The Future of Proposer-Builder Separation (PBS): Promise vs. Reality

The top 3 builders (e.g., Flashbots, bloXroute, beaverbuild) consistently win >80% of blocks on Ethereum. This centralizes the critical infrastructure of block building, creating systemic risk and potential censorship vectors.

• Risk: Single point of failure for network liveness.
• Reality: PBS has shifted power from validators to a small cabal of builders.

Bake PBS directly into the protocol consensus layer to eliminate trust in off-chain relays and builder cartels. This is Ethereum's long-term answer, moving critical logic from off-chain markets to on-chain, verifiable code.

• Benefit: Removes reliance on centralized relays.
• Challenge: Complex protocol change requiring years of R&D (e.g., Vitalik's Proposer-Block Separation proposal).

Projects like Flashbots SUAVE aim to decentralize the builder market itself. It's a shared mempool and decentralized block builder network, allowing anyone to become a competitive builder by pooling orderflow and compute.

• Mechanism: Creates a neutral, open marketplace for block space.
• Goal: Break the oligopoly by commoditizing the building process.

Large staking pools like Lido, Coinbase, and Rocket Pool are vertically integrating into building. Their massive stake gives them a natural advantage in proposing blocks, which they can pair with in-house builder software to capture 100% of MEV.

• Outcome: Re-centralization under a different guise.
• Metric: Lido validators propose ~30% of Ethereum blocks.

Dominant builders using OFAC-compliant relays (like Flashbots) have censored >50% of blocks post-Merge. This turns a technical oligopoly into a political one, where a few entities enforce regulatory compliance on-chain.

• Threat: Network-level transaction censorship.
• Data: Censorship peaked at >70% in 2023.

Building competitive blocks requires low-latency data (<100ms) and massive compute for complex MEV bundles. This inherently favors centralized, well-funded entities, creating a permanent tension between efficiency and decentralization in PBS.

• Barrier: Capital and technical overhead for small builders.
• Result: Natural tendency towards cartelization without protocol-level fixes.

The builder market consolidates into a few dominant players like Flashbots, BloXroute, and Titan, creating a new, unregulated layer of centralization. This recreates the very problem PBS was meant to solve.

• Risk: >66% of blocks built by 2-3 entities.
• Consequence: Censorship resistance fails; builders become the new validators.

Enshrining PBS into the protocol (ePBS) locks in economic assumptions that may not hold. It risks ossifying the MEV supply chain, making it impossible to adapt to new threats or market structures.

• Risk: Protocol-level commitment to a flawed auction mechanism.
• Consequence: Innovation in MEV redistribution (e.g., MEV-Share, MEV-Boost) is stifled.

If builder profits dwarf vanilla staking yields, solo stakers exit. This reduces validator set decentralization, making the network more vulnerable to attacks and increasing reliance on the few remaining professional operators.

• Risk: Solo staker APR drops >30% relative to builders.
• Consequence: Lido and Coinbase dominance increases; Ethereum's security model degrades.

PBS introduces a multi-party, multi-round communication protocol with tight latency constraints. This creates a vast new attack surface for timing attacks, network partitioning, and consensus manipulation that we have not fully modeled.

• Risk: ~4s slot time creates brittle dependencies.
• Consequence: A single relay outage could cause chain reorganization and significant MEV theft.

Regulators (SEC, CFTC) classify block building and MEV extraction as securities trading or market manipulation. Builders and relays become regulated entities, destroying the permissionless, neutral core of the network.

• Risk: KYC/AML requirements for block production.
• Consequence: OFAC-compliant blocks become mandatory; crypto-anonymity is dead.

The market bypasses PBS entirely. Users express intents via systems like UniswapX and CowSwap, and a decentralized sequencer network like SUAVE executes them. PBS becomes a legacy system for simple payments.

• Risk: PBS is rendered economically irrelevant.
• Consequence: Ethereum' core roadmap is misaligned; value accrues to application-layer intent networks.

Ethereum's roadmap to enshrine PBS in-protocol is years away, leaving the ecosystem reliant on off-protocol, trust-minimized markets like MEV-Boost. This creates a fragile, multi-party dependency where ~90% of Ethereum blocks are built by a handful of builders, introducing systemic risk.

Flashbots' SUAVE reframes PBS by creating a decentralized, application-specific chain for preference expression and execution. It aims to become a cross-chain mempool and block builder, commoditizing MEV extraction and returning value to users.

• Key Benefit: Unifies fragmented liquidity and intent flow across Ethereum, Arbitrum, Optimism, etc.
• Key Benefit: Enables novel applications like intent-based bridges and private transactions.

The economics of block building favor large, vertically-integrated entities. Titan Builder and Relayoor dominate because they control order flow, sophisticated algorithms, and exclusive data. This recreates the miner centralization problem PBS was meant to solve, creating censorship risks and single points of failure.

Obol and SSV Network mitigate proposer centralization by splitting validator keys across multiple nodes. This reduces the single-operator risk PBS introduces and strengthens network resilience.

• Key Benefit: Enables trust-minimized staking pools and institutional participation.
• Key Benefit: Provides fault tolerance, removing single points of failure for block proposal.

As activity moves to Rollups, so does MEV. PBS was designed for a single chain, not a multi-chain ecosystem. This creates fragmented MEV markets and allows sequencers on chains like Arbitrum and Base to capture value that should be contestable.

Projects like Astria and Espresso are building decentralized shared sequencers that operate like a PBS layer for rollups. They introduce inter-rollup atomic composability and open block building to competition via auctions.

• Key Benefit: Unlocks cross-rollup MEV and improves user experience.
• Key Benefit: Prevents rollup sequencers from becoming entrenched, extractive monopolies.