Guardrails - MEV Penalties

The current version of MEV Penaltiesallows any number of penalties to applied to any number of minipools. But there is no need for unlimited penalties. There are 50,400 blocks per week, so that is a guaranteed upper bound. If we assume that RP will not represent more than 33% of the network then (with 99.9% probability) RP will not get more than 16,900 proposals per week. Using the current market share of ~2.45% gives less than 1300 proposals per week (with 99.9% probability).

So it should be possible to enforce a maximum number of penalties in a given interval to reduce impact of malicious behavior while still allowing for legitimate use of the penalty system. This proof of concept limits penalties to 2500 per week. Again a (timelocked) pDAO setting might make sense here.

Completely penalizing all minipools would currently take ~156,000 penalties (~13k minipools, 2 strikes and 10 1.6 ETH penalties). Using the limit of 2500 penalties/week would reduce value at risk to less than 3.5% of node operator ETH.