Why the Searcher-Builder Alliance is Reshaping Blockchain Politics

Traditional PoS validators simply propose blocks, ceding economic control to off-chain searchers who extract ~$1B+ annually in MEV. This creates a misalignment where the network's security providers are not its primary economic beneficiaries.\n- Revenue Leakage: Validator staking yield is diluted by extracted MEV.\n- Opaque Markets: Users face front-running and sandwich attacks with no recourse.

Builders (like Flashbots Suave, Titan, bloXroute) compete to construct the most profitable blocks by aggregating searcher bundles. PBS formally separates block building from block proposal, creating a competitive market.\n- Efficiency Capture: Validators auction block space to the highest-bidding builder, capturing MEV revenue.\n- Credible Neutrality: Builders can enforce fair ordering rules, mitigating user harm.

Top searchers (e.g., Jito Labs, Skip Protocol) are becoming builders to guarantee bundle inclusion and maximize profit. This creates a powerful alliance that controls block content and ordering.\n- Vertical Control: Integrated entities capture the full MEV supply chain from intent to execution.\n- New Dependencies: Protocols like UniswapX and CowSwap now rely on these alliances for optimal cross-chain settlement.

Blockchain governance must now account for builder-searcher coalitions as a new, powerful stakeholder class. Their influence extends to cross-chain bridges (LayerZero, Across) and L2 sequencers.\n- Political Power: These entities can censor transactions or favor certain applications.\n- Infrastructure Capture: The alliance becomes a critical piece of national-scale infrastructure, inviting regulatory scrutiny.

Builder dominance has reached critical mass, with the top 3 builders like Flashbots' SUAVE and Titan controlling >80% of Ethereum blocks. This creates a single point of censorship and failure, enabling time-bandit attacks where builders can reorg chains for profit.

• Centralized Order Flow: Searchers route bundles exclusively to dominant builders.
• Vertical Integration: Builders operate their own validators, bypassing proposer-builder separation (PBS).
• Systemic Reorg Risk: The economic incentive to reorg finalized blocks grows with builder market share.

The only credible defense is protocol-level enforcement of proposer-builder separation, moving critical logic from off-chain cartels into the consensus layer. This forces open competition at the builder layer and removes trust assumptions.

• Ethereum's EIP-4844 & danksharding: Aims to enshrine PBS, making builder markets permissionless.
• Force Builder Rotation: Protocol rules prevent long-term builder monopolies.
• Cryptoeconomic Slashing: Penalize builders for withholding blocks or censorship.

The most profitable MEV strategies (e.g., DEX arbitrage, liquidations) are dominated by a handful of sophisticated searchers like Jump Crypto and GSR. This concentrates economic value and creates an arms race in latency, pushing infrastructure towards centralized, co-located servers.

• Value Extraction: >90% of MEV is captured by the top 10 searchers.
• Latency Arms Race: Leads to geographic centralization around AWS/Azure data centers.
• Barrier to Entry: Requires $1M+ in capital and bespoke infrastructure to compete.

Mitigating searcher power requires redesigning transaction ordering. Projects like Flashbots' SUAVE and Shutter Network propose encrypted mempools and fair ordering protocols to neutralize frontrunning and democratize access.

• Time-Boost Auctions: Decouple payment from ordering priority.
• Threshold Encryption: Hide transaction content until block inclusion.
• Commit-Reveal Schemes: Prevent sniping of profitable opportunities.

MEV-Boost, while initially decentralizing, now incentivizes validators to outsource block building to the highest-bidding centralized builder. This creates a principal-agent problem where validator revenue depends on a cartel, aligning their economic interests with the builder alliance.

• Relay Trust: Validators must trust >10 major relays not to censor or steal.
• Revenue Maximization: Forces validators to use dominant builders, reinforcing their power.
• Geographic Risk: Major relays and builders are concentrated in specific legal jurisdictions.

To break the validator-builder dependency, MEV must be socialized and redistributed at the protocol level. This reduces the outsized rewards from builder cartels and aligns validator incentives with network health.

• Proposer Reward Smoothing: Distribute MEV rewards evenly across all validators over time.
• Burn-and-Mint Mechanics: Redirect excess MEV to the protocol treasury or stakers.
• Decentralized Relays: Incentivize a permissionless network of relays via cryptoeconomics.

Your transaction ordering is a commodity. Without a strategy, you cede control to the highest bidder in the builder market, which can lead to unpredictable user experience and censorship risks.

• Key Benefit 1: Recognize that block space is a political arena, not just a technical resource.
• Key Benefit 2: Design for intent-based flows (like UniswapX or CowSwap) to abstract away the adversarial auction.

Partner with searchers who specialize in your protocol's logic (e.g., DEX arbitrage, NFT liquidation). This creates a positive-sum alliance that optimizes for protocol health, not just extractive value.

• Key Benefit 1: Guaranteed execution for critical functions like oracle updates or liquidations.
• Key Benefit 2: Revenue sharing models (e.g., via MEV capture) can become a sustainable protocol income stream.

Assume PBS is inevitable. Your protocol's state transitions must be verifiable and efficient for builders to include, while your user flow should be resilient to searcher competition.

• Key Benefit 1: Design MEV-aware contracts that minimize negative externalities (e.g., use TWAPs, commit-reveal schemes).
• Key Benefit 2: Integrate with cross-domain intent standards (e.g., Across, LayerZero) to let users express preferences, shifting power from builders back to applications.

SUAVE aims to decentralize the builder market by creating a shared mempool and execution network. It will commoditize block building, making searcher relationships the new moat.

• Key Benefit 1: Reduce reliance on a single builder like bloXroute or Titan.
• Key Benefit 2: Access a global liquidity and computation market for cross-chain intents, bypassing traditional bridges.

User experience is now defined by the Searcher-Builder negotiation. Protocols must measure and optimize for latency to finality, as this is what searchers compete on.

• Key Benefit 1: Predictable settlement improves composability for DeFi lego.
• Key Benefit 2: Lower effective fees for users, as searchers internalize costs for speed.

The Searcher-Builder alliance can become a cartel that controls transaction flow. This creates a single point of failure and a clear target for regulation (e.g., OFAC compliance).

• Key Benefit 1: Diversify builder relays to avoid censorship.
• Key Benefit 2: Advocate for credible neutrality in core protocol development (e.g., Ethereum's inclusion lists) to maintain decentralization.