►
From YouTube: Does it Make Sense to Aggregate and Average feeReceipent Rewards Using a Smoothing Pool by Ken Smith
Description
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https://archive.devcon.org/archive/watch/6/does-it-make-sense-to-aggregate-and-average-feereceipent-rewards-using-a-smoothing-pool/
This talk presents a statistical model and python code that can be used to model feeRecipient tips using a set of binomial, Gaussian, and Bayesian modeling techniques. We will explore if the ideal of pooling these fees, similar to how POW miners have been pooling their hash power, makes sense for Ethereum validators. We will present the results of modeling one such feeReceipent pooling contract to determine if such a model adds value to other validating Ethereum Node operators.
Speaker(s): Ken Smith
Skill level: Intermediate
Track: Staking & Validator Experience
Keywords: Staking,feeReceipent,tips
Follow us: https://twitter.com/efdevcon, https://twitter.com/ethereum
Learn more about devcon: https://www.devcon.org/
Learn more about ethereum: https://ethereum.org/
Devcon is the Ethereum conference for developers, researchers, thinkers, and makers.
Devcon 6 was held in Bogotá, Colombia on Oct 11 - 14, 2022.
Devcon is organized and presented by the Ethereum Foundation, with the support of our sponsors. To find out more, please visit https://ethereum.foundation/
A
A
Smith
I'll
be
talking
about,
does
it
make
sense
to
aggregate
an
average
fee
recipient
rewards
commonly
referred
to
as
Mev,
using
a
smoothing
pool
and
very
glad
to
talk
about
a
number
of
things
I'm
with
a
firm
of
my
own
called
nextblock
Solutions,
but
I'm?
Also
a
rocket
scientist
with
the
rocket
pull
protocol
and,
most
importantly,
a
member
of
the
node
operators
Association.
A
So
one
of
the
things
you
can
do
is
you
could
download
a
copy
of
this
report
that
was
published
early
summer?
There's
a
QR
code
here
in
the
corner
that
you
can
grab,
but
this
this
presentation
will
cover
the
highlights
of
that
report
or
at
least
give
you
a
good
orientation
to
read
it,
but
I
do
encourage
you
to
go
there
for
more
additional
information
that
I
can't
cover
in
in
24
minutes
and
nine
seconds
here.
A
So
to
begin
with,
let's,
let's
bring
just
a
a
short
second
talking
about
the
taxonomy
taxonomy
of
Mev
right.
You've
heard
a
lot
of
talks
about
it.
One
of
the
first
things
you
might
be
asking
is:
why
would
it
make
sense
to
aggregate
rewards
in
a
smoothing
pool?
This
is
something
that
kind
of
comes
from
the
mining
industry
right,
where
the
chances
of
you
actually
solving
a
cryptographic,
hash
and
being
rewarded
is
so
rare
that
it
makes
sense
to
go
in
collectively
with
other
individuals
to
have
a
constant
income
stream.
A
This
here
is
a
graph
that
shows
the
the
probability
over
five
years
of
receiving
a
block
proposal
right.
So
if
you
have
a
single
validator
and
sometimes
I
might
refer
to
those
as
mini
polls
in
rocketful
terminology,
but
validators
over
five
years,
given
four
thousand
two
hundred
four
thousand
25
validators
or
a
little
bit
more
than
that
now
on
the
on
the
blockchain,
you
will
receive
on
average
about
30
proposals
over
that
five-year
period.
Now,
again,
that's
just
an
average
right.
A
You
can
see
in
the
the
probability
histogram
you
might
be
unlucky
and
might
only
receive
12
proposals
over
that
five
years.
You
might
also
receive
50
or
so
right
and
it
scales
linearly.
If
you
have
two
validators,
you
can
see
here
that
the
average
is
going
to
be
60..
You
would
think
that
there's
no
advantage
to
having
more
validators
in
there
if
each
each
proposal
was
rewarded
uniformly
with
the
same
amount
of
Beacon
Rewards,
but
obviously,
in
addition
to
getting
Beacon
rewards
you'll
also
get
a
chance
at
at
Mev
right.
A
So
let's
just
take
a
little
bit
at
looking
at
Mev
right.
You
know
the
definition
right,
I
think
one
of
the
things
we
lose
a
little
bit,
though,
is
that
it's
viewed
somewhat
as
a
theoretical
limit.
It's
the
maximum
extractable
value
and
I
would
argue
and
I
think
a
lot
of
the
data
supports
that
we're
not
actually
extracting
that
full
amount
right.
A
So
the
flashbots
team
has
used
this
term
I,
don't
think
it's
quite
as
catchy
called
rev,
which
is
the
actual
amount
that
we're
able
to
extract
From,
the
Block
right
and
there's
some
amount
of
of
earnings
right.
That
is
not
captured
right.
It's
just
left
on
the
blockchain
for
the
the
next
block,
I'm
just
going
to
call
that
eulage
until
somebody
comes
up
with
a
better
name
right,
there's
some
really
great
metrics
coming
coming
out
now
post
merge
about.
A
If
we
look
at
this
rev,
how
much
of
it
is
actually
going
to
the
Searcher
right,
how
much
of
it
is
going
to
the
block
Builder
right?
What
part
of
it
may
go
to
the
relayer
right
now?
The
relay
players
seem
to
be
providing
that
as
a
as
a
no
fee
service
right,
but
there's
a
potential,
they
might
capture
some
revenue
from
there
and
most
of
it
from
the
metrics
we're
seeing
right
now
is
going
to
the
block
proposer
right.
That's
the
validator
and
so
I've
been
I've
been
calling
this
term
in
my
report.
A
Here
the
proposer
payment
value,
it's
the
amount
paid
to
the
the
validator
to
put
those
transactions
into
the
block.
Okay,
one
of
the
things
that
we
did
is
performed
a
Monte
Carlo
simulation.
Looking
at
it
pre-emerge
we
looked
over
a
period
of
60
days.
We
looked
at
the
amount
of
Bev
that
was
extracted
by
miners.
Now
this
was
done
in
the
kind
of
May
June
time
period,
but
Bev
seems
to
be
about
pretty
much
stable
in
that
time
period.
A
It's
not
maybe
declining
slightly
but
pretty
much
in
there,
and
it
is
this
long
tail
distribution.
Okay,
most
of
the
math
this
this
line
right
here.
This
is
the
median
value
right.
So
50
of
the
blocks
received
a
value,
that's
less
than
less
than
.05
eth
in
their
block
right
50
of
the
blocks
had
eth
payments
and
Mev
payments
or
proposer
payment
values
that
are
greater
than
that.
The
average
is
actually
quite
a
bit
higher
than
the
median
and
the
reason
for
that
is
of
this
long
tail
distribution.
A
In
fact,
it's
it's
so
much
that
you
know
in
looking
at
some
of
these
metrics.
If
we
just
look
at
the
top
point,
one
percent
right,
let
me
get
it
here-
thirty
percent
of
all
the
each
values
is
in
that
top
point.
One
percent
of
the
blocks
there
right
and
it's
because
it's
just
so
long
tailed
here
I
mean
that
ends
right
here
at
one
East,
but
it
actually
continues
on
right.
We
heard
earlier
that
you
know
some
of
the
blocks
would
be.
A
You
know
near
three
digits
e
right:
okay,
adstrument
tremendous
value
to
it
right
so
because
of
that
long
tail
right,
even
the
top
one
percent
have
45
of
the
proposer
payment
value
in
there
right
it.
It
creates
these.
These
very
rich
eth
blocks
right
that
we've
been
calling
Lottery
blocks
right,
and
if
you
win
a
lottery
block
it
can
be.
It
could
be
very
rewarding
in
terms
of
an
income
stream
right.
So
this
is
why
it
makes
sense
to
start
aggregating
them
into
a
smoothing
pool.
A
So
one
of
the
things
we
did
pre-merge
is
we
started
to
looking
at
okay,
I
think
this
was
originally
proposed
by
flashbots.
There
was
a
Dev
on
the
rocketful
team
that
actually
came
up
with
an
ideal
and
a
mechanism
to
implement
it,
Joe
Joe
pamplis,
and
so
what
we
did
is
we,
we
I
created
a
a
Python
program
and
you
can
get
it
from
the
GitHub
that
went
ahead
and
it
for
and
it
went
through
a
morning,
Carlo
simulation,
and
so
just
briefly
what
it
did
is.
A
It
said:
okay,
let's
figure
out
some
time
period
and
that's
important
right,
because
the
way
that
this
works
is
that,
if
you
validate
for
an
indefinite
period
of
time
right,
you
all
approach
the
average
okay,
but
we're
not
going
to
validate
for
an
indefinite
period
of
time.
There's
some
investment
right.
Maybe
you
start
staking.
You
earn
income,
but
maybe
it's
a
five
year,
maybe
it's
a
ten
year
or
twenty
year
there's
some
limitation
of
time.
A
Perhaps
it's
even
much
shorter,
with
proposer
Builder
separation
right,
maybe
that
will
come
in
three
years
or
four
years
right
or,
as
we
heard
in
the
other
talk.
Maybe
there
are
other
technologies
that
could
prevent
prevent
a
lot
of
this
from
occurring.
So
there's
some
finite
determination.
The
software
goes
ahead
and
it
performs
a
try.
It
grabs
a
validator.
It
makes
a
guesstimate
about
the
number
of
proposals
that
it
will
get
over
that
five-year
period
for
most
most
of
my
graphs.
A
It
then
for
each
of
those
proposals
randomly
assigns
a
an
amount
of
Med
based
upon
that
60-day
historical
period.
Okay,
because
math
seems
to
be
somewhat
random.
We
don't
know
when
the
nfts
are
going
to
drop
when
the
Arbitrage
is
going
to
happen.
Okay.
It
then
goes
ahead
and
does
that
for
a
validator
or
a
set
of
validators
that
you
have,
it
then
also
Compares.
Another
set
like
type
you
know,
set
a
set
B
set.
A
B
is
where
that
validator,
instead
of
running
by
itself,
something
I
call
a
solitarius
mode
is
now
running
as
part
of
a
smoothing
pool.
Okay
and
the
size
that
I
chose
for
this
meaningful
initially
was
about
3
000
validators
that
are
working
collectively,
sharing
sharing
their
proposer
payment
values
and
then
it
it.
It
did
that
for
the
entire
validating
period
And
it
simply
compared
it
said.
A
Okay,
would
you
in
this
case
in
this
try
did
the
solitarius
mini
pool,
earn
more
income
and
and
proposer
payment
value
than
if
it
was
in
a
smoothing
pool
right
and
so
we've
we've
got
some
results
that
we
could
share
about
this.
It
records
it
and
then
it
repeats
it
a
whole
bunch
of
times,
and
you
can
set
that
number
for
anything.
But
you
get
enough
power
at
about
a
thousand
tries
running
through
this
thing.
Here
and
then
finally,
it
produces
a
lot
of
a
lot
of
knee
graphs.
So
let's
go
ahead.
A
Let's
take
a
look
at
those
graphs.
Okay,
so
let
me
walk
through
it
with
you
a
couple
of
times.
Let's
just
start
with
one,
we
have
one
validator
who,
over
the
course
of
five
years,
produces
on
average
about
60
blocks
right,
and
you
can
see
here
that
it
runs
for
a
period
of
time.
It
gets
it
gets
a
a
block
and
it
receives
a
small
amount
of
MAV
here
it
got
it
proposed
again
and
received
a
larger
amount,
and
you
can
see
as
it
steps
up
here.
It's
not
receiving
any
blocks.
A
This
run
of
this
single
validator
earned
about
2.5
Ethan,
math,
okay,
we
could
run
it
again
and
we
could
say
given
that
same
performance,
what
about
if
it
was
in
a
group
of
299
other
validators
and
it
so,
therefore,
the
mini
pool
had
3
000
validators,
and
we
could
see
here
that,
if
I
can,
if
I
put
both
of
those
slides
together
that
it
outperformed
right,
it
was
much
better
to
get
a
small,
constant
share
of
a
larger
pool
over
time.
Now.
This
was
just
one
run
right:
okay,
maybe
it
just
so
happened.
A
I
picked
one
that
had
outperformed
it.
We
need
to
repeat
that
a
little
bit
more
right.
So,
let's,
let's
look
at
that,
a
little
bit
more
here
right
so
again,
I
said
we'll.
Try
it
10
times
right,
and
you
can
see
here
back
to
the
solitarius
validator
that
maybe
it
only
earned
two
eth,
maybe
over
here
in
this
trial
it
earned
about
60
right,
okay,
there's
greater
variance
because
of
just
the
the
long
tail
randomness
of
of
the
Mev.
A
But
if
it's
part
of
a
smoothing
pool,
you
could
see
here,
even
at
10
tries
of
a
smoothing
pool,
the
variance
is
much
less
because
now
we're
averaging
a
share
over
3
000
validators
right
and
when
you
put
them
together
on
the
same
chart
and
the
same
axis
is
here.
You
can
see
that
at
least
in
this,
this
trial
of
10
runs
at
nine
nine
times
out
of
ten
being
in
a
smoothing
pool,
you
earned
more
income
over
that
five-year
period
than
if
you
had
just
ran
independently.
A
So
we,
this
is
just
another
chart,
that's
looking
at
it
where
I
normalized.
If
you
were
by
yourself
and
you
could
see
that
most
of
the
runs
you
earned.
You
know
in
this
case
about
three
E's
more
over
that
five-year
period
than
if
you
had
ran
solitariously.
That's
the
red
line,
okay,
well
again,
10
times
is
not
a
lot.
You
need
to
start
increasing
that
very
large
to
get
your
orders
of
power
in
in
terms
of
your
ability
to
see
resolution.
So
here
I
ran
it
again.
A
All
these
lines
start
to
overlap,
and
it
looks
like
from
here
again
the
blue
lines.
Here
are
the
smoothing
pool-
and
you
might
say,
wow
look
at
all
these
here
that
are
up
here,
earning
hundreds
of
Eve
over
the
smoothing
pool
right,
but
it's
a
it's
a
little
bit
of
a
of
an
optical
illusion
right,
because
the
majority
of
the
lines
are
here
in
this
very
dark
purple
at
the
bottom
right.
In
fact,
how
many
of
those
are
there?
We
could
sit?
A
We
can
start
looking
at
it
right
and
I'll
just
I'll
just
point
to
this
one
spot
here.
If
you
had
one
mini
pool
of
your
own
and
you
were
in
it
enjoined
a
smoothing
pool
of
only
a
hundred
other
mini
pools.
78
percent
of
the
time
in
in
this
run
of
a
thousand
tries
78
of
the
time
the
smoothing
pool
outperformed
a
solitarius
mini
pool
right.
A
If
you
have
one
validator,
don't
join
until
there's
at
least
two
or
three
validators
in
the
pool
right,
okay,
but
as
soon
as
you
become
the
small
fish
in
the
pool
right,
if
you
join
a
pool
of,
let's
say:
3
000
mini
pools
and
you
only
have
10
or
15
15
validators
right,
you
can
join.
You
could
expect
about
80
percent
of
the
time
that
that
that's,
that
smoothing
pool
will
outperform
your
solitarious
mini
pull
so
it
does.
It
does
provide
that
you
know.
A
The
kind
of
takeaway
here
is
that
a
fractional
share
is
going
to
outperform
most
of
the
time.
Okay,
now
another
rocket
scientist
in
rocket
pole,
valderram
I,
think
looked
at
the
report
when
it
was
when
it
was
in
the
early
phases-
and
he
said
Ken
that
was,
that
was
pretty
interesting.
Stuff.
I
love
the
code,
but
he
says
I
think
I
could
show
it
in
one
graph,
okay,
and
so
he
put
together
this
graph.
I
got
to
give
him
the
full
credit,
and
what
it
shows
here
is.
A
Most
of
your
probability
is
getting
some
value
close
to
five
or
six
eth
over
that
period
of
time,
and
then
again
it
becomes
very
unlikely
that
you're
going
to
win
the
lottery
right,
because
the
pool
won
the
lottery
and
you're
just
getting
a
share.
It's
also
shown
down
here
lower
below
here,
which
is
that
if
you're
in
the
pool
right
You
are,
you
are
nearly
guaranteed
to
get
at
least
one
eighth,
two
e
three.
A
A
You
know
the
takeaway
here
is
that
if
you
participate
in
a
smoothing
pool
right,
you
are
more
likely
to
receive
large,
larger
monthly
eth
rewards.
Okay,
especially
if
it
pays
out
on
a
on
a
monthly
process,
then
running
your
own
mini
Pools
by
yourself.
Okay,
now,
why
is
this
important
kind
of
post-emerge?
Well,
let
me
let
me
share
a
couple
of
things.
Postmortem
I
mentioned
that
rocket.
Pull
already,
has
a
smoothing
pool
for
its
node
operators.
A
They
can
opt
in
to
it
right,
you're,
not
required
to
and
there's
a
great
a
great
tool.
Again,
you
can
scan
the
QR
code,
a
great
tool
called
Rocket
scan
by
another
rocket
scientist
Peter.
Is
that
actually
shows
the
rocketful
validators
and
I
did
this
last
night
when
I
was
putting
these
slides
together
and
you
can
see
what
proposers
or
what
blocks
they
proposed
and
if
they
have
a
little
looks
like
a
smoothie
right
they're
in
the
smoothing
pool.
A
Think
after
the
merge
happened
so
about
30
days
ago,
or
so
that
you
know
it
is
trending
very
close
to
our
model
predictions
right.
We
have,
you
know
a
median
of
about
0.6
e.
So
if
you
were
a
solitary
is
that
would
that
is
what
you
would
expect
in
terms
of
of
your
rewards
and
then,
if
you're,
in
the
smoothing
pool,
you
can
see
the
performance
enhancement
from
it
right
in
the
smoothing
pool
you
get
the
average.
A
It
very
much
like
our
model
predictions
that
we
can
see
most
of
the
Mev
are
these
very
small
amounts
that
occur,
but
you
may
not
see
it
here,
but
I'll,
just
kind
of
Point,
there's
one
around
four
or
one
around
five
and
the
biggest
Med
block
we've
got
so
far
in
the
last
30
days
is
about
8.4
e.
That
was
right.
After
the
right
after
the
merge,
there
was
a
very
a
fortunate
block
proposal
that
came
in
and
got
vetted,
but
it
models
very
close
to
our
our
predictions.
A
A
This
is
only
in
the
last
14
days
we're
about
halfway
through
the
reward
cycle.
It's
already
generated,
70
among
these
participating,
4
000
mini
polls
that
are
in
there
right
now.
Obviously,
this
is
this
is
a
model
that
kind
of
showed
how
it
works.
It's
an
example
from
the
rocket
pool
protocol
about
how
a
smoothing
pool
can
work,
but
I
actually
think
it
it's
it's
a
value
to
other
staking
Services
right.
I
can
certainly
see
a
need
for
solo
validators
to
perhaps
aggregate
in
a
smoothing
pool
of
their
own
I
could
see.
A
Other
protocols
begin
to
create
their
own
smoothing
pools.
One
of
the
interesting
things
is
I
know
that
the
ethereum
foundation
and
the
research
side
is
looking
as
one
of
the
possible
solutions
to
proposer.
Builder
separations
is
the
establishment
of
a
protocol,
including
smoothing
pool
that
redirects
those
rewards,
and
so
this
could
be
an
excellent
model
for
them
to
look
at
in
terms
of
getting
data,
and
that
was
one
of
the
reasons
I
wanted
to
present
it
here
at
Devcon,
because
I
think
it
does
does
offer
some
example
on
stuff.
A
Last
but
not
least
so,
I
have
time
for
questions.
I
would
like
to
thank
the
note
operators
associations
with
their
financial
support.
That
I
was
able
to
attend
here
and
present
this
paper
and
shout
out
to
all
those
in
the
rocket
full
trading
Discord.
That
gave
me
a
lot
of
support
to
actually
submit
and
present
this
and
write
the
paper.
B
D
B
A
I
think
I
I
think
the
numbers
you
on
the
slide.
Maybe
I
can
pull
it
back
up
here.
Well,
maybe
not,
but
if
you
look
at
the
slide
that
shows
it,
you
know
even
at
100
a
mini
pool
of
about
100
100
mini
polls
right
as
I
go
back
for
it
you
you
start
to
get
it
right,
even
even
at
3000
and
so
forth.
The
numbers-
maybe
this
is
a
better
slide
over
here
I
mean
look
you're
at
78
80
right,
which
is
pretty
close
to
it.
A
A
Foreign
I'll
wait
for
the
mic
to
get
back
there.
Well,
it
does
I'll
add
over
here
that
you
know.
Certainly
if
you
join
where
you're
a
small
part-
and
you
know
you
can
see
the
numbers,
they
start
moving
moving
more
and
you
know
again,
it's
Monte
Carlo
simulations.
So
if
you
see
little
variances
as
to
why
this
is
lighter
shade
and
not
it's
just
you
run
it
again
on
another
thousand,
you
get
a
you
know
a
slightly
different
picture,
but
it
all.
It
all
looks
this
in
my
report.
D
A
Yeah
yeah,
no,
the
the
math
and
the
the
mechanism
Works
regardless
of
the
protocol
right.
So
just
if
you
get
enough
validators,
together
working
collectively
to
share
the
rewards,
the
math
all
follows
right
now,
I
understand
it's
actually
come
up
a
couple
of
times,
I
understand
from
the
rocketpool
community.
If
they
would
open
the
rocket
Bowl,
smoothing
pool
right
now,
they
have
it
only
to
Rocket
pull
validators
that
are
with
their
protocol,
but
I
know
it's
been
talked
about.
A
C
A
I
I
think
my
slide
said
that
there
was
about
70
of
the
existing
node
operators.
So
a
little
bit
of
terminology
here,
a
node
operator
is
an
individual
who
has
a
a
single
piece
of
Hardware,
maybe
I
guess
it
would
be
a
single
piece
of
hardware
and
about
them.
70
of
them
have
joined
right
so
out
of
the
1600
node
operators
and
Rocket
pull
just
just
a
little
bit
more
than
1100
have
joined.
A
We
do
think
that
from
some
of
the
the
other
node
operators,
I
think
they
are
waiting
for
Med
extraction
to
be
required
like
right
now,
I
believe
it's
about
90
of
those
in
the
smoothing
pool
have
memboost
on,
but
10
don't,
and
so
you
can
kind
of
think
of
it.
If
you
know
some
somewhat
as
a
strain
on
it
right,
because
they're
not
actually
going
after
any
MAV,
but
they
are
getting
a
share
of
the
rewards.
A
The
plan
in
rocket
pool
is
to
make
it
mandatory
and
as
part
of
joining
the
pool,
but
because
of
the
merge
and
the
new
technology
on
Mev
and
the
relays
right
now.
It's
just
truly
an
opt-in,
but
most
of
the
node
operators
are
obviously
profit
seeking
and
they
are
turning
on
the
the
meth
boost,
an
excellent
question
by
the
way.