Builder dominance breaks neutrality. Ethereum's transition to Proposer-Builder Separation (PBS) outsourced block construction to a competitive market, but MEV extraction incentives have consolidated power. A handful of builders like Flashbots and bloXroute now control over 80% of blocks, acting as centralized gatekeepers.
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Why Builder Dominance Threatens Blockchain Neutrality
The MEV supply chain has centralized block building into a handful of entities, creating a single point of failure for censorship and transaction ordering. This is the hidden tax on blockchain neutrality.
introduction
THE THREAT
Introduction
The rise of specialized block builders is centralizing transaction ordering power, undermining the foundational neutrality of public blockchains.
This is a protocol-level capture. The decentralized validator set is now dependent on a small cartel of builders for optimal revenue. This recreates the miner extractable value (MEV) problem at a new layer, where builders, not validators, dictate transaction inclusion and order.
The result is systemic risk. A builder cartel can censor transactions, extract maximal value via sophisticated strategies like arbitrage and liquidations, and create a toxic environment for retail users. Protocols like Uniswap and Aave become subject to the builder's profit motives, not network rules.
key-trends
BUILDER DOMINANCE
The Centralization Triptych
The shift from miner extractable value (MEV) to builder extractable value (BEV) has created a new axis of centralization that threatens the core neutrality of blockchains.
01
The Problem: The Builder Oligopoly
A handful of builders like Flashbots, BloXroute, and Titan control >80% of Ethereum blocks. This centralizes the power to order transactions, creating systemic risk and censorship vectors.
- Single Point of Failure: A bug or malicious update in a dominant builder can halt or corrupt the chain.
- Censorship Risk: Builders can exclude transactions from OFAC-sanctioned addresses or competing protocols.
- Economic Capture: The ~$1B+ annual MEV market is funneled to a few entities, centralizing profits.
>80%
Blocks Controlled
$1B+
Annual MEV
02
The Problem: Neutrality as a Broken Promise
Blockchains are meant to be neutral settlement layers. Builder dominance allows for transaction ordering attacks (e.g., frontrunning, sandwiching) that are now institutionalized, favoring sophisticated players over users.
- Unfair Execution: DEX traders using Uniswap or 1inch are routinely exploited by builder-controlled bots.
- Protocol Distortion: Projects must design around builder behavior, not just protocol rules.
- Trust Assumption: Users must trust builder integrity, violating the 'trustless' premise.
~99%
Sandwichable DEX Trades
0
User Recourse
03
The Solution: Enshrined Proposer-Builder Separation (PBS)
Formalizing PBS in-protocol (e.g., Ethereum's roadmap) is the endgame. It cryptographically enforces a separation of powers between block building and proposing.
- Credible Neutrality: Proposers (validators) receive anonymous blocks, preventing censorship collusion.
- Permissionless Building: Any actor can compete to build blocks, reducing oligopoly power.
- MEV Smoothing: Mechanisms like MEV-Burn or MEV-Share can redistribute extracted value to the protocol or users.
~2025
Ethereum ETA
100%
Enforced Separation
04
The Solution: SUAVE - A Decentralized Block Builder
Flashbots' SUAVE is a dedicated chain attempting to decentralize the builder layer itself. It creates a competitive marketplace for block building and preference expression.
- Decentralized Memory Pool: Transactions are sent to SUAVE's mempool, not to centralized builders.
- Competitive Auction: Builders bid for the right to build blocks, driving efficiency and reducing rents.
- Cross-Chain Vision: Aims to be the neutral executor for Ethereum, Polygon, Arbitrum, and others.
1
Chain for MEV
Multi-Chain
Scope
05
The Solution: Intent-Based Architectures & Private Mempools
Protocols like UniswapX, CowSwap, and 1inch Fusion shift the paradigm from broadcasting transactions to declaring outcomes. This bypasses the public mempool and its predators.
- MEV Resistance: Solvers compete to fulfill user intents, internalizing MEV as better prices.
- User Empowerment: Users get what they want (a price) without needing to know how (complex routing).
- Builder Bypass: Reduces reliance on the generic builder oligopoly for fair execution.
$10B+
Monthly Volume
~100%
MEV Protection
06
The Solution: Enhanced Staking & Governance
Staking pools and DAOs must actively decentralize their block production stack. This includes running their own relays, using multiple builders, and enforcing neutrality commitments.
- Validator Sovereignty: Large stakers like Lido and Rocket Pool can run their own builders to avoid reliance on Flashbots.
- Relay Diversity: Proposers should rotate across relays from Flashbots, BloXroute, Agnostic, and Titan.
- Slashing for Censorship: Future Ethereum upgrades could slash validators who propose censored blocks.
40%+
Staking Pool TVL
4+
Critical Relays
MEV-BOOST RELAY ANALYSIS
Builder Market Share & Censorship Data
A comparison of leading Ethereum block builders by market share, censorship resistance, and operational transparency, highlighting centralization risks.
| Metric / Policy | Flashbots (Dominant) | bloXroute (Regulated) | Titan Builder (Decentralizing) | Ultra Sound (Permissionless) |
|---|---|---|---|---|
Avg. Market Share (Last 30d) | 45.2% | 18.7% | 8.1% | 4.3% |
OFAC Sanctions Compliance | ||||
Censorship Rate (Tx from Tornado Cash) | 99.9% | 99.5% | 0.1% | 0.0% |
Requires KYC/Whitelist | ||||
Open Source Builder Software | ||||
Avg. Block Value to Proposer (ETH) | 0.12 | 0.11 | 0.10 | 0.09 |
Supports MEV-Share / Orderflow Auctions | ||||
Relay Geographic Centralization Risk | High (US) | High (US) | Medium | Low |
deep-dive
THE INCENTIVE MISMATCH
From Permissionless to Permissioned: The Slippery Slope
Builder dominance centralizes transaction ordering, creating a permissioned gateway that undermines blockchain neutrality.
Builder dominance centralizes control. The MEV supply chain separates block building from proposing, but builders like Flashbots SUAVE and Jito Labs consolidate order flow. This creates a permissioned gateway where transactions require builder approval, reversing the permissionless ethos of public mempools.
Neutrality becomes a product. Builders optimize for extractable value, not censorship resistance. This incentive mismatch means protocols like Uniswap and Aave must negotiate with builders for fair inclusion, turning a public good into a privatized service.
The data shows consolidation. Post-Merge Ethereum sees over 90% of blocks built by three entities. This extreme centralization proves the slippery slope: permissionless systems naturally converge to permissioned bottlenecks when profit motives dominate.
counter-argument
THE INCENTIVE MISMATCH
The Builder's Defense (And Why It's Flawed)
Builder dominance is rationalized as a natural market outcome, but its incentives structurally undermine blockchain neutrality.
Builders argue for market efficiency. They claim their dominance results from superior capital and technical execution, a natural evolution like Flashbots outcompeting vanilla miners. This view frames MEV extraction as a service and block-building markets as competitive.
This defense ignores systemic capture. A dominant builder like Jito Labs on Solana or a cartel on Ethereum controls transaction ordering. This power creates a single point of failure and censorship, contradicting the decentralized sequencing that networks promise.
Neutrality becomes a negotiable feature. Builders prioritize profit, not protocol rules. They will reorder or exclude transactions to maximize MEV extraction, turning the chain into a pay-to-play arena where user experience depends on builder allegiance.
Evidence: The OFAC-compliant blocks. Post-Merge, MEV-Boost relays produced blocks censoring Tornado Cash transactions, proving builder incentives override network neutrality. This is a structural flaw, not a market bug.
takeaways
BUILDER DOMINANCE
Key Takeaways for Protocol Architects
The rise of centralized block builders and PBS creates systemic risks that undermine the core value proposition of decentralized networks.
01
The MEV Cartel Problem
A handful of builders like Flashbots, BloXroute, and Titan now control >80% of Ethereum blocks. This centralization creates a single point of censorship and failure, directly threatening neutrality.
- Risk: Transaction filtering becomes trivial for dominant builders.
- Impact: Protocols can be deplatformed at the builder level, bypassing validator checks.
>80%
Blocks Controlled
1-3
Dominant Entities
02
Solution: Enshrined Proposer-Builder Separation (PBS)
Move PBS from an off-protocol marketplace into the core consensus layer. This forces builder competition into a credibly neutral, permissionless arena.
- Benefit: Eliminates trusted relays and off-chain deals that enable cartel formation.
- Requirement: Must be paired with inclusion lists to prevent censorship.
0
Trusted Relays
100%
Permissionless
03
The SUAVE Architecture
Flashbots' SUAVE is a strategic attempt to own the mempool and become the default execution environment for all chains. It centralizes intents and order flow.
- Threat: Creates a meta-monopoly over cross-chain MEV and user transactions.
- Counterplay: Protocols must support alternative mempools and intent solvers like UniswapX and CowSwap to maintain optionality.
All-Chain
Ambition
High
Integration Risk
04
Mandate Encrypted Mempools
Plaintext mempools are the root cause of extractive MEV and builder advantage. Encryption (e.g., shutterized rollups) neutralizes frontrunning and forces fair auctions.
- Result: Builders compete on fee efficiency, not on information asymmetry.
- Adoption: Critical for L2s and app-chains to ensure fair settlement.
~0s
Frontrun Window
>90%
MEV Reduction
05
Diversify Builder Client Software
The ecosystem is dangerously reliant on a single builder codebase. A bug or exploit in dominant software (e.g., mev-boost) threatens the entire chain.
- Action: Fund and integrate alternative builders like Eden Network, Manifold, and Rsync.
- Goal: Achieve <33% market share for any single client to prevent consensus failures.
1
Dominant Client
<33%
Target Share
06
Own Your Order Flow
Protocols must aggregate and route user transactions directly to a diversified set of builders and solvers. Cede no control to wallets or centralized RPCs.
- Mechanism: Implement intent-based architectures and direct integrations with solvers like Across and LayerZero.
- Outcome: Retain fee capture and guarantee execution quality for users.
100%
Fee Capture
Multi-Solver
Routing
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Protocols Shipped
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