With slashing live for Symbiotic Networks, the risk surface area of LRTs is evolving. Chaos Labs analyzes and monitors its risks to help build a safer and more resilient restaking ecosystem. In this analysis, we look at Primev’s mev-commit, a Network secured by ether.fi, that utilizes slashing as part of its design. This analysis focuses on mev-commit’s incorporation of slashing in Symbiotic and its impact on the risks and rewards for stakers.
Summary
Symbiotic’s introduction of slashing to restaking has been integrated by Primev to enhance economic security and accountability within its P2P network, mev-commit. This network connects selected MEV actors and transaction execution providers, ensuring guaranteed transaction execution or inclusion in Ethereum blocks via preconfirmation. Operators must propose blocks that incorporate preconfirmed transactions from the network. By doing so, operators currently earn an incremental annual yield of 0.165%. If an operator proposes a block from an external builder, they face a slashing penalty of 1 ETH per slot. With nearly 3 months live on mainnet and 12 months on testnet, mev-commit has experienced zero slashable events to date.
Chaos Labs assesses the slashing risk in mev-commit as low. Rewards are distributed through mev-boost, making them independent of Symbiotic, and are sustainably generated by demand for preconfirmed transactions. The protocol mitigates accidental slashing by ensuring operators only receive compliant blocks from relays and offers an insurance fund to cover any slashing incidents arising from mev-commit infrastructure issues.
How mev-commit Works
In typical MEV scenarios, searchers identify profitable opportunities and submit transaction bundles to block builders via auctions, yet there is no certainty their bundles will be included. Primev resolves this issue through preconfirmations, which are enforced through the mev-commit network using commitments and slashing.
Bidders, which include searchers, solvers, and blob producers, submit their transaction bundles through the mev-commit network. Those bundles get picked up by providers, such as block builders or sequencers. Once providers decide to accept a bundle, they create cryptographic commitments stored on the mev-commit chain. This allows for the independent verification of whether providers honored their commitments. Providers then submit their finalized blocks containing the preconfirmed transactions as bids to a mev-boost auction.
Validators participate in mev-commit either through restaking platforms like Eigenlayer or Symbiotic or by directly staking a separate amount of ETH to the network. By opting into mev-commit, validators agree to exclusively propose blocks coming from block builders that are staked on mev-commit and use supporting relays to do this. If any of the providers or validators fail on their commitment, the bidder will receive compensation in the form of a slashed stake.
Rewards and Slashing
In the following section, we will focus solely on validators, as provider rewards and slashing are not managed through restaking.
The validator’s reward payment is processed through the mev-boost mechanism, not the mev-commit network itself. The validator receives the payment specified in the provider’s winning bid in the mev-boost auction. This payment is typically higher than what they would earn without mev-commit, as preconfirmed transactions make the block more valuable to providers, who, in turn, are willing to pay more to validators. Historically, using mev-commit has generated an additional yield of approximately 0.01985 ETH per block, translating to a 5.95% yield increase. Primev plans to introduce use cases for mev-commit beyond preconfirmations, which could increase rewards in the future. Rewards are distributed directly to validators—who, in this case, act as node operators on Symbiotic. It is then up to node operators to determine the fee split and redistribute rewards among stakers. On top of that, Primev offers a points program, which grants an immediate 1,000 points per validator upon opting in and up to 10,000 points for completing a full 6-month season, points are redistributed to validators directly, not via mev-boost.
Once a block is proposed on Ethereum, the mev-commit oracle verifies whether both providers and validators have honored their commitments to the bidder. The oracle examines each block to determine the builder’s identity using the BLS public key. It then cross-references this information with the Provider Registry contract on the mev-commit chain, ensuring alignment with the agreed commitments. If a block proposed by a validator committed to mev-commit has a BLS key that is not in the Provider Registry, it indicates that the validator either proposed a block from a non-participating builder or built the block themselves. In the former case, the validator violates the mev-commit protocol and is subject to slashing. The current penalty for such a violation is a fixed 1 ETH per slot, which is transferred to the bidder as compensation. Self-building is permitted, if the validator did not receive any economically viable bids from mev-commit relays. Additionally, no slashing occurs if a validator misses their slot entirely. To date, after 12 months of testing on Holesky and nearly 3 months live on mainnet, no slashable event has occurred.
Risk Considerations
Rewards
As for rewards we view these as sustainably generated and without price risk as they are distributed in ETH:
- Rewards are distributed via mev-boost, where rewards come from the fee paid for preconfirmed transactions.
- Rewards are distributed in ETH, mitigating both volatility and liquidity risks typically associated with native protocol tokens.
- The mechanics of the Beacon Chain determine the frequency of reward payouts, ensuring a sustainable reward structure.
- Rewards are paid directly to node operators, meaning stakers depend on operators and the fee split defined in the Symbiotic vault. However, since Ether.fi oversees the curation of the Symbiotic vault, the risk of an unfavorable fee split remains minimal.
- Validators’ tasks are simple and seamlessly integrate with their usual staking activities, incurring no additional operational costs beyond the initial relayer setup adjustment.
Slashing
The protocol emphasizes that validators are generally not expected to be slashed on mev-commit unless they act maliciously, which is reflected in its current slashing setup:
- As long as validators utilize blocks from mev-commit relayers, they are safeguarded against accidental slashing. These relayers ensure compliance by filtering out blocks from builders who are not staked with mev-commit. As a result, validators remain unaffected if a block builder does not fulfill their commitment.
- In the event of a mev-commit operational failure resulting in unwarranted slashing, validators are covered under a 100 ETH insurance fund.
- Primev does not utilize a veto committee in the Symbiotic vault but instead manages slashing disputes internally. While we recommend implementing a multi-party veto committee, we acknowledge that disputes are relatively simple to resolve since slashing conditions are publicly verifiable through the Beacon Chain.
Oracle
- The oracle is currently a centralized point of trust. Its correct operation is essential for the security and integrity of the mev-commit system. Primev acknowledges this and is researching ways to decentralize the oracle via zk-proofs. Furthermore, the current oracle’s code is open-source.
Return per unit of Risk
Given our current understanding of the reward and slashing structures on Primev, we derive the following return per unit of Risk:
- Based on current estimates, a validator is expected to propose a block approximately once every 4.5 months, averaging 2.67 blocks per year. This results in an Annual Incremental Yield of 0.05297 ETH per validator or an Incremental Rewards APR of 0.165%.
- There is no economic incentive for malicious behavior, as operators who bypass mev-commit face slashing penalties and earn lower returns.
- The primary slashing risk arises when operators inadvertently misconfigure their relayers and accept block bundles from non-Primev-affiliated relays.
- On the Ethereum Beacon Chain, the historical slashing rate due to misconfigurations or operational errors has been approximately 0.04% over the past year. We use this as a proxy since the nature of the slashing risk is comparable.
- Each operator is expected to propose approximately 2.67 blocks per year, and given a 1 ETH slashing penalty, we estimate the Return per unit of Risk for Primev as:
Conclusion
With a return per unit of risk of approximately 5297%, Primev demonstrates a strong reward-to-risk ratio, suggesting that the potential benefits outweigh the expected slashing costs. The low probability of slashing, combined with the structured reward mechanism, indicates that validators can achieve meaningful yield enhancements with minimal additional risk.
References
https://dune.com/primev/mev-commit-mainnet-validator-stats