets just go full send because load shedding is a thing".
Further, these side hustles or tricks like having newer miners all revolve around having more hashing for less electricity. MEV presents a novel price incentive to mining that cant be compared to load shredding or mining on curtailed energy, because those grid issues are everywhere. Mining on ercot has been lucrative for iris, but eventually the texas grid will evolve to not need the miners and the incentives will evaporate, replaced by incentives posed by other grids like microgrids in africa.
When these discussions picked up the line was that it doesnt pose a risk, it seems clear that it does pose a risk. Maybe you consider the risk worth it, but I don't; it adds too many unknowns to the incentives around mining, the lack of clear explanation of why miners wouldnt create the sidechain blocks is the most obvious issue I see.
Could you explain what hes saying here in more detail? It seems like the arguement is
1. Drivechains make miners more money so they are harder to bribe
2. Liquid could create MEV too, so its hypocritical to not accept MEV from drivechains.
Assuming thats accurate,
To 1, I assume we all accept the economic principle that prices fall to the marginal cost of production. If drivechains cause hash prices to fall, all that does is drive out miners that cant compete on MEV. That would make you feel very secure and "powerful" if you were the top pool operator, and that appears to be what Paul is referring too, but why that is a "good thing" eludes me. Again, miners arent getting bribed, they arent getting paid, they are directly collecting the fees because they will be building sidechain blocks. The idea that miners wouldnt jump at the idea to make more money just because they are making enough is thus an irrational conclusion, if they do not then they will be overtaken by a miner that will because of the affect on the hash price.
To 2, again, an arguement about something you dont like about bitcoin today doesnt justify aggrevating the situation. Pauls tendency to resort to these arguements is troubling, either drivechains are a good idea or they are not, when a hole gets poked in his game theory and he immediately starts pointing the finger at someone else it discredits him. At the very least he needs to do a better job defending his arguements, rather than this and the patronizing language from the first link. That aside, he says in-text that liquid hasnt implemented MEV as described, so evaluating that as an arguement is difficult.
Greed