L1 proposer collusion
I am also concerned about running the VRF auction on L1, especially if L1 lacks inclusion lists.
Let the proposal phase be N L1 blocks long. If N sequential L1 validators collude they can capture all fees+MEV, by censoring other bidders.
Elongating the phase has limited value because of increased MEV opportunities later in the phase, and the all-pay nature of the auction disincentivises other bidders.
A partial solution might have the top VRF bid twice, at both the beginning and end of the phase. This would be done with gas-rebates for both bids of the winning VRF.
Additionally, the second-highest VRF bid may be worth rebating if no bid appears early in the phase.
What I think happens is that Lido offers an L2 staking service, and can guarantee their L2 blocks succeed ~66% (N=3) of the time (where they control at least 1 L1 node).
PBS is also succeptible here, and may require a dynamic “halting period” to further combat L1 censorship MEV.
I think it’s worth reconsidering economically-aligned proposals, like based rollup [1] with preconfirmations.