Block proposer incentives are rewards offered to entities that create and propose new blocks in a blockchain network. These economic mechanisms motivate validators or miners to perform the computational work or stake capital required to add transactions to the blockchain. Incentives typically include newly minted cryptocurrency and transaction fees collected from users. Proper incentive design is crucial for network security and consistent block production.
Context
The effectiveness and structure of block proposer incentives are consistently discussed in cryptocurrency news, especially concerning network upgrades and economic security models. Changes to these incentives, such as those implemented during Ethereum’s transition to Proof of Stake, significantly impact validator participation and network centralization concerns. Debates frequently involve optimizing these rewards to deter malicious behavior and promote network stability.
Introducing the Smooth-Running Auction, a mechanism using Time-Averaged Commitments to decouple block value from proposer revenue, stabilizing MEV and promoting decentralization.
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