MIP-11 (Automatic Priority Fee Distribution) has been drafted by @category_xyz researchers. This proposal causes priority fees to be automatically shared to delegators, prorata to their stake, after deducting validator commission. Currently, all priority fees go to validators, who optionally share these fees with delegators using the `externalReward` syscall. This proposal makes the treatment of priority fees similar to the treatment of block rewards, and allows delegators to participate in the economics of the priority gas auction. Details As a recap, when users submit transactions on Monad, they pay a base fee and a priority fee. - Base fees are constant within a block (but vary from block to block based on recent network activity) and are burned. - Priority fees are variable (submitters send with elevated priority fee to have their transaction prioritized within a block) and are not burned. The protocol currently sends the priority fee to the node operator but gives the node operator the option of sharing it with their delegators using the `externalReward` syscall. However, most node operators are not sharing the rewards with their delegators, in part because it requires additional infrastructure to execute these syscalls periodically, and in part because it is difficult for users to know which node operators share these rewards. This proposal standardizes the behavior, causing priority fees to automatically share `(1 - commission_rate)` of the priority fees to delegators. This proposal slightly lowers node operator revenue and increases staker revenue. I want to mention a few philosophical points. When delegators bring stake to a node, they increase the number of blocks that that node will produce, thus increasing the amount of block rewards. They are compensated accordingly, receiving their "share" of the total block rewards earned by the validator (minus the commission of course). Priority fees are similar. The more stake a delegator brings, the more priority fees the validator unit earns. Smart delegators ought to demand their "share" of the priority fees as well, delegating to validators who agree to share the priority fees (after a commission). Validators would compete on sharing the priority fee and most stake would end up with validators who do so. However getting to that state with the current infrastructure is clunky. It is inconvenient for node operators have to set up the right infrastructure to call `externalReward` periodically, while handling corner cases like the dust threshold. It is also hard for delegators to see which node operators follow this policy since it is the presence or absence of action. This proposal standardizes the practice. Stakers receive most of the priority fees, while node operators continue to earn a cut proportional to the commission rate. Link to the MIP and the forum thread in the next post.