Proposal : Introduction of a New Penalty Mechanism for Sandwich Attackers

General
1

Current Issues

Despite the implementation of MIP-9 (which blocklisted malicious validators from the stake auction marketplace), several problems persist:

  1. The ban has proven to be only temporary and insufficient. Some banned validators still maintain active stake in the system (ref)
  2. Attackers simply change their identity addresses and create new validator instances to continue executing sandwich transactions. Current sandwich attackers represent more than 50% of total stake (ref)

In the current auction environment, most high-bidding validators are sandwich attackers. This has made participation economically irrational for honest validators, leading to deterioration of Solana’s UX and unhealthy validator concentration.

Proposed Solution

To completely remove sandwich attackers from the auction, a more continuous and severe penalty mechanism is needed that makes it economically rational for attackers to exit the auction system. After discussions in Discord, the following approach has been agreed upon:

—If a validator is flagged as a sandwicher, they get banned in the next epoch and all their bonds are confiscated. (ref)

For flagging validators as sandwich attackers, either the criteria used in the MIP-9 implementation or the standards compiled by Hanabi-Staking could be applied. (ref)

Expected Outcomes

When sandwich attackers are removed from the auction:

There may be a temporary decrease in winning APY and Marinade’s yield. However, this will attract many honest validators to participate in the auction. This will promote validator diversification across the network.

In the medium term, competition among honest validators will gradually increase the winning APY in a healthy and sustainable manner

2 Likes
2

The only method that can help Marinade get rid of sandwichers is to eliminate the auction system.

Tell me: where will validators get the additional revenue that offsets the auction bids?

There are no sources in the network that can cover those bids—except sandwich attacks.

The entire Marinade system is a sandwich-driving pool

great recent example
https://x.com/lux8net/status/1923387506029965673

The only healthy system for the ecosystem and validators was the previous stake distribution model, which incentivized network decentralization.

The current race for additional APY is only harming the network and the ecosystem overall

3

I believe that if we can eliminate sandwichers, the bid competition will likely become more moderate than it is currently, so I think auctions will naturally be adjusted to be conducted within a range where a certain profit margin can be secured among the remaining validators.

4

Banning sandwichers while they can enter the auction with new validators would not be effective. It could be, however, once the reputation system comes fully online including reputation-based limits.