The Future of Proposer-Builder Separation (PBS) on Rollups

Full protocol-level PBS, like Ethereum's vision, is a multi-year roadmap item. Rollups cannot wait. The interim is a messy landscape of centralized sequencers, off-chain deals, and ad-hoc auctions that create systemic risk and rent extraction.

• Centralization Risk: Single sequencers act as de facto builders, creating a single point of failure.
• Opaque MEV: Value is captured off-chain, with no guarantees of fair distribution to users or the protocol.
• Fragmented Standards: Each rollup reinvents the wheel, hindering interoperability and composability.

SUAVE (Single Unifying Auction for Value Expression) proposes a specialized chain to centralize and democratize block building across all rollups. It becomes the canonical intent mempool and executor.

• Cross-Rollup Liquidity: Builders can aggregate liquidity and MEV opportunities from Arbitrum, Optimism, Base simultaneously.
• Credible Neutrality: Decouples block building from proposing, breaking sequencer monopolies.
• Intent-Driven UX: Paves the way for UniswapX-style transactions, where users express outcomes, not steps.

While SUAVE builds the future, rollups today are adopting hybrid PBS via fast-lane auction protocols like Astria or Radius. These use TEEs (Trusted Execution Environments) or FHE (Fully Homomorphic Encryption) to create a competitive, yet secure, builder market.

• Censorship Resistance: Encrypted mempools prevent sequencers from frontrunning or censoring transactions.
• Revenue Capture: Auction proceeds can be directed to a public goods fund or stakers, aligning incentives.
• Progressive Decentralization: Serves as a practical stepping stone to a more enshrined future.

The ultimate goal of mature PBS is to socialize and neutralize harmful MEV. MEV-burn mechanisms, inspired by EIP-1559, can destroy auction revenue, turning extractive value into a public deflationary good. Combined with protocol-owned liquidity, this creates a sustainable economic flywheel.

• Reduced Token Inflation: MEV revenue replaces staking rewards, reducing sell pressure.
• Enhanced Security: Burning value increases the cost of attacking the chain.
• User Alignment: The protocol, not just validators, captures the value of its own block space.

Most rollups run a single, centralized sequencer. This negates PBS's core value of separating block production from block proposal, creating a single point of failure and censorship.

• No MEV Redistribution: All value is captured by the sequencer operator.
• Opaque Operations: Users cannot audit transaction ordering or inclusion fairness.
• Protocol Risk: Relies on the sequencer's altruism for liveness and correct execution.

Decentralize the proposer role via a fast, leaderless auction. Rollups outsource block production to a competitive market of builders, while retaining execution sovereignty.

• Shared Sequencing Layer: Projects like Espresso Systems and Astria provide a neutral marketplace for proposers.
• Rollup Sovereignty: The rollup's DA and settlement layer remain the ultimate arbiters of chain state.
• MEV Capture & Redistribution: Auction revenue can be directed to the rollup's treasury or its users, akin to EigenLayer's vision for Ethereum.

Prevent harmful MEV at the source by encrypting transactions until they are included in a block. This shifts the PBS dynamic from redistribution to prevention.

• Threshold Encryption: Networks like Shutter Network use a distributed key shard system to blind transaction content.
• Builder Obliviousness: Builders bid on encrypted bundles, unable to front-run or sandwich users.
• Composability: Can be integrated with existing PBS designs like those from Flashbots (SUAVE) or Builder APIs.

Each rollup implementing its own PBS auction creates isolated MEV markets. This reduces builder capital efficiency and increases latency for cross-domain arbitrage.

• Capital Silos: Builders must post bonds and manage liquidity across dozens of chains.
• Inefficient Arbitrage: Opportunities between, say, Arbitrum and Optimism are harder to capture atomically.
• Weaker Security: Smaller, isolated auctions are more susceptible to manipulation.

Create a unified, domain-agnostic block building market. A single decentralized builder network can service multiple rollups, aggregating liquidity and intent.

• Unified Preference Environment: Flashbots' SUAVE aims to be a decentralized block builder and encrypted mempool for all chains.
• Intents-Based Flow: Users express desired outcomes (e.g., "swap X for Y at best rate across L2s"), which builders fulfill optimally, similar to UniswapX.
• Maximal Extractable Value (MEV) becomes Maximal Extractable Coordination, capturing cross-domain efficiency gains.

Bake PBS directly into the rollup stack's security model. Use Ethereum's cryptoeconomic security to enforce proposer decentralization and slashing conditions.

• Restaking Security: Projects like EigenLayer allow ETH stakers to extend security to auxiliary services, including a decentralized proposer network for rollups.
• Credible Neutrality: The proposer set is secured by Ethereum stake, not a rollup's native token, aligning incentives with the base layer.
• Data Availability: Coupled with EigenDA or Celestia, this creates a fully decentralized, modular rollup stack.

Most rollups today run a centralized, in-house sequencer that acts as both proposer and builder. This is a single point of failure and censorship, and it prevents an open MEV market from forming.\n- Centralized Control: The rollup team controls all transaction ordering and MEV extraction.\n- Stifled Innovation: No competition for block building efficiency or advanced PBS concepts like MEV smoothing.

Rollups can implement a two-stage block production process: competitive builders bid for the right to construct a block, and a decentralized proposer (often a validator) selects the highest bid. This separates trust and creates a liquid market.\n- Decentralized Censorship Resistance: No single entity controls transaction inclusion.\n- Optimized Execution: Builders compete on gas efficiency and MEV extraction, lowering user costs.

Native PBS enables advanced privacy primitives to combat MEV exploitation. Encrypted mempools (e.g., Shutter Network) hide transaction content until after the builder's bid is committed. SUAVE aims to be a universal preference layer for decentralized block building.\n- Fair Ordering: Users are shielded from front-running and sandwich attacks.\n- Cross-Chain MEV: Builders can arbitrage across rollups and L1 in a single block.

Implementing PBS adds ~1-2 seconds of latency to block production due to the auction process. For high-frequency DeFi or gaming rollups, this is a critical design decision. Solutions like pre-confirmations or fast-lane services from builders like BloXroute or Blocknative will emerge to bridge this gap.\n- User Experience: Instant pre-confirms vs. decentralized finality.\n- Market Segmentation: Different rollups will optimize for different use cases.

PBS creates a dedicated market for rollup-specific builder software. Expect specialization: Flashbots SUAVE for cross-domain MEV, EigenLayer AVSs for decentralized proposer networks, and RaaS providers (e.g., Conduit, Caldera) offering PBS-as-a-service.\n- Specialized MEV: Builders will develop rollup-specific strategies (e.g., L2->L1 arbitrage).\n- Rapid Deployment: Rollup teams can outsource PBS complexity to infrastructure providers.

The ultimate evolution is a shared sequencer (e.g., Espresso, Astria) that provides PBS and atomic cross-rollup composability. This moves the PBS auction and MEV market above individual rollups, creating a unified liquidity layer.\n- Atomic Composability: Transactions across multiple rollups settled in one atomic bundle.\n- Network Effects: MEV revenue and security are shared across the ecosystem.