Validator Slot Auctions

[michaelkaplan13]

Context and scope
This is very much still in the idea phase. More suggestions/discussion welcome

The validator manager contracts define the logic for the requirements to become a validator of a given L1, and use the ACP-77 message types to publish validator set changes to the P-Chain. Currently, they support a proof-of-stake variant where the number of tokens locked is directly proportional to the weight of a given validator, and an arbitrary rewards curve can be defined for locking an amount of tokens for a period of time.

A secondary "reward" of being a validator of a chain is that you have a certain amount of ability to extract value from that chain in the form of MEV. In ProposerVM instances, the percentage of the available value that a given validator can extract is directly proportional to their stake weight. This implicit reward is not accounted for in the implementation of the existing proof-of-stake variants however. It would be great if an L1 (and/or the primary network) could accrue value back from validators for the MEV that the validators are able to extract.

Discussion and alternatives
One approach to accrue value back to the L1 for the MEV that validators are able to extract is to have an auction for the right to become a validator of the chain. For instance, there could be a fixed number of validator slots available (all with the same weight), that are continuously auctioned to the highest bidder (who presumably is willing to bid more if the MEV they are able to extract by winning the validator slot is higher).

Open questions

• Should the fixed number of slots be auctions all at once, or one by one in a rolling manner?
• How to handle batch updates to the P-Chain if needed
• Do auction proceeds get burned somehow otherwise distributed?
• Should/Could the number of slots be made dynamic somehow based on amounts bid?