Why PBS Merely Redistributes, Rather Than Reduces, the MEV Tax

PBS redistributes, not reduces, MEV. The core economic inefficiency—the MEV tax—is the value siphoned from user transactions by network actors. PBS merely formalizes this extraction into a specialized builder market, shifting profits from validators to a new class of capital-intensive searchers and builders.

The tax persists in the order flow. Builders like Flashbots and bloXroute compete to pay validators the highest bid, which is funded by arbitrage, liquidations, and sandwich attacks on user transactions. This creates a zero-sum redistribution from users and smaller validators to sophisticated, centralized builders.

Evidence: Post-PBS Ethereum shows builder dominance is concentrated. The top three builders (e.g., Titan, rsync) consistently win over 60% of blocks, demonstrating that MEV revenue consolidates into fewer, more powerful entities rather than dissipating.

PBS redistributes MEV extraction. It formalizes the auction between builders and proposers, moving value from validators to specialized searchers and builders like Flashbots and bloXroute. The total MEV supply, derived from user transactions, remains unchanged.

The user tax is structural. MEV originates from latency, information asymmetry, and DeFi arbitrage opportunities on protocols like Uniswap and Aave. PBS does not reduce these sources; it merely creates a more efficient market for their capture.

Evidence from Ethereum post-merge. Analysis from EigenPhi and Flashbots shows MEV revenue has not decreased; it has been redirected. Builders now compete in a sealed-bid auction, but the winning bid is still funded by user transaction value.

PBS is a redistribution mechanism. It formalizes the MEV supply chain into specialized roles—searchers, builders, proposers—but the total extracted value from user transactions remains unchanged. The tax is still paid; it just flows to different parties.

Builders capture the primary value. They aggregate searcher bundles, paying proposers a fee for block inclusion. This creates a builder market where profit is optimized via sophisticated algorithms and private order flow from entities like Flashbots and Jito Labs.

Proposers become rent-extracting gatekeepers. Their revenue shifts from base issuance and tips to builder bids, creating a passive income stream decoupled from network utility. This centralizes economic power at the relay layer.

Evidence: Post-PBS, over 90% of Ethereum blocks are built by a handful of entities. The MEV-Boost relay market shows builders consistently outbidding the public mempool, proving value capture is concentrated, not eliminated.

Builder competition optimizes extraction, not elimination. Builders compete to pay validators the highest bid for block space, which is funded by maximizing extracted MEV. This auction dynamic shifts profits from validators to sophisticated builders, but the underlying value is still siphoned from user transactions.

The user's price is the MEV floor. A user's swap on Uniswap creates a guaranteed arbitrage opportunity. Whether Builder A or Builder B wins the block, they capture this value. Competition ensures the most efficient capture, not its absence. Tools like Flashbots Protect merely route this value to compliant builders.

Evidence from Ethereum post-merge. Since EIP-1559 and the merge, total MEV has not decreased; it has become a more centralized and professionalized market. The revenue simply flows through different entities like bloXroute and Relayoor, rather than disappearing from the system.

PBS redistributes, not reduces, value extraction. The economic value of block space is fixed; PBS merely shifts who captures it from validators to specialized builders and proposers. The MEV tax on end-users remains, now flowing through a more efficient, professionalized market.

Builders become the new extractive layer. With MEV-Boost on Ethereum, builders like Flashbots, bloXroute, and Titan compete to create the most profitable blocks. This competition centralizes sophisticated extraction into a few entities, creating a new oligopoly of block production.

End-user costs are protocol-agnostic. Whether MEV is captured by a validator in a monolithic chain or a builder in a PBS chain, the cost is baked into slippage and front-running. This is analogous to intent-based architectures like UniswapX or Across, which shift complexity off-chain but still pay for optimal execution.

Evidence: Post-PBS, Ethereum's proposer payment (the winning bid) consistently represents over 80% of a block's total reward, demonstrating that MEV value is simply being repackaged and auctioned, not destroyed. The tax is now more visible on-chain.