Why Proposer-Builder Separation is Not a Silver Bullet

PBS relocates centralization risk from validators to builders. The builder market consolidates because sophisticated MEV extraction requires massive capital and low-latency infrastructure, creating a new oligopoly.

Out-of-protocol PBS creates trust dependencies. Current implementations like MEV-Boost on Ethereum rely on a relay network. This introduces new points of failure and censorship, as seen with OFAC compliance.

Builder cartels can form. A dominant builder like Flashbots or bloXroute can manipulate block space, creating a coordination problem that undermines the original decentralization goal of PBS.

Evidence: Post-Merge, over 90% of Ethereum blocks are built by just five entities via MEV-Boost, demonstrating rapid market concentration.

Builder cartels form naturally. The competitive advantage from MEV extraction and economies of scale creates a winner-take-most market. The top three builders, like Flashbots SUAVE and BloXroute, consistently win over 80% of blocks.

Oligopoly shifts from hardware to data. PBS moves power from stake concentration to information asymmetry. Builders with superior order flow and MEV strategies, not validators, dictate transaction inclusion and ordering.

Centralization risk is now hidden. The builder market is opaque. Validators outsource block production to a black box, creating a trusted third party problem that defeats decentralization goals.

Evidence: Ethereum blockspace data shows the top 5 builders produce >90% of post-merge blocks. This concentration rivals pre-merge mining pool dominance, proving PBS re-centralizes power.

PBS created a builder cartel. The separation of block proposing from building outsourced complexity to specialized entities like Flashbots, bloXroute, and beaverbuild. This created a market where a handful of builders win most blocks through superior MEV extraction and network latency.

Builders control transaction ordering. The proposer's role is now passive; they simply accept the highest-paying header. Builders use private mempools and sophisticated algorithms to construct the most profitable block, dictating the final state for all users.

Centralization is a feature, not a bug. The economic efficiency of MEV extraction demands scale. Large builders like Flashbots' SUAVE vision dominate because they aggregate more order flow, creating a feedback loop that entrenches their position.

Evidence: Over 90% of Ethereum blocks post-Merge are built by just three entities. This builder market share demonstrates that PBS shifts, rather than solves, the centralization problem.

Trust in Data Availability persists. PBS assumes builders post valid blocks, but they can withhold data, forcing validators to trust centralized sequencers like Arbitrum or Optimism for L2 state. This creates a single point of failure for chain liveness.

Trust in Cross-Domain Messaging is the new bottleneck. PBS-compliant builders must interact with bridges like Across or LayerZero, which introduce their own multisig or oracle trust models. The security of an intent's cross-chain execution is only as strong as its weakest bridge.

Trust in Economic Finality is not absolute. PBS separates block proposal from construction, but the underlying consensus (e.g., Ethereum's LMD-GHOST) still determines canonical ordering. A malicious supermajority of validators can still reorder transactions post-PBS.

Evidence: The dominance of a few builders like Flashbots and bloXroute post-PBS demonstrates that decentralization is a market structure problem, not just a protocol design one. PBS shifts, but does not eliminate, trust.

PBS creates new cartels. The builder market consolidates around a few specialized entities like Flashbots SUAVE and bloXroute, creating a new layer of centralization. This shifts power from validators to capital-rich builders.

MEV supply chain lengthens. PBS adds latency and complexity to block production, creating more points of failure. This contrasts with the simpler, integrated model of Solana or Monad.

Relayer centralization is critical. The trusted relay connecting builders and proposers becomes a single point of censorship. If a dominant relay like Flashbots censors, the chain censors.

Evidence: Post-Merge, >90% of Ethereum blocks are built by just five entities. The builder market is more concentrated than the validator set it was designed to protect.

PBS creates builder cartels. The economic logic of MEV extraction favors large, vertically integrated entities with private orderflow and advanced infrastructure, replicating the centralization PBS was meant to solve.

Relay trust is mandatory. Builders must trust a centralized relay to honestly deliver their blocks. This creates a single point of censorship and failure, as seen in the dominance of Flashbots' relay on Ethereum.

Enshrined PBS is not neutral. Protocol-level PBS, as proposed for Ethereum, hardcodes economic rules that can ossify market structure and stifle innovation from off-protocol solutions like SUAVE or Shutter Network.

Evidence: Post-Merge, over 90% of Ethereum blocks are built by just three entities, demonstrating that PBS alone does not prevent builder market concentration.