Centralized builders are a single point of failure. The current PBS model funnels over 90% of Ethereum blocks through a handful of entities like Flashbots and bloXroute. This concentration creates a censorship vector where a builder can exclude transactions or be coerced by external actors.
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Why Centralized Builders Are a Single Point of Failure
A technical failure or regulatory attack on a dominant builder like Flashbots could cripple a significant portion of Ethereum's block production. This is the systemic risk hiding in plain sight.
introduction
THE BOTTLENECK
Introduction
The dominance of centralized builders creates a systemic risk that undermines the censorship-resistance and liveness guarantees of Ethereum.
Decentralization fails at the builder layer. The network's security depends on a decentralized validator set, but this is negated if validators rely on a monopolistic builder marketplace. The failure or malicious action of a major builder compromises the entire chain's liveness.
The MEV supply chain is fragile. Builders like Titan and Beaver rely on centralized infrastructure for speed. An outage or attack on their relay or data pipeline halts block production for their dependent validators, creating systemic fragility.
Evidence: The top three builders consistently produce over 80% of Ethereum blocks. This level of consolidation is a protocol-level risk that in-protocol solutions like enshrined PBS (ePBS) must solve.
key-trends
SINGLE POINTS OF FAILURE
The Centralization Problem: By The Numbers
Blockchain's decentralization promise is undermined when a handful of centralized builders control transaction ordering and value extraction.
01
The MEV Cartel
A few dominant builders like Flashbots and BloXroute control the majority of block production. This centralizes the power to censor transactions, front-run users, and extract value.
- >80% of Ethereum blocks are built by just 3-4 entities.
- Creates systemic risk for OFAC-compliant censorship.
- Enables predatory MEV strategies against retail users.
>80%
Block Share
~$1B+
Annual MEV
02
The Infrastructure Monopoly
Reliance on centralized RPC providers like Alchemy and Infura creates a critical chokepoint. Their failure would cripple most dApps and wallets.
- >50% of Ethereum traffic routes through a few providers.
- Single company outages can black out entire ecosystems.
- Creates data privacy and surveillance risks.
>50%
Traffic Share
100%
Downtime Risk
03
The Staking Centralization Trap
Liquid staking derivatives (LSDs) like Lido and centralized exchanges concentrate validator power, threatening Proof-of-Stake chain security.
- Lido controls ~30% of Ethereum's staked ETH.
- Exceeds the 33% threshold for causing chain finality delays.
- Creates regulatory attack surface and governance capture risk.
~30%
Stake Share
33%
Safety Threshold
04
The Bridge Custody Risk
Centralized bridges and cross-chain services hold billions in custodial wallets, creating massive honeypots for hackers and insider threats.
- $2B+ lost in bridge hacks since 2021.
- Multisig keys often controlled by a small team.
- Creates fragmented liquidity and trust dependencies across chains.
$2B+
Hack Losses
5/8
Typical Multisig
05
The Sequencer Black Box
Optimistic and ZK Rollups rely on a single, centralized sequencer (e.g., Arbitrum, Optimism) for transaction ordering and speed, reintroducing trust.
- Users cannot force transaction inclusion without the sequencer.
- Creates ~7-day withdrawal delays to L1 for censorship resistance.
- Centralized profit capture from L2 transaction fees.
1
Active Sequencer
~7 Days
Withdrawal Delay
06
The Data Availability Bottleneck
Rollups depend on centralized data availability committees or a single chain like Ethereum for data posting, creating cost and scalability limits.
- Ethereum DA costs are ~80-90% of a rollup's operating expense.
- Creates a scalability ceiling tied to L1 throughput.
- Centralized DACs reintroduce trust assumptions for validity proofs.
80-90%
Cost Driver
1
Primary DA Layer
SINGLE POINT OF FAILURE ANALYSIS
Builder Market Share & Risk Profile
Comparison of market concentration, client diversity, and censorship resistance across the dominant centralized builder and decentralized alternatives.
| Metric / Feature | Flashbots (Current Leader) | Decentralized Builder Pool | Solo Staker |
|---|---|---|---|
Proposer-Builder Separation (PBS) Client | mev-boost-relay | Multiple (e.g., Ultra Sound, Agnostic) | Self-built or None |
Market Share of Top Builder |
| <15% (distributed) | ~0% |
Censorship Resistance (OFAC Compliance) | |||
Relay Trust Assumption | Centralized (TLS, Attestations) | Decentralized (EigenLayer, SSV Network) | None |
MEV Extraction Strategy | Optimized for searcher bids | Optimized for validator yield | Basic or None |
Block Proposal Latency | < 1 sec (optimized) | 1-2 sec (network overhead) |
|
Infrastructure Cost to Validator | $0 (subsidized) | ~$5-20/month (service fee) | Self-hosted CapEx |
Failure Impact on Chain Liveness | Critical (Mass re-orgs) | Minimal (Redundant nodes) | None (Independent) |
deep-dive
THE SINGLE POINT OF FAILURE
The Slippery Slope: From Efficiency to Systemic Risk
Centralized builders create a fragile MEV supply chain that threatens the liveness and censorship-resistance of the entire network.
Centralized builders are a systemic risk. They consolidate block production, creating a single point of failure for transaction inclusion and ordering that undermines the network's decentralized security model.
Efficiency creates fragility. Builders like Flashbots SUAVE and Jito Labs optimize for extractable value, but their dominance means a bug or malicious action in one client can halt an entire chain.
Censorship becomes trivial. A dominant builder can blacklist transactions from sanctioned addresses or protocols like Tornado Cash, effectively enforcing regulatory policy at the protocol level.
Evidence: On Ethereum, over 90% of blocks are built by just five entities. This concentration mirrors the pre-OFAC-compliant relay problem, but now exists deeper in the stack.
risk-analysis
THE BUILDER CARTEL RISK
Concrete Failure Modes: What Could Go Wrong?
Centralized builder dominance reintroduces the systemic risks that decentralized blockchains were built to eliminate.
01
The Censorship Vector
A centralized builder can unilaterally filter or reorder transactions, becoming a political and regulatory choke point. This directly violates the credibly neutral settlement guarantee of the base layer.
- MEV-Boost relays already censor OFAC-sanctioned addresses.
- A dominant builder could blacklist entire protocols or front-run with impunity.
- Creates a single legal entity for regulators to target, unlike a permissionless peer-to-peer network.
>90%
Relay Censorship
1 Entity
Choke Point
02
The Liveness Failure
If a major builder like Flashbots or bloxroute goes offline due to technical failure or attack, block production for a significant portion of the network halts. This creates a single point of technical failure for economic activity.
- ~80% of Ethereum blocks are built by a handful of entities.
- Network reverts to slower, less efficient native block production, causing massive latency spikes and failed transactions.
- Analogous to a cloud provider outage taking down critical DeFi infrastructure.
~80%
Blocks At Risk
Seconds→Minutes
Latency Spike
03
The Economic Capture
Centralized builders maximize their own extractable value (MEV) at the expense of users and proposers. They become profit-maximizing intermediaries, not neutral infrastructure.
- Can implement exclusive order flow (EOF) deals with searchers like Jito Labs, creating a closed ecosystem.
- Skim priority fees and MEV that should go to validators/stakers.
- Distort market incentives, leading to long-term centralization of block building expertise and capital.
100%
Fee Control
Opaque
Profit Sharing
04
The Trusted Hardware Trap
Builders relying on SGX/TEEs for pre-confirmation privacy (e.g., Flashbots' SUAVE vision) introduce a new hardware-level attack vector. Compromise of the trusted execution environment breaks all security guarantees.
- Intel SGX has a history of critical vulnerabilities.
- Creates a false sense of security for cross-domain MEV and intent settlement.
- Shifts trust from cryptographic verification to corporate and hardware vendor security, a regression in decentralization.
1 Exploit
Total Break
Vendor Risk
New Dependency
05
The Protocol Ossification
A dominant builder architecture becomes too big to change, stifling protocol-level innovation. Upgrades to the consensus or execution layer must cater to the builder's economic interests, not network health.
- EIP-1559 and Proposer-Builder Separation (PBS) design was heavily influenced by builder capabilities.
- Future improvements like single-slot finality or new preconfirmations could be blocked if they threaten builder margins.
- Creates a de facto governance layer outside of community consensus.
Slow
Innovation Rate
Veto Power
On Upgrades
06
The Cross-Chain Contagion
A builder cartel on a major chain like Ethereum can extend its influence to connected ecosystems via cross-chain MEV and shared searcher networks, exporting centralization.
- Bridges and liquidity networks like LayerZero, Axelar, and Wormhole become MEV extraction points.
- A failure or malicious action on Ethereum can cascade to rollups (Arbitrum, Optimism) and app-chains (Cosmos, Polygon) via shared builder infrastructure.
- Turns a chain-specific risk into a systemic L0/L1/L2 failure.
Multi-Chain
Failure Domain
Cascading
Risk
counter-argument
THE SINGLE POINT OF FAILURE
The Steelman: "But It's Just a Neutral Marketplace"
Centralized builders create a systemic risk by concentrating censorship, liveness, and economic power.
Centralized builders are not neutral. They are active participants that decide transaction ordering, inclusion, and censorship, directly contradicting the credibly neutral settlement guarantees of the underlying L1 like Ethereum.
Censorship becomes a protocol-level feature. A dominant builder like Flashbots can exclude transactions based on OFAC lists or arbitrary policy, a risk that decentralized builders like SUAVE or Shutter Network are designed to mitigate.
Liveness depends on a single entity. If the centralized builder's infrastructure fails, the entire chain's block production halts, unlike a decentralized set of builders where redundancy ensures resilience.
Economic centralization creates MEV cartels. A single builder controls the flow of proposer-builder separation (PBS) revenue, enabling rent extraction and stifling competition from smaller searchers and builders.
Evidence: The Flashbots builder commands >90% of Ethereum blocks post-Merge, demonstrating the market's failure to decentralize and creating a de facto standard for censorship.
protocol-spotlight
WHY CENTRALIZED BUILDERS ARE A SINGLE POINT OF FAILURE
The Decentralized Builder Ecosystem
The MEV supply chain's reliance on a few centralized entities like Flashbots introduces systemic risk and rent extraction.
01
The Censorship Vector
A single, dominant builder like Flashbots can become a political tool, enabling OFAC compliance that censors transactions at the protocol level. This violates Ethereum's credibly neutral base layer.
- Risk: State-level actors can pressure a single entity.
- Solution: A distributed network of builders makes censorship economically irrational.
>90%
Post-Merge Dominance
0
Censorship Resistance
02
The Liveness Bomb
Centralized builder infrastructure is a single point of technical failure. An outage at a major provider like BloXroute or builder0x69 can cripple block production, causing chain re-orgs and missed slots.
- Risk: Centralized cloud dependencies (AWS, GCP) create correlated downtime.
- Solution: Decentralized builders leverage geographically distributed, permissionless nodes.
~12s
Slot Time
$1M+
Per-Slot MEV
03
The Economic Black Box
Opaque, centralized builders like Eden Network or private orderflow auctions extract maximal value for themselves, not users or validators. This creates information asymmetry and stifles competition.
- Problem: Sealed-bid auctions hide true MEV value from the public market.
- Solution: Transparent, open-source builder markets like SUAVE or MEV-Share democratize value capture.
$1B+
Annual Extracted Value
-50%
Validator Revenue
04
Protocol Capture Risk
A centralized builder can capture core protocol development. If the dominant builder's interests diverge from the network's (e.g., pushing for PBS changes that benefit them), they can stall or distort upgrades.
- Entity Risk: See Flashbots' influence on Ethereum's roadmap.
- Antidote: A competitive, decentralized builder ecosystem aligns incentives with the public chain.
1
Agenda
1000s
Divergent Nodes
future-outlook
THE SINGLE POINT OF FAILURE
The Path Forward: Enshrined PBS or Bust
The current reliance on centralized builder infrastructure reintroduces the exact systemic risks that decentralization was designed to eliminate.
Centralized builders are a systemic risk. The dominance of a few entities like Jito Labs or bloXroute creates a single point of failure for the entire MEV supply chain. Their centralized servers are vulnerable to downtime, censorship, and regulatory capture, directly threatening chain liveness and neutrality.
The MEV supply chain centralizes. The current PBS model outsources block production to a permissioned auctioneer. This creates a bottleneck where builders like Flashbots' SUAVE or Titan can act as gatekeepers, determining which transactions are included and which are not, effectively re-centralizing the network.
Enshrined PBS is the only viable solution. The protocol must directly enforce permissionless block building. This eliminates the trusted relay layer and ensures the builder market remains credibly neutral and competitive, preventing the formation of a cartel that can extract maximal rent from users.
Evidence: The dominance is measurable. In late 2023, a single builder on Ethereum produced over 90% of blocks for a period, demonstrating the fragility of the current outsourced model and the urgent need for protocol-level enforcement.
takeaways
THE CENSORSHIP RISK
TL;DR for Protocol Architects
Centralized builders like Flashbots' SUAVE or private mempools create systemic MEV and liveness vulnerabilities that threaten protocol neutrality.
01
The Single Point of Censorship
A dominant centralized builder can blacklist transactions, making protocols like Tornado Cash or sanctioned addresses non-functional. This violates the credibly neutral settlement guarantee of the base layer.
- Real-World Impact: USDC blacklisting on Ethereum is a preview.
- Architectural Risk: Your protocol's liveness depends on a third-party's compliance policy.
>66%
Builder Dominance
100%
Censorship Power
02
The MEV Cartel Problem
Builders and proposers can collude to extract maximum value from users, creating a tax on every swap and liquidation. This directly reduces your protocol's effective yield and user returns.
- Extraction Vector: Front-running, back-running, and sandwich attacks.
- Protocol Cost: MEV seeps value from Uniswap LPs and Aave liquidators into builder/validator pockets.
$1B+
Annual MEV
~50bps
Per-Swap Tax
03
Solution: Decentralized Builder Networks
Distribute block building across a permissionless set of competing builders. This is the core thesis behind EigenLayer, Astria, and shared sequencer networks.
- Key Benefit: Censorship resistance through builder diversity.
- Key Benefit: MEV competition drives profits back to users/protocols.
10x+
More Builders
-90%
Cartel Profits
04
Solution: SUAVE & Intents
Flashbots' SUAVE chain aims to decentralize the mempool and block building process. Paired with intent-based architectures (UniswapX, CowSwap), it shifts competition from the dark forest to a transparent auction.
- Key Benefit: Users express outcomes, not transactions.
- Key Benefit: MEV is captured and redistributed via order flow auctions.
~500ms
Auction Latency
100%
Flow Auctioned
05
Solution: Enshrined Proposer-Builder Separation (PBS)
Ethereum's roadmap formalizes PBS at the protocol level, preventing validator-builder collusion. This is the endgame for credible neutrality.
- Key Benefit: Validators simply choose the highest-paying, valid header.
- Key Benefit: Forces builder market competition, breaking cartels.
L1 Native
Solution
2025+
Timeline
06
Action: Architect for Neutrality
Design your protocol's transaction flow to be builder-agnostic. Integrate with RPC endpoints like Flashbots Protect, support private transaction bundles, and consider intent-based designs from day one.
- Immediate Step: Use mev-blocks API to detect censorship.
- Strategic Step: Allocate treasury to bootstrap a decentralized builder.
Now
Integration Time
Critical
Priority
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