Builder centralization is structural. The MEV supply chain's design—where searchers send bundles to a limited set of specialized builders like Flashbots, bloXroute, and beaverbuild—creates a natural oligopoly. This centralized relay layer is the critical chokepoint for transaction ordering and censorship resistance.
mev-the-hidden-tax-of-crypto
Blog
Why the Builder Role is the Single Point of Failure
Proposer-Builder Separation (PBS) was meant to decentralize MEV. Instead, it created a new, more dangerous centralization point: the builder. This analysis dissects the builder's power to order, censor, and exclude transactions, making it the most attackable link in the modern blockchain stack.
introduction
THE BOTTLENECK
Introduction
The builder role has become the centralizing force and single point of failure in modern blockchain architectures.
Decentralization theater fails. Protocols like Ethereum rely on proposer-builder separation (PBS) to distribute power, but the economic reality is different. The capital requirements for competitive block building and the data advantages of entities like Jito Labs create insurmountable moats for new entrants.
The failure mode is systemic. A compromised or malicious major builder can censor transactions, extract maximal value, or destabilize the chain. The Flashbots relay's dominance demonstrates this risk, where its temporary outage effectively halts a primary MEV market.
thesis-statement
THE SINGLE POINT OF FAILURE
The Core Argument: Builders Are the New Validators
The shift to Proposer-Builder Separation (PBS) centralizes network security in the builder role, creating a new, more complex attack surface.
PBS redefines security: Validators now outsource block construction to specialized builders, making the validator's role a passive relay. The builder role is the new validator, controlling transaction ordering, censorship, and MEV extraction.
Centralization is the attack: The builder market consolidates around a few entities like Flashbots and bloXroute due to economies of scale in MEV. This creates a single point of failure more dangerous than validator centralization.
Builder collusion is final: Unlike validators, whose actions are checked by the network, a malicious builder's block is final upon acceptance. A cartel can censor transactions or launch time-bandit attacks with impunity.
Evidence: Post-merge Ethereum sees over 90% of blocks built by just three entities. This concentration gives builders more power over the chain's state than any single validator pool.
key-trends
THE SINGLE POINT OF FAILURE
The Centralization Playbook: How Builders Cement Power
The builder role has become the critical chokepoint for MEV extraction and censorship, consolidating power in the hands of a few entities.
01
The Problem: The Dark Forest of MEV
Builders have perfect visibility into the mempool, creating a toxic environment for users. They can front-run, sandwich, and censor transactions at will.\n- >90% of blocks are built by a cartel of ~5 entities.\n- $1B+ in MEV extracted annually, directly from user slippage.
>90%
Blocks Controlled
$1B+
Annual MEV
02
The Solution: Enshrined Proposer-Builder Separation (PBS)
Ethereum's roadmap explicitly separates block building from proposing to neutralize builder power. Validators (proposers) simply choose the most valuable header.\n- Builders compete in a credibly neutral auction.\n- Proposer receives the full block value, disincentivizing side-deals.
100%
Auction Neutrality
0%
Proposer MEV
03
The Workaround: Private Order Flows & SUAVE
Builders cement power by securing exclusive order flow (EOF) from wallets and apps like MetaMask and Uniswap. This creates a moat new entrants cannot cross.\n- Flashbots Protect and bloXroute dominate the EOF market.\n- SUAVE aims to decentralize this by creating a shared mempool and decentralized block builder network.
~60%
EOF Market Share
1 Chain
SUAVE Goal
04
The Endgame: Intents and Solver Networks
The ultimate decentralization move is to abstract the builder away entirely. Users express desired outcomes (intents), and a permissionless network of solvers competes to fulfill them.\n- UniswapX and CowSwap are pioneering intent-based architectures.\n- Removes the builder's privileged view, shifting power to solver competition.
0 Builders
User Exposure
N Solvers
Competitive Field
SINGLE POINT OF FAILURE ANALYSIS
Builder Market Share & Risk Metrics
Quantifying the centralization and systemic risk of the dominant builder role in Ethereum's PBS ecosystem.
| Metric / Risk Factor | Flashbots (MEV-Boost) | bloXroute (Regulated), Titan, etc. | Idealized Distributed Network |
|---|---|---|---|
Market Share of Top Builder |
| 10-15% | <10% |
Proposer-Builder Separation (PBS) Compliance | |||
Censorship Resistance (OFAC Compliance) | |||
Time to Finality Impact on Failure | ~12-15 minutes | ~1-2 minutes | Negligible |
Cross-Domain MEV Extraction (e.g., via Across, LayerZero) | |||
Exclusive Order Flow (e.g., from UniswapX, CowSwap) | |||
Reliability (Uptime SLA) |
|
|
|
Centralization-Induced MEV (e.g., Time-Bandit Attacks) | High Risk | Medium Risk | Low Risk |
deep-dive
THE SINGLE POINT OF FAILURE
The Attack Vectors: From Censorship to Chain Reorgs
The builder role centralizes MEV and transaction ordering, creating systemic risks that undermine blockchain neutrality and finality.
Builder centralization creates censorship. A dominant builder like Flashbots SUAVE or a private mempool can blacklist addresses or transactions, breaking the permissionless promise of Ethereum. This is not theoretical; OFAC-compliant blocks already exist.
MEV extraction distorts incentives. Builders prioritize maximum extractable value (MEV) over user experience, leading to front-running and sandwich attacks. This is a direct tax on users, with protocols like Uniswap and Aave as primary targets.
The threat of chain reorgs is real. A malicious builder with sufficient stake can reorganize the chain to steal finalized transactions or censor past blocks. This attacks the core guarantee of finality that applications like Lido and MakerDAO rely on.
Evidence: In 2023, over 90% of Ethereum blocks were built by just five entities. This concentration makes the network vulnerable to coordinated downtime or malicious action, a risk that protocols like Across and Arbitrum must hedge against.
counter-argument
THE MARKET REALITY
The Rebuttal: "But Builders Are Competitive!"
Competition is structurally limited, creating a cartel-like dynamic that centralizes control.
Builder competition is illusory. The high capital requirements for effective MEV extraction create a natural oligopoly, where only a few players like Flashbots and bloXroute dominate. New entrants cannot compete without massive, specialized infrastructure.
Profit motives align against decentralization. Builders maximize revenue by submitting the most profitable block, which incentivizes vertical integration with exclusive order flow (e.g., via private mempools) and searcher relationships, not by fostering a broad, permissionless market.
The data shows consolidation. On Ethereum post-Merge, the top three builders consistently control over 80% of blocks. This centralized block production is the single point of failure, making censorship and transaction manipulation a protocol-level risk.
The comparison is stark. A competitive market like DEX liquidity (Uniswap, Curve) has low barriers. Builder competition has prohibitive capital and technical barriers, making it resemble an infrastructure cartel, not an open marketplace.
risk-analysis
THE BUILDER BOTTLENECK
The Bear Case: What Could Go Wrong?
The builder role centralizes execution power, creating systemic risks that threaten the credibly neutral foundation of blockchains.
01
The Censorship Vector
Builders can exclude transactions from blocks, enabling regulatory or malicious blacklisting. This undermines the core promise of permissionless access.
- Real-World Precedent: OFAC-sanctioned addresses were censored on ~50% of Ethereum blocks post-Merge.
- Protocol-Level Threat: Neutral sequencing is a public good, but builders are profit-maximizing private entities.
~50%
Censored Blocks
0
Native Slashing
02
The MEV Cartel
Builder dominance consolidates into an oligopoly, capturing and internalizing maximal extractable value (MEV). This drains value from users and validators.
- Economic Reality: Top 3 builders often control >80% of block space on major relays.
- Network Effect: Advanced orderflow auctions (like those from Flashbots, BloXroute) create winner-take-most dynamics.
>80%
Market Share
$1B+
Annual MEV
03
The Liveness Attack
A malicious or faulty builder can halt chain progression by withholding blocks, creating a single point of failure for network liveness.
- Technical Risk: Reliance on a handful of high-performance builders (e.g., Titan, Rsync) for timely data availability.
- Systemic Fragility: An outage at a major builder can cause significant chain reorganization and latency spikes.
~500ms
Latency Spike
1
Entity to Fail
04
Solution: Enshrined Proposer-Builder Separation (PBS)
Hard-baking PBS into the protocol via EIP-4844 and Verkle Trees removes builder trust assumptions. Validators commit to blocks without seeing contents first.
- First-Principles Fix: Decouples block production from proposal, enforced by cryptography.
- Ethereum Roadmap: Core to the Scourge milestone, aiming to neutralize in-protocol MEV.
EIP-4844
Next Step
The Scourge
Ethereum Epoch
05
Solution: Decentralized Builder Networks
Projects like SUAVE and Astria are creating shared, neutral markets for block building, fragmenting centralized power.
- SUAVE's Vision: A decentralized mempool and block builder network where preferences are executed trustlessly.
- Competitive Landscape: Forces builders to compete on efficiency, not on exclusive orderflow deals.
1
Shared Mempool
N/A
Market Price
06
Solution: Intent-Based Architectures
Shifting from transaction execution to outcome declaration (intents) moves complexity off-chain. Users specify what, not how.
- Paradigm Shift: Protocols like UniswapX, CowSwap, and Across solve for optimal fulfillment.
- Builder-Proof: Removes the builder's ability to front-run or sandwich, as the solution space is constrained by the intent.
UniswapX
Key Entity
>90%
MEV Reduction
future-outlook
THE SINGLE POINT OF FAILURE
The Path Forward: Can We Fix the Unfixable?
The builder role is the unavoidable, centralized bottleneck in modern blockchains, and its risks are systemic.
The builder is the bottleneck. Every transaction must pass through a builder to be included in a block, creating a centralized chokepoint for censorship and MEV extraction that protocols like Flashbots Auction and MEV-Share attempt to manage.
Decentralization is a facade. The separation of proposers and builders in PBS creates an illusion; the economic power consolidates with a few sophisticated builders who control the order flow, as seen in the dominance of entities like Titan and beaverbuild.
Technical fixes are palliative. Solutions like encrypted mempools (e.g., Shutter Network) or commit-reveal schemes add latency and complexity but do not eliminate the builder's privileged position to sequence transactions.
Evidence: On Ethereum post-merge, over 90% of blocks are built by just three entities, demonstrating that PBS failed to decentralize block production, only outsourcing it.
takeaways
THE BUILDER BOTTLENECK
TL;DR: Key Takeaways for Protocol Architects
The MEV supply chain's centralization around builders creates systemic fragility and rent extraction. Here's what to architect against.
01
The Problem: Builder-Validator Collusion
The PBS model assumes a clean separation, but vertical integration (e.g., Coinbase, Lido validators running builders) creates a single point of censorship and value capture.\n- Risk: Transaction filtering and OFAC compliance enforced at the builder level.\n- Result: >50% of Ethereum blocks built by just 3-5 entities, centralizing control.
>50%
Blocks Centralized
3-5
Dominant Entities
02
The Solution: Enshrined Proposer-Builder Separation (ePBS)
Move the PBS protocol into the consensus layer itself, as proposed by Ethereum researchers. This cryptographically enforces the builder-proposer boundary.\n- Key Benefit: Eliminates trust in off-protocol relay operators.\n- Key Benefit: Prevents validator-builder collusion by design, decentralizing block building power.
L1 Native
Trust Model
0
Relay Trust
03
The Problem: Opaque Orderflow Auctions
User transactions are a blind input to a black-box builder auction. This creates MEV leakage and suboptimal execution for users.\n- Result: Searchers and builders capture value that should go to users or validators.\n- Example: Without protection, a simple swap can lose 10-50+ bps to hidden arbitrage.
10-50+ bps
Typical Leakage
Black Box
Auction Process
04
The Solution: SUAVE as a Shared Mempool
Flashbots' SUAVE aims to decentralize the builder role by creating a shared, competitive environment for block building and cross-chain intent expression.\n- Key Benefit: Breaks builder monopolies by standardizing communication (pre-confirmations, encrypted mempools).\n- Key Benefit: Enables intent-based architectures (like UniswapX, CowSwap) to route efficiently.
Shared
Mempool
Cross-Chain
Intent Scope
05
The Problem: Relays as Censorship Vectors
Builders submit blocks to validators via trusted relays. These relays can censor transactions or go offline, halting the chain's liveness.\n- Real Risk: Post-Merge, >90% of Ethereum blocks complied with OFAC via major relays.\n- Fragility: A relay outage can cause mass reorgs and consensus instability.
>90%
OFAC Compliance
Single Point
Of Failure
06
The Solution: Direct Builder-Validator P2P Networks
Architect for a future where validators connect directly to a permissionless set of builders via a peer-to-peer network, bypassing centralized relays.\n- Key Benefit: Removes the censorship and liveness dependency on relay operators.\n- Key Benefit: Aligns with Ethereum's core ethos of credibly neutral, permissionless infrastructure.
P2P
Network Model
Permissionless
Builder Set
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