Why Proposer-Builder Separation Solves the Wrong Problem

PBS is a distraction. It shifts centralization from validators to a new cartel of professional builders like Flashbots and bloXroute, who now control transaction ordering and extract maximal value. The core problem persists.

The real issue is rent-seeking. The current auction model for block space creates a zero-sum game between users and builders. PBS optimizes for builder revenue, not user outcomes, which is why protocols like UniswapX and CowSwap bypass it entirely with intent-based architectures.

Evidence is in the data. Post-PBS Ethereum sees over 90% of blocks built by just three entities. This is not decentralization; it's a relocation of power from one set of capital-heavy actors to another, more technically sophisticated one.

PBS optimizes for efficiency, not fairness. It formalizes the builder role, creating a hyper-competitive market for block construction that centralizes around capital-intensive players like Flashbots and bloXroute.

The economic pressure remains unchanged. Builders must still pay proposers the highest bid, forcing them to extract maximal MEV from users via arbitrage, frontrunning, and sandwich attacks to remain profitable.

This shifts risk, not reward. The user's experience with MEV—failed trades, slippage, value leakage—is identical. PBS simply moves the operational burden from validators to specialized builders.

Evidence: Post-PBS, over 90% of Ethereum blocks are built by a handful of builders. The MEV supply chain is more efficient, but user-facing negative externalities persist.

PBS formalizes extraction. It creates a specialized market for block production, separating the validator's role from the builder's. This solves censorship resistance and validator centralization, but it institutionalizes the MEV supply chain. The builder's profit is now a formalized cost.

The real problem is opacity. PBS does not solve the information asymmetry between users and the network. Users sign transactions without knowing their execution context, creating a predictable profit margin for searchers and builders. This is the root of value leakage.

Intents are the counterpoint. Protocols like UniswapX and CowSwap demonstrate the alternative. Users submit declarative intents (e.g., 'swap X for Y at best price'), delegating execution to a competitive network of solvers. This flips the model from opaque transaction processing to transparent outcome fulfillment.

Evidence: Builder dominance. Post-PBS Ethereum sees over 90% of blocks built by a handful of entities like Flashbots. This proves PBS optimizes for validator simplicity, not user value capture. The supply chain is efficient but remains extractive by design.

In-protocol PBS is insufficient. It formalizes the builder role but does not solve for the economic centralization of block building. The core problem is the capital and data advantages required to win the auction, which in-protocol rules cannot regulate.

The real competition is off-chain. Builders like Flashbots and bloXroute compete in private dark pools and orderflow auctions long before the in-protocol bid. The protocol only sees the final, sanitized output, missing the extractive mechanics.

It creates a regulatory honeypot. By baking PBS into consensus, Ethereum ossifies a specific market structure. This invites scrutiny on the now-formalized builder role, unlike the flexible, off-chain model used by Solana via Jito.

Evidence: Post-PBS, the top three builders consistently produce over 80% of Ethereum blocks. The protocol mechanism changed, but the centralization outcome did not.

PBS solves the wrong problem. It focuses on the final auction for block space, ignoring the more valuable upstream competition for user transactions. The real power accrues to entities that aggregate, route, and execute user intents.

Intent-based architectures are the endgame. Protocols like UniswapX, CowSwap, and Across abstract execution complexity. They own the user relationship by finding the optimal path across chains and liquidity sources, commoditizing the underlying block builders.

The battle shifts to the application layer. Wallets (Rainbow, Rabby) and aggregators become the new gatekeepers. They capture fees and data by controlling the flow of transactions before builders ever see them, making PBS a backend optimization for their services.

Evidence: UniswapX now processes over $10B in volume by acting as an intent-based settlement layer. Its success demonstrates that economic value concentrates at the point of user intent, not block production.