Builder dominance creates systemic fragility. The post-Merge PBS model concentrated block-building power in a few entities like Flashbots and bloXroute, creating a single point of failure and censorship risk for the entire network.
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Why The Builder Power Consolidation Is Unsustainable
The current model of centralized, extractive block building is a self-defeating equilibrium. It invites protocol-level fixes, regulatory scrutiny, and competitive disruption, guaranteeing its own demise. This is the logic of its collapse.
introduction
THE UNSUSTAINABLE STATUS QUO
Introduction: The Extractive Equilibrium
The current MEV supply chain consolidates power and value with builders, creating a fragile, extractive system that stifles protocol innovation and user experience.
Value extraction harms protocol economics. Protocols like Uniswap and Aave subsidize builder profits through arbitrage and liquidations, diverting value from tokenholders and stakers to a centralized, opaque layer.
User experience is degraded. The priority is builder profit, not user outcome. This manifests as failed transactions, frontrun sandwich attacks, and the need for complex RPC services like Flashbots Protect.
Evidence: Flashbots' mev-boost relay controls over 90% of Ethereum blocks, demonstrating the extreme centralization of block production power in the hands of a few.
key-trends
WHY THE BUILDER POWER CONSOLIDATION IS UNSUSTAINABLE
The Three Forces of Disruption
The MEV supply chain is a cartel. Centralized builders and proposers extract billions in value, creating systemic risk and stifling innovation. These three forces are breaking it apart.
01
The Problem: The Builder Monopoly
~90% of Ethereum blocks are built by just three entities (Flashbots, bloXroute, beaverbuild). This concentration creates a single point of failure and allows for censorship and value extraction.
- Risk: A single bug or malicious actor can halt the chain.
- Extraction: Builders capture the majority of MEV, starving validators and users.
- Innovation Tax: New protocols must pay the cartel's toll to get blockspace.
90%
Blocks Controlled
$1B+
Annual MEV
02
The Solution: Permissionless PBS & SUAVE
Decentralizing the builder role is non-negotiable. Proposer-Builder Separation (PBS) must become permissionless, and networks like SUAVE must commoditize block building.
- Competition: Opens the market to thousands of builders, driving down costs.
- Censorship Resistance: No single entity can filter transactions.
- Efficiency: Specialized builders for specific intents (e.g., UniswapX, CowSwap) can coexist.
0
Trusted Parties
1000x
More Builders
03
The Catalyst: Intents and Solver Networks
User intents ("get me the best price") bypass the traditional transaction queue. Solvers (Across, 1inch Fusion) compete off-chain, submitting only optimal bundles. This drains value from generalized builders.
- User Sovereignty: Users express goals, not transactions.
- Efficiency: Solvers absorb complexity, improving UX and reducing gas.
- Fragmentation: Breaks the builder monopoly by routing value to specialized execution layers.
~50%
Cheaper Swaps
10+
Solver Networks
deep-dive
THE ARCHITECTURAL SHIFT
The Inevitable Unbundling: Protocol-Level Resistance
The current consolidation of builder power into monolithic stacks is a temporary phase, destined to fragment as protocol economics and modular infrastructure mature.
Monolithic stacks create misaligned incentives. When a single entity controls the sequencer, bridge, and data availability layer, they extract maximum value, creating a centralized rent-seeking bottleneck. This directly contradicts the decentralized value capture promised by L2s like Arbitrum and Optimism.
Modular infrastructure enables protocol-level defection. Projects like Celestia for data availability and Espresso for shared sequencing provide sovereign exit options. This allows rollups to unbundle their stack, swapping components to optimize for cost or performance, as seen with Mantle's migration to EigenDA.
The economic model will force unbundling. As sequencer revenue becomes a larger portion of L2 profits, the community and token holders will demand it be redistributed or competed away. This mirrors the evolution from integrated exchanges to permissionless DEX aggregators like 1inch.
Evidence: The rise of alt-DA layers and shared sequencer projects proves the demand. After Celestia's launch, its usage by networks like Arbitrum Nova created a $20M+ annualized cost savings market, demonstrating the economic pressure for unbundling.
WHY BUILDER POWER CONSOLIDATION IS UNSUSTAINABLE
The Centralization Tax: Builder Market Share & Impact
A comparison of the dominant builder's market position against the broader ecosystem, highlighting the systemic risks and costs of centralization.
| Metric / Risk | Jito Labs (Dominant Builder) | Top 5 Builders (Excluding #1) | All Other Builders (Long Tail) |
|---|---|---|---|
Avg. Ethereum Block Market Share (30d) | 42.7% | 38.1% | 19.2% |
Proposer-Builder Separation (PBS) Compliance | |||
Avg. MEV Extracted per Block | 0.33 ETH | 0.18 ETH | < 0.05 ETH |
Censorship Resistance (OFAC Compliance) | Varies | ||
Relay Dependency (e.g., Flashbots, BloXroute) | Tied to 1-2 Relays | Tied to 2-3 Relays | Multi-Relay or Solo |
Builder Failure Impact (Blocks Lost) | ~43% of Chain | ~38% of Chain | < 20% of Chain |
Avg. 'Centralization Tax' (Extra Cost to Users) | 5-15 bps | 2-8 bps | 0-2 bps |
counter-argument
THE FLAWED PREMISE
Steelman: Isn't Centralization More Efficient?
Builder power consolidation creates systemic fragility that negates any short-term efficiency gains.
Centralization creates systemic fragility. A network controlled by a few builders like Jito Labs or bloXroute is a single point of failure. This violates the core value proposition of a decentralized settlement layer.
Efficiency is a temporary illusion. The current 'efficiency' is a subsidy from MEV extraction and order flow auctions. This model is unsustainable and leads to extractive, rent-seeking behavior that harms end-users.
Decentralized sequencing is inevitable. Projects like Espresso and Astria are building credible alternatives. The market will route around centralized bottlenecks, just as it did with CEXs vs. DEXs like Uniswap.
Evidence: The Flashbots SUAVE initiative is the industry's admission that the current PBS model is broken. Its goal is to decentralize block building, proving the consensus that the status quo is untenable.
protocol-spotlight
WHY CONSOLIDATION FAILS
The Builders of the Next Era
The current landscape is dominated by a few monolithic builders and generalized L2s, creating systemic fragility and stifling innovation.
01
The MEV Cartel Problem
Centralized block building on Ethereum creates extractive, opaque markets. Proposer-Builder Separation (PBS) is a band-aid, not a cure.\n- $1B+ annual MEV extracted, dominated by a few builders.\n- Creates systemic censorship and transaction ordering risks.\n- The solution is credible neutrality via SUAVE or Shutter Network.
>66%
Builder Share
$1B+
Annual MEV
02
Generalized L2s Are Bloatware
EVM-equivalent rollups force every app to subsidize a monolithic VM, paying for features they don't use. This is inefficient capital and compute.\n- ~90% of gas is spent on EVM opcodes most apps ignore.\n- The solution is app-specific rollups (dYdX, Eclipse) and modular execution layers (Fuel, Sovereign).
~90%
Gas Waste
10-100x
Efficiency Gain
03
The Interoperability Bottleneck
Bridges and cross-chain messaging protocols (LayerZero, Axelar) are centralized points of failure. Security is only as strong as their multisig.\n- $2B+ lost to bridge hacks.\n- The solution is light client bridges (IBC, Polymer) and intent-based architectures (Across, UniswapX) that minimize trust.
$2B+
Bridge Losses
7/10
Multisig Reliance
04
Data Availability Monopoly
Ethereum's calldata is the gold standard but is becoming prohibitively expensive, forcing reliance on a single external DA layer (Celestia).\n- Creates a new centralization vector and vendor lock-in.\n- The solution is multi-DA strategies and EigenDA / Avail competition driving down costs.
~$1M/day
DA Spend
-99%
Cost Potential
05
Sequencer Centralization
Rollup sequencers are single points of failure that can censor, reorder, or downtime. Decentralization is perpetually 'coming soon'.\n- Leads to ~2s liveness faults during peaks.\n- The solution is shared sequencer networks (Espresso, Astria) and based sequencing (Ethereum L1 inclusion).
~2s
Fault Time
1
Active Sequencer
06
The Infrastructure Tax
Builders and infra providers (Alchemy, Infura) capture disproportionate value versus the applications generating it. This stifles economic sustainability.\n- Apps pay 20-30% of revenue to infra.\n- The solution is decentralized RPC networks (POKT) and user-owned infra via restaking (EigenLayer).
20-30%
Revenue Tax
$50B+
Restaking TVL
future-outlook
THE INEVITABLE SHIFT
The Endgame: Fragmentation and Specialization
The current consolidation of builder power into a few dominant players is a temporary phase that will fracture into specialized, modular roles.
Builder cartels are unstable. The current MEV supply chain concentrates power with a handful of builders like Jito Labs and Flashbots. This creates a single point of failure and invites regulatory scrutiny as a de facto cartel.
Specialization beats consolidation. The future is a fragmented landscape of specialized roles: intent solvers (UniswapX, CowSwap), block builders, and proposer-builder separation (PBS) enforcers. Each layer optimizes for a specific function.
Modularity drives fragmentation. Rollups like Arbitrum and Optimism are already outsourcing sequencing. This trend accelerates as shared sequencers (Espresso, Astria) and dedicated data availability layers (Celestia, EigenDA) create new competitive markets.
Evidence: Flashbots' dominance on Ethereum post-Merge exceeded 90% builder market share, a concentration that the ecosystem's core economics and security models are designed to dismantle.
takeaways
BUILDER POWER CONSOLIDATION
TL;DR: The Logic of Collapse
The centralization of block production into a few dominant entities like Flashbots, bloXroute, and beaverbuild creates systemic fragility.
01
The Problem: MEV as a Centralizing Force
Maximal Extractable Value (MEV) creates winner-take-all economics. Builders with the best data and orderflow win every block, creating a feedback loop that starves competitors.
- >90% of Ethereum blocks are built by a handful of entities.
- This leads to censorship risk and single points of failure.
- The network's liveness depends on the health of ~5 firms.
>90%
Blocks Controlled
~5 Firms
Critical Dependency
02
The Solution: Enshrined Proposer-Builder Separation (PBS)
Formalizing the builder role at the protocol level prevents off-chain cartel formation. It creates a permissionless, competitive marketplace for block building.
- Eliminates trusted relays as a centralizing bottleneck.
- Enables credible neutrality through cryptographic commitments.
- Unlocks long-term scaling (e.g., danksharding) by solving data availability coordination.
0 Relays
Trust Assumption
Protocol-Level
Enforcement
03
The Catalyst: SUAVE - A Decentralized Block Builder
Flashbots' own SUAVE is an admission that the current model is broken. It aims to decentralize MEV sourcing and execution across chains.
- Splits the monopolies: Separates expression, solving, and execution.
- Creates a cross-chain mempool to dilute chain-specific builder power.
- Its success would ironically dismantle the very centralization Flashbots helped create.
Cross-Chain
Mempool
Monopoly Split
Design Goal
04
The Market Response: Vertical Integration & Private Mempools
Protocols like CowSwap and UniswapX with intents, and chains like Solana with Jito, are bypassing the public mempool entirely to retain value.
- This fragments liquidity and erodes the public goods funding from MEV.
- Leads to an arms race between searchers, builders, and applications.
- The endpoint is a balkanized network where the best deals never hit public blockspace.
Intent-Based
Bypass Strategy
Liquidity Fragmentation
Result
05
The Economic Flaw: Inelastic Validator Supply
Builders consolidate power because they compete for a fixed, inelastic resource: validator slots. There are only ~900,000 slots per day on Ethereum.
- This creates extreme rent-seeking behavior.
- Validator revenue becomes dependent on builder payouts, not protocol security.
- The system incentivizes centralization to capture this scarce resource.
~900k
Daily Slots
Inelastic
Resource
06
The Endgame: Regulatory Capture or Protocol Fix
The current trajectory leads to a regulated cartel of block builders. The only escape is a protocol-level fix that makes builder power ephemeral and non-capturable.
- Without enshrined PBS, builders become systemically important financial infrastructure.
- This invites OFAC compliance mandates and kills permissionless innovation.
- The collapse logic is clear: centralize, capture, regulate, stagnate.
SIFI Risk
Regulatory Endpoint
PBS or Bust
Protocol Choice
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