Protocol-Owned Builder

Skip Protocol's Protocol-Owned Builder (POB) is a set of Cosmos SDK and ABCI++ primitives that provide application developers the ability to define how their apps construct and validate blocks on-chain in a transparent, enforceable way, such as giving complete control to the protocol to recapture, control, and redistribute MEV.

Skip's POB provides developers with a set of a few core primitives:

• x/builder: This Cosmos SDK module gives applications the ability to process MEV bundled transactions in addition to having the ability to define how searchers and block proposers are rewarded. In addition, the module defines a AuctionDecorator, which is an AnteHandler decorator that enforces various chain configurable MEV rules.
• ProposalHandler: This ABCI++ handler defines PrepareProposal and ProcessProposal methods that give applications the ability to perform top-of-block auctions, which enables recapturing, redistributing and control over MEV. These methods are responsible for block proposal construction and validation.
• AuctionMempool: An MEV-aware mempool that enables searchers to submit bundled transactions to the mempool and have them bundled into blocks via a top-of-block auction. Searchers include a bid in their bundled transactions and the highest bid wins the auction. Application devs have control over levers that control aspects such as the bid floor and minimum bid increment.

Releases

Release Compatibility Matrix

POB Version	Cosmos SDK
v1.x.x	v0.47.x

Install

$ go install github.com/skip-mev/pob

Setup

1. Import the necessary dependencies into your application. This includes the proposal handlers, mempool, keeper, builder types, and builder module. This tutorial will go into more detail into each of the dependencies.

   import (
     proposalhandler "github.com/skip-mev/pob/abci"
     "github.com/skip-mev/pob/mempool"
     "github.com/skip-mev/pob/x/builder"
     builderkeeper "github.com/skip-mev/pob/x/builder/keeper"
     buildertypes "github.com/skip-mev/pob/x/builder/types"
     ...
   )

2. Add your module to the the AppModuleBasic manager. This manager is in charge of setting up basic, non-dependent module elements such as codec registration and genesis verification. This will register the special MsgAuctionBid message. When users want to bid for top of block execution, they will submit a transaction - which we call an auction transaction - that includes a single MsgAuctionBid. We prevent any other messages from being included in auction transaction to prevent malicious behavior - such as front running or sandwiching.

   var (
     ModuleBasics = module.NewBasicManager(
       ...
       builder.AppModuleBasic{},
     )
     ...
   )

3. The builder Keeper is POB's gateway to processing special MsgAuctionBid messages that allow users to participate in the top of block auction, distribute revenue to the auction house, and ensure the validity of auction transactions.

   a. First add the keeper to the app's struct definition.

   type App struct {
     ...
     // BuilderKeeper is the keeper that handles processing auction transactions
     BuilderKeeper         builderkeeper.Keeper
   
     // Custom checkTx handler
     checkTxHandler abci.CheckTx
   }

   b. Add the builder module to the list of module account permissions. This will instantiate the builder module account on genesis.

   maccPerms = map[string][]string{
     builder.ModuleName: nil,
     ...
   }

   c. Instantiate the builder keeper, store keys, and module manager. Note, be sure to do this after all the required keeper dependencies have been instantiated.

   keys := storetypes.NewKVStoreKeys(
     buildertypes.StoreKey,
     ...
   )
   
   ...
   app.BuilderKeeper := builderkeeper.NewKeeper(
     appCodec,
     keys[buildertypes.StoreKey],
     app.AccountKeeper,
     app.BankKeeper,
     app.DistrKeeper,
     app.StakingKeeper,
     authtypes.NewModuleAddress(govv1.ModuleName).String(),
   )
   
   
   app.ModuleManager = module.NewManager(
     builder.NewAppModule(appCodec, app.BuilderKeeper),
     ...
   )

   d. Searchers bid to have their bundles executed at the top of the block using MsgAuctionBid messages (by default). While the builder Keeper is capable of tracking valid bids, it is unable to correctly sequence the auction transactions alongside the normal transactions without having access to the application’s mempool. As such, we have to instantiate POB’s custom AuctionMempool - a modified version of the SDK’s priority sender-nonce mempool - into the application. Note, this should be done after BaseApp is instantiated.

   d.1. Application developers can choose to implement their own AuctionFactory implementation or use the default implementation provided by POB. The AuctionFactory is responsible for determining what is an auction bid transaction and how to extract the bid information from the transaction. The default implementation provided by POB is DefaultAuctionFactory which uses the MsgAuctionBid message to determine if a transaction is an auction bid transaction and extracts the bid information from the message.

   config := mempool.NewDefaultAuctionFactory(txDecoder)
   
   mempool := mempool.NewAuctionMempool(txDecoder, txEncoder, maxTx, config)
   bApp.SetMempool(mempool)

   e. With Cosmos SDK version 0.47.0, the process of building blocks has been updated and moved from the consensus layer, CometBFT, to the application layer. When a new block is requested, the proposer for that height will utilize the PrepareProposal handler to build a block while the ProcessProposal handler will verify the contents of the block proposal by all validators. The combination of the AuctionMempool, PrepareProposal and ProcessProposal handlers allows the application to verifiably build valid blocks with top-of-block block space reserved for auctions. Additionally, we override the BaseApp's CheckTx handler with our own custom CheckTx handler that will be responsible for checking the validity of transactions. We override the CheckTx handler so that we can verify auction transactions before they are inserted into the mempool. With the POB CheckTx, we can verify the auction transaction and all of the bundled transactions before inserting the auction transaction into the mempool. This is important because we otherwise there may be discrepencies between the auction transaction and the bundled transactions are validated in CheckTx and PrepareProposal such that the auction can be griefed. All other transactions will be executed with base app's CheckTx.

   // Create the entire chain of AnteDecorators for the application.
   anteDecorators := []sdk.AnteDecorator{
     auction.NewAuctionDecorator(
       app.BuilderKeeper,
       txConfig.TxEncoder(),
       mempool,
     ),
     ...,
   }
   
   // Create the antehandler that will be used to check transactions throughout the lifecycle
   // of the application.
   anteHandler := sdk.ChainAnteDecorators(anteDecorators...)
   app.SetAnteHandler(anteHandler)
   
   // Create the proposal handler that will be used to build and validate blocks.
   handler := proposalhandler.NewProposalHandler(
     mempool, 
     bApp.Logger(), 
     anteHandler,
     txConfig.TxEncoder(),
     txConfig.TxDecoder(),
   )
   app.SetPrepareProposal(handler.PrepareProposalHandler())
   app.SetProcessProposal(handler.ProcessProposalHandler())
   
   // Set the custom CheckTx handler on BaseApp.
   checkTxHandler := pobabci.CheckTxHandler(
     app.App,
     app.TxDecoder,
     mempool,
     anteHandler,
     chainID,
   )
   app.SetCheckTx(checkTxHandler)
   
   ...
   
   // CheckTx will check the transaction with the provided checkTxHandler. We override the default
   // handler so that we can verify bid transactions before they are inserted into the mempool.
   // With the POB CheckTx, we can verify the bid transaction and all of the bundled transactions
   // before inserting the bid transaction into the mempool.
   func (app *TestApp) CheckTx(req cometabci.RequestCheckTx) cometabci.ResponseCheckTx {
     return app.checkTxHandler(req)
   }
   
   // SetCheckTx sets the checkTxHandler for the app.
   func (app *TestApp) SetCheckTx(handler abci.CheckTx) {
     app.checkTxHandler = handler
   }

   f. Finally, update the app's InitGenesis order and ante-handler chain.

   genesisModuleOrder := []string{
     buildertypes.ModuleName,
     ...,
   }

Params

Note, before building or upgrading the application, make sure to initialize the escrow address for POB in the parameters of the module. The default parameters do not initialize an escrow address as that should be determined by governance. The escrow address will be the address that is receiving a portion of auction house revenue alongside the proposer (if enabled).