Thanks for being persistent here. After discussing this point internally I think that incorporating penalties into the consistency budget is an overall win.
The main reasons for this are as follows:
- The budget spent on rewards is actually stable at 50% of revenue across all chain. This makes this fraction a clear business decision and it does not need to be tuned with penalties in mind. Otherwise some L2s (e.g. Base) would have had significantly smaller payments.
- Some forms of unavoidable unsets (“unsuccessful settlements”) are handled a bit better when including penalties into consistency rewards. For example, if there were an externally given unset reason in 10% of auctions and consistency rewards were distributed according to auction wins, the penalty from such unavoidable unsets would not need to be taken into account when solvers take a cut from surplus to cover penalties. Instead, penalties from these unsets are reimbursed to solvers via consistency rewards. The incentive to prevent avoidable unsets remains, albeit being a bit weaker than at the moment.
- The DAO actively profiting from unsets is a strange misalignment of incentives.
Overall, these advantages seem stronger than the increase in complexity of the bidding due to changes in per-auction penalties.
I will update the CIP text (and queries and docs PR) accordingly.
Just as a clarification: Unsets are not being considered in any of the approaches we tried.
I will also add one additional clause to the CIP text which allows the core team to increase rewards on small L2s a bit more:
The core team asks for a mandate to change the fraction of revenue directed towards solvers on small networks to a value between 50% and 100%. This will allow for redirecting more revenue to solvers on chains where the solver competition is still lacking. One prime example would be new networks.