PBS reshuffles, not removes, power. It separates block proposal from block construction, moving the core economic engine from validators to specialized builders like Flashbots and bloXroute. This creates a market for block space but centralizes sophisticated MEV extraction.
security-post-mortems-hacks-and-exploits
Blog
The Future of MEV: Will Proposer-Builder Separation Truly Democratize Blockspace?
PBS separates block proposing from building to curb validator centralization. This analysis argues it merely shifts power to an opaque, competitive market of specialized builders, risking new monopolies and hidden MEV extraction.
introduction
THE PROBLEM
Introduction: The Centralization Shell Game
Proposer-Builder Separation (PBS) is the industry's response to MEV centralization, but it risks creating new, more opaque power structures.
The builder market centralizes instantly. The technical complexity and capital requirements for optimal MEV bundling create a natural oligopoly. The top three builders on Ethereum consistently produce over 80% of post-merge blocks, a concentration that rivals pre-PBS mining pools.
Relays become the new choke point. Builders submit blocks to proposers via trusted relays like the Flashbots Relay. This centralized middleware controls censorship resistance and transaction ordering, creating a single point of failure and policy enforcement.
Evidence: Ethereum's beacon chain data shows the dominant builder, builder0x69, consistently captures over 30% of block production, demonstrating the winner-take-most dynamics PBS introduces.
key-trends
BEYOND PBS
The New MEV Landscape: Three Inconvenient Trends
Proposer-Builder Separation is not the endgame; it's the catalyst for a more complex, adversarial, and vertically integrated MEV supply chain.
01
The Problem: PBS Consolidates Power, It Doesn't Disperse It
PBS creates a new oligopoly of specialized builders like Flashbots' SUAVE, bloXroute, and beaverbuild. The winning builder is the one with the most sophisticated order flow and the fastest connections to exclusive orderflow auctions (OFAs).\n- Result: Top 3 builders win >80% of Ethereum slots.\n- Risk: Centralized block production becomes the new validator centralization.
>80%
Slot Dominance
~$1B+
Annual MEV
02
The Solution: Vertical Integration via 'Enshrined' Auctions
Protocols like UniswapX and CowSwap are internalizing MEV capture via intents and solving. They bypass the public mempool, routing user orders directly to a private network of solvers who compete on price.\n- Who: UniswapX, CowSwap, Across (via intents).\n- Effect: DApp-level PBS fragments the builder market and captures value for the protocol treasury.
0 Slippage
User Guarantee
Solver Network
New Primitive
03
The Problem: Cross-Chain MEV is the New Frontier
Arbitrage and liquidation opportunities now span Ethereum L2s, Solana, and Cosmos app-chains. This creates a multi-chain latency race and new trust assumptions for bridges like LayerZero and Wormhole.\n- Complexity: Requires synchronized execution across heterogeneous state machines.\n- Risk: Cross-chain MEV can destabilize bridge security and create systemic contagion.
~500ms
Latency Race
Multi-Chain
Attack Surface
04
The Solution: Intents as the Universal Settlement Layer
The end-state is a network of intent-centric protocols where users declare outcomes, not transactions. SUAVE aims to be a decentralized mempool and block builder for this intent-based world.\n- Mechanism: Users sign intents → Solvers compete to fulfill them → Winning bundle is settled onchain.\n- Outcome: Democratizes access to complex, cross-chain MEV strategies for any solver.
Outcome-Based
User Experience
Solver DAOs
New Entity
05
The Problem: Regulatory Scrutiny Targets MEV as 'Front-Running'
The SEC and other regulators view certain MEV extraction, especially time-bandit attacks or sandwich attacks on retail, as illegal market manipulation. This creates legal liability for builders, relays, and even validating entities.\n- Precedent: The Ethereum Foundation is under investigation.\n- Threat: Could force OFAs and builder software to geofence or shut down.
SEC
Primary Risk
Global
Compliance Cost
06
The Solution: Privacy-Preserving PBS with Encryption
Builders like Flashbots are pushing for encrypted mempools (e.g., via threshold decryption) to hide transaction content until the block is proposed. This neutralizes front-running and reduces regulatory surface area.\n- Tech: Threshold Cryptography, Secure Enclaves.\n- Trade-off: Adds latency and complexity, potentially reinforcing builder oligopoly.
Encrypted
Mempool
Regulatory Shield
Key Benefit
POST-MERGE REALITY CHECK
Builder Market Concentration: The Numbers Don't Lie
A quantitative comparison of the top Ethereum block builders, analyzing market share, revenue, and decentralization metrics post-Proposer-Builder Separation (PBS).
| Metric / Feature | Builder A (Top 1) | Builder B (Top 2-3) | Rest of Market (Builders 4-20) |
|---|---|---|---|
Avg. Market Share (Last 30d) | 42.7% | 28.3% | 29.0% |
Avg. Block Value Extracted (MEV + Tips) | 1.82 ETH | 1.65 ETH | 1.41 ETH |
Proposer Payoff Premium (vs. mean) | +22% | +17% | |
Exclusive Order Flow Source | Private mempool | MEV-Boost Relay | Public mempool |
Cross-Chain MEV Capability | |||
Avg. Builder Payment to Proposer | 0.11 ETH | 0.10 ETH | 0.08 ETH |
Blocks Censoring OFAC Sanctions | 99% | 95% | 45% |
Integration with SUAVE / Shared Sequencing | R&D Phase | Pilot |
deep-dive
THE REALITY CHECK
The Opaque Cartel: How Builders Centralize Power
Proposer-Builder Separation (PBS) outsources block construction to specialized builders, creating a new, centralized layer of power.
Builder centralization is inevitable. PBS shifts power from validators to a small group of sophisticated actors who optimize for MEV extraction. These builders, like Flashbots and bloXroute, operate proprietary, closed-source software to win block auctions, creating an information asymmetry.
The cartel controls information flow. Builders see the entire transaction mempool and private order flow from searchers. This allows them to construct the most profitable blocks, while validators see only the final, opaque block header. The result is a two-tiered system where profit is concentrated at the builder layer.
Decentralized builders are non-viable. Open-source, permissionless builders cannot compete with the capital, data access, and low-latency infrastructure of professional firms. The builder market will consolidate, mirroring the centralization seen in traditional finance's high-frequency trading.
Evidence: Post-Merge, over 90% of Ethereum blocks are built by just five entities. The top three builders consistently win over 80% of blocks, demonstrating that PBS creates a new, entrenched oligopoly.
counter-argument
THE COUNTER-ARGUMENT
Steelman: Isn't a Competitive Market Still Better?
A pure market for block building may concentrate power more efficiently than PBS.
Competition centralizes power faster. PBS fragments the supply chain, but builders with superior data, capital, and JIT liquidity (e.g., Flashbots SUAVE) will still dominate. A free market rewards efficiency, which is inherently centralizing.
PBS adds systemic complexity. The separation introduces new trust assumptions and latency overhead between proposers and builders. This complexity creates attack surfaces that a monolithic, competitive validator market does not.
Evidence: Look at L2 sequencer markets. Despite decentralization goals, a few players like Arbitrum and Optimism dominate execution. PBS on Ethereum will replicate this, with builders like bloXroute and Beaver Build consolidating market share.
risk-analysis
BEYOND PBS
The Bear Case: Four Risks of Builder Dominance
Proposer-Builder Separation (PBS) aims to democratize blockspace, but new centralization vectors emerge at the builder layer.
01
The Cartel Problem: Builder Collusion
Dominant builders like Flashbots, Titan, and beaverbuild can form implicit cartels to censor transactions or manipulate auction dynamics.\n- Risk: Top 5 builders control >80% of Ethereum blocks post-Merge.\n- Consequence: Extracted value flows to a few entities, defeating PBS's decentralization goal.
>80%
Market Share
0
Slashing Today
02
The Black Box: Opaque Order Flow Auctions
Builders operate private mempools (e.g., Flashbots Protect, bloxroute) where order flow is auctioned off-chain.\n- Risk: Users and searchers cannot audit execution or verify they received fair value.\n- Consequence: Creates information asymmetry, enabling builders to extract maximum extractable value (MEV) without competitive pressure.
~90%
Private Flow
$1B+
Annual MEV
03
The Enforcer Gap: In-Block MEV Re-Emergence
PBS separates block building from proposing, but does nothing to prevent in-block MEV like DEX arbitrage.\n- Risk: Builders become the new arbitrageurs, using their privileged position to front-run user transactions within their own blocks.\n- Consequence: Value leaks from LPs and users to builders, requiring complementary solutions like CowSwap, UniswapX, or MEV-Share.
~$500M
Annual In-Block
0ms
User Protection
04
The Protocol Capture: Builder-Driven Governance
Builders with concentrated economic power can influence core protocol upgrades (e.g., EIP-4844, EIP-1559) to favor their infrastructure.\n- Risk: Protocol development becomes captive to builder interests, stifling innovation that threatens their margins.\n- Consequence: Long-term protocol resilience is compromised, mirroring the miner-driven governance risks PBS was meant to solve.
5-10
Key Entities
$10B+
Staked Influence
future-outlook
THE ARCHITECTURAL IMPERATIVE
The Path Forward: Enshrined PBS and Credible Neutrality
Enshrined Proposer-Builder Separation is the only viable path to credible neutrality, but its implementation determines whether it democratizes blockspace or creates new cartels.
Enshrined PBS is inevitable. The economic forces of MEV extraction demand a formalized separation of block building and proposing at the protocol level, moving beyond the current outsourced model used by Flashbots and bloXroute.
Credible neutrality requires protocol-level guarantees. The current outsourced PBS model relies on social consensus, creating systemic risk. Enshrined PBS codifies rules, preventing proposers from censoring or frontrunning builder bundles.
The builder market centralizes. Specialized hardware and data pipelines create economies of scale, leading to a builder oligopoly. This centralization is the trade-off for efficient MEV extraction and maximal block value.
Evidence: Ethereum's PBS roadmap (eipPBS) explicitly designs for permissionless builder entry and proposer sovereignty, a direct response to the centralization risks observed in the current MEV-Boost ecosystem.
takeaways
MEV & PBS LANDSCAPE
TL;DR: Key Takeaways for Architects
Proposer-Builder Separation is a foundational shift, not a panacea. Here's what it actually changes for protocol design.
01
The Problem: PBS Creates a New Oligopoly
PBS doesn't eliminate MEV; it centralizes its capture. Specialized builders like Flashbots' SUAVE, bloXroute, and Titan now compete on capital and data access, creating a builder cartel.\n- Risk: Reliance on a few dominant builders recreates Lido-like centralization risks.\n- Architectural Lock-in: Builders with proprietary order flow (e.g., from Coinbase, Binance) have an unassailable advantage.
>80%
Builder Market Share
1-3
Dominant Entities
02
The Solution: In-Protocol Execution (EigenLayer, Espresso)
Mitigate builder power by moving auction mechanics into the protocol layer. Shared sequencers and decentralized block building protocols use cryptographic proofs (like zk-proofs) to verify execution fairness.\n- Key Benefit: Removes trust in off-chain builder black boxes.\n- Key Benefit: Enables cross-rollup MEV sharing, aligning incentives across L2s like Arbitrum and Optimism.
~0ms
Latency Advantage
L2s
Native Integration
03
The Problem: User Experience is Still Hostage
Even with PBS, users suffer from frontrunning and poor price execution. The searcher-builder-proposer pipeline optimizes for extractable value, not user outcomes. This is the core failure that intent-based architectures like UniswapX, CowSwap, and Across solve.\n- Architect's Blind Spot: Standard PBS does nothing for the end-user's transaction.
$1B+
Annual Extractable Value
>100ms
Adversarial Latency
04
The Solution: Intents & SUAVE as a Universal Solver
Decouple transaction declaration from execution. Users submit signed intents (e.g., 'I want this token at best price'), and a competitive network of solvers (like those on UniswapX) fulfills them. Flashbots' SUAVE aims to be the preference-aware mempool and decentralized block builder for this new paradigm.\n- Key Benefit: User gets optimal outcome without MEV knowledge.\n- Key Benefit: Breaks the searcher monopoly by opening execution to solver competition.
10-100x
More Solvers
Best
Price Execution
05
The Problem: Cross-Chain MEV is the Next Battleground
PBS is chain-specific, but value flows between chains. Cross-domain MEV (e.g., arbitrage between Ethereum L1 and Arbitrum) is currently captured by centralized relayers and bridges like LayerZero and Wormhole, creating systemic risk and fragmented liquidity.\n- Architectural Gap: No native, secure coordination layer for cross-chain block building.
$100M+
Cross-Chain Volume/Day
3-5
Opaque Relayers
06
The Solution: Shared Sequencing & Light Clients
A canonical sequencing layer (proposed by EigenLayer, Astria) orders transactions across rollups before they hit L1. Combined with light client bridges, this allows builders to construct blocks containing atomic cross-chain bundles.\n- Key Benefit: Unlocks native cross-rollup arbitrage as a public good.\n- Key Benefit: Dramatically reduces bridging latency and risk, challenging incumbent bridges.
~1s
Finality Across L2s
Atomic
Cross-Chain Bundles
ENQUIRY
Get In Touch
today.
Our experts will offer a free quote and a 30min call to discuss your project.
NDA Protected
Confidentiality24h Response
Time to ValueDirectly to Engineering Team
No Sales Fluff10+
Protocols Shipped
$20M+
TVL Overall