Account abstraction redefines PBS. The classic PBS model separates block building from block proposing to optimize MEV capture. AA inverts this by empowering users to define their own transaction execution logic through smart accounts, moving complexity off-chain.
mev-the-hidden-tax-of-crypto
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Account Abstraction Redefines the PBS Landscape
The rise of ERC-4337 and intent-based architectures is shifting value flow from block builders to solvers and bundlers, forcing a fundamental rethink of Proposer-Builder Separation economics.
introduction
THE SHIFT
Introduction
Account abstraction is dismantling the traditional Proposer-Builder Separation model by moving transaction logic from the network to the user.
This creates user-centric block building. Instead of builders searching for profitable transactions, users submit signed intents. Aggregators like UniswapX and CowSwap then compete to fulfill these intents optimally, shifting the competitive landscape from searchers to solvers.
The result is a new architectural layer. Protocols like Ethereum's ERC-4337 and Starknet's native accounts standardize this intent-based flow. This layer abstracts gas, enables batched operations, and delegates security to smart contract logic, not just EOA private keys.
Evidence: Ethereum's ERC-4337 bundlers processed over 4.5 million UserOperations in its first year, demonstrating demand for this new transaction primitive that bypasses traditional mempool mechanics.
key-trends
ACCOUNT ABSTRACTION REDEFINES PBS
Executive Summary: The New PBS Reality
Proposer-Builder Separation is no longer just about block builders. ERC-4337 and smart accounts are shifting the auction's center of gravity to the user.
01
The Problem: PBS Without Users is Incomplete
Traditional PBS optimizes for searcher/MEV extractor value, treating users as passive transaction endpoints. This creates a value leak where user intent and willingness-to-pay are opaque to the auction.
- User Surplus is Ignored: Builders capture MEV, but user's own transaction priority is a blunt fee market.
- No Cross-Domain Optimization: A user's multi-chain intent is fragmented across separate PBS auctions.
- Rigid Transaction Semantics: Simple EOA transfers cannot express complex conditional logic for execution.
>90%
Value to Builders
Fragmented
User Intent
02
The Solution: Intent-Based PBS via Account Abstraction
ERC-4337 Bundlers and Paymasters become the new User-Attached Builders. They participate in the PBS auction with a powerful new input: a signed user intent, not just a raw transaction.
- Bundlers as Aggregators: Compete to fulfill user intents (e.g., "swap X for Y at best rate across UniswapX, 1inch, CowSwap") by sourcing liquidity and routing.
- Paymasters Monetize Abstraction: Sponsor gas or accept payment in any token, capturing value via spreads or fees, not just block space.
- Auction for Outcomes: Builders now bid on solving user problems, not just ordering transactions.
ERC-4337
New Primitive
Outcome-Based
Auction Logic
03
The New Stack: SUAVE, Anoma, and the Intent Layer
The full vision requires infrastructure that separates declaration from execution. This is the rise of the intent-centric architecture.
- SUAVE (Shared sequencer): Aims to be a neutral marketplace for preference expression and execution, a natural fit for aggregated AA intents.
- Anoma/Espresso: Architectures built from first principles for private intent matching and solving.
- UniswapX, Across, LayerZero: Already executing intent-like flows; will integrate with AA bundler networks as solvers.
- The Endgame: A generalized PBS where the auction is for solving constraints, and block building is just one execution arm.
Multi-Chain
Intent Scope
Neutral
Marketplace
04
The Metric Shift: From MEV Extracted to User Surplus Captured
The key performance indicator for the new PBS landscape shifts from pure extractable value to total value facilitated for the user.
- New Revenue Pools: Bundler/Paymaster fees, intent-solving premiums, and cross-domain arbitrage on behalf of the user.
- Vertical Integration: Successful builders will operate bundler networks and solver algorithms directly (e.g., Flashbots SUAVE + bundler service).
- VC Thesis: Invest in infrastructure that sits at the intersection of AA and MEV, not just pure block builders. The winners will capture the economic relationship with the end-user.
User Surplus
New KPI
Vertical Stack
Winning Model
thesis-statement
THE SHIFT
Core Thesis: From Block Space to Intent Space
Account abstraction transforms the Proposer-Builder Separation (PBS) model by decoupling user intent from transaction execution.
Block space is a commodity. PBS in Ethereum L1 commoditizes transaction ordering for MEV extraction, but users still submit low-level calldata.
Intent space is a service. Account abstraction, via ERC-4337, lets users sign high-level intents (e.g., 'swap X for Y at best price'), delegating execution to specialized intent solvers like UniswapX or CoW Swap.
PBS shifts to the user. The competitive market for block builders is replaced by a solver network competing to fulfill user intents, moving the auction upstream.
Evidence: UniswapX, which outsources swap routing to off-chain solvers, now processes over $10B in volume, proving demand for intent-based execution.
PROPOSER-BUILDER SEPARATION
The Economics Shift: PBS 1.0 vs. AA-Driven PBS
How Account Abstraction transforms the economic incentives and capabilities of block building.
| Economic Feature | PBS 1.0 (Validator-Centric) | AA-Driven PBS (User-Centric) |
|---|---|---|
Primary Auction Bidder | Validators / Proposers | User Wallets / Bundlers |
Payment Flow | Builder → Proposer → Relay | User → Bundler → Builder → Proposer |
MEV Capture Point | Builder (searcher competition) | User (via intents) & Builder |
User Fee Control | None (gas market only) | Sponsored transactions, session keys, gas abstraction |
Typical Builder Revenue Source | Arbitrage, Liquidations, Sandwiching | Intent fulfillment fees, order flow auctions |
Required Trust Assumption | Honest-Majority of Proposers (censorship resistance) | Solver/Bundler reputation (e.g., Safe, Biconomy, Stackup) |
Key Enabling Tech | MEV-Boost, Flashbots Relay | ERC-4337, ERC-7579, UniswapX, CowSwap |
deep-dive
THE ARCHITECTURAL SHIFT
Deep Dive: How Intents and Sponsorship Break the Builder Monopoly
Account abstraction decouples transaction construction from execution, enabling a competitive market for block building.
Account abstraction separates intent from execution. Users sign a desired outcome, not a specific transaction. This creates a new market where specialized solvers compete to fulfill the intent at the best cost, bypassing the need for a single builder.
Sponsored transactions are the economic catalyst. Protocols like Starknet and Polygon pay gas fees, enabling seamless onboarding. This shifts the payer from the end-user to the application, creating a direct incentive for solvers to optimize for dApp-specific outcomes.
The builder's role is commoditized. With intents, the value shifts from transaction ordering to solver competition. Projects like UniswapX and CowSwap demonstrate that a decentralized network of fillers provides better prices than any single centralized builder.
Evidence: UniswapX processes billions via intents. It routes orders across private market makers and on-chain liquidity, proving that intent-based architectures outperform traditional transaction submission in both cost and execution quality.
protocol-spotlight
ACCOUNT ABSTRACTION REDEFINES PBS
Protocol Spotlight: Who Wins in the New Stack?
Proposer-Builder Separation is evolving from a block-level to a user-level game. Here's who capitalizes on the shift to intents and smart accounts.
01
The Problem: MEV is User-Hostile
Traditional PBS optimizes for searcher-builder collusion, externalizing costs to end-users via frontrunning and failed transactions.\n- User Experience: ~$200M+ in MEV extracted monthly from retail.\n- Inefficiency: Failed tx waste ~$10M+ in gas monthly on Ethereum alone.
$200M+
Extracted/Month
$10M+
Gas Wasted
02
The Solution: Intent-Based Architectures (UniswapX, CowSwap)
Shift from transaction execution to outcome declaration. Users submit signed intents; a solver network competes for optimal fulfillment.\n- Key Benefit: MEV becomes a discount, not a tax, via competition.\n- Key Benefit: Gasless experience with meta-transactions and fee abstraction.
0
User Gas
~100ms
Quote Latency
03
The Enforcer: Smart Account Wallets (Safe, Biconomy, ZeroDev)
ERC-4337 accounts are the settlement layer for intents, enabling batched operations, sponsored gas, and social recovery.\n- Key Benefit: Session keys enable 1-click UX for dApp suites.\n- Key Benefit: Paymaster integration allows fee payment in any ERC-20 token.
5M+
Smart Accounts
-90%
UX Friction
04
The Winner: Cross-Chain Intent Orchestrators (Across, Socket, LayerZero)
The real value accrual moves to protocols that aggregate liquidity and solvers across chains into a single intent.\n- Key Benefit: Unified liquidity from $10B+ TVL across chains.\n- Key Benefit: Atomic composability for cross-chain actions (swap + bridge + stake).
$10B+
Aggregate TVL
<30s
Settlement Time
05
The New Builder: Specialized Solver Networks
Entities like CowSwap solvers and UniswapX fillers compete on execution quality, not just block space. Profit shifts from MEV extraction to service fees.\n- Key Benefit: Capital efficiency via private mempools and off-chain auction.\n- Key Benefit: Predictable revenue from solving fees vs. volatile MEV.
$50M+
Monthly Volume
0.1%
Avg. Fee
06
The Loser: Generic RPC Providers & Simple Wallets
Infrastructure that doesn't abstract complexity becomes a commodity. EOAs and basic JSON-RPC endpoints lose strategic positioning.\n- Key Benefit for Incumbents: None. They face disintermediation by bundlers and paymasters.\n- Outcome: Value shifts to the intent aggregation and fulfillment layer.
-50%
Margin Pressure
Commodity
Future Role
counter-argument
THE ADAPTATION
Counter-Argument: Builders Aren't Dead, They're Adapting
Account abstraction transforms the Proposer-Builder Separation model by creating new, specialized roles for block builders.
Builders become intent solvers. Account abstraction shifts the core transaction unit from a signed calldata blob to a user-signed intent. Builders like EigenLayer operators and SUAVE-aligned searchers now compete to solve these intents, bundling them with MEV extraction and cross-chain settlement via Across or LayerZero.
The PBS auction moves upstream. The value capture point shifts from block space to the intent resolution layer. Builders must now integrate with ERC-4337 bundlers and paymasters, competing on the quality of execution paths rather than pure block inclusion speed.
Evidence: The rise of intent-centric protocols like UniswapX and CowSwap demonstrates this model. Their solvers perform the functions of specialized builders, sourcing liquidity and optimizing settlement across domains, proving the demand for this new role.
risk-analysis
ACCOUNT ABSTRACTION & PBS
Risk Analysis: The New Attack Vectors
Account abstraction and Proposer-Builder Separation introduce new trust assumptions and attack surfaces that redefine the security landscape for users and protocols.
01
The Bundler as a Censorship Vector
Bundlers (e.g., Stackup, Alchemy, Pimlico) are the new gatekeepers. They can frontrun, censor, or reorder user operations (UserOps) for MEV extraction.
- Centralization Risk: Reliance on a few dominant bundlers creates a single point of failure.
- Trust Assumption: Users must trust the bundler to include their transaction honestly and promptly.
- MEV Leakage: Sophisticated bundlers can exploit the ordering of intents within a bundle.
~70%
Market Share
500ms
Censorship Window
02
Paymaster Dependency and Economic Capture
Paymasters enable gasless transactions but introduce a critical dependency. A malicious or compromised paymaster can drain sponsored funds or selectively deny service.
- Solvency Risk: Paymaster must hold sufficient funds; a run could break the service.
- Opaque Policies: Users cannot audit a paymaster's transaction approval logic in real-time.
- Protocol Capture: Dominant paymasters like Biconomy could become rent-seeking infrastructure.
$10M+
Sponsored Gas
1-of-N
Trust Model
03
Intent-Based PBS and Solver Collusion
AA enables intent-based architectures (e.g., UniswapX, CowSwap), shifting risk from transaction execution to intent fulfillment. Solvers compete to fulfill user intents, but can collude to extract maximum value.
- Opaque Routing: Users cannot verify they received the optimal execution path.
- Cartel Formation: A dominant solver network can enforce minimum profitability thresholds.
- Cross-Domain Risk: Intents that span chains via Across or LayerZero inherit bridge security risks.
95th %ile
Price Improvement
O(1s)
Solver Latency
04
Smart Account Key Management Exploits
Smart accounts (ERC-4337) replace EOAs with programmable logic, creating a larger attack surface for key management modules (social recovery, multisig, session keys).
- Module Vulnerability: A bug in a recovery or session key module can lead to total fund loss.
- Phishing 2.0: Attackers trick users into signing malicious
validateUserOppayloads. - Upgrade Risk: Account logic can be upgraded, potentially introducing malicious code if the upgrade mechanism is compromised.
1 Bug
Total Loss
24/7
Attack Surface
future-outlook
THE ARCHITECTURE
Future Outlook: The Integrated Intent Stack
Account abstraction is the substrate for a new, vertically integrated intent execution layer that absorbs Proposer-Builder Separation (PBS).
Account abstraction absorbs PBS. The current PBS model separates block building from proposing. Smart accounts with intent-based transaction batching internalize this function, allowing a user's bundled intents to be the atomic unit of execution, bypassing the need for a generalized builder.
The stack inverts the flow. Today's flow is user -> wallet -> builder -> proposer. The integrated intent stack flips this: user expresses intent -> specialized solver competes -> smart account executes. This moves competition from block-space to the intent-solving layer.
This creates protocol-native MEV. Projects like UniswapX and CowSwap already capture this logic off-chain. ERC-4337 and RIP-7560 standardize it on-chain, turning intents into a first-class primitive. The winning architecture will own the solver network, not the block builder.
Evidence: The success of Across Protocol's UMA-based verification and LayerZero's omnichain fungible token standard demonstrates that intent settlement layers with competitive solver markets outperform generalized sequencing.
takeaways
ACCOUNT ABSTRACTION REDEFINES PBS
Key Takeaways for Builders and Architects
AA shifts PBS from a block-building auction to a user-intent orchestration layer, unlocking new design space.
01
The Problem: MEV is a UX Tax
Traditional PBS protects users from frontrunning but still forces them to pay the MEV tax via inflated gas prices. Builders capture this value, not users.
- Result: Users pay for block space and value leakage.
- Opportunity: AA wallets can internalize and redistribute MEV.
$1B+
Annual MEV
10-20%
Gas Premium
02
The Solution: Intent-Based Order Flow
AA enables users to sign intents (e.g., 'I want 1 ETH worth of USDC') instead of rigid transactions. Solvers like UniswapX and CowSwap compete to fulfill them off-chain.
- Benefit: Users get optimal execution, solvers capture MEV.
- Architecture Shift: PBS builders become intent solvers.
~500ms
Solver Latency
>95%
Fill Rate
03
The New Stack: AA-PBS Hybrid
Future PBS will integrate AA at the protocol level. Think EIP-4337 Bundlers acting as specialized builders.
- Core: Bundlers aggregate user ops, solvers compete on fulfillment, proposers sell blocks.
- Tooling: Requires new SDKs from Stackup, Alchemy, Biconomy.
10x
Txn Bundle Size
-50%
User Gas Cost
04
The Risk: Centralized Intents
If a few solvers (e.g., Across, 1inch) dominate intent flow, they become the new centralized sequencers.
- Threat: Recreates L1 miner extractable value (MEV) problems at the solver layer.
- Mitigation: Force solver competition via open auctions and cryptographic proofs.
3-5
Dominant Solvers
>60%
Market Share Risk
05
The Blueprint: Cross-Chain Intents
AA makes native cross-chain UX possible. A user signs a single intent, and a solver network uses bridges like LayerZero and Axelar to fulfill it.
- Vision: PBS expands to a cross-domain block space market.
- Players: Across and Socket are already executing this model.
<2 mins
Cross-Chain Settle
$10B+
Bridge TVL
06
The Mandate: Build for Bundlers
Architects must design dApps that generate high-quality, bundle-friendly order flow. This is the new moat.
- Tactic: Integrate AA SDKs to batch user ops.
- Incentive: Negotiate fee sharing with bundlers/solvers for premium order flow.
0.1-1.0%
Flow Rebate
100k+
Ops/Day Scale
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