Why Bundlers Will Fragment the MEV Supply Chain

Permissionless bundlers fragment MEV. Account Abstraction standards like ERC-4337 commoditize the role of the block builder, shifting power from a few centralized searcher-builder entities to a dynamic network of specialized actors.

Specialization creates new markets. The unified MEV supply chain will split into distinct roles: intent solvers (like UniswapX), cross-domain sequencers (like Across), and data availability providers, each competing on cost and latency.

Fragmentation reduces systemic risk. A monolithic chain controlled by Flashbots or a dominant L2 sequencer presents a single point of failure. A distributed network of bundlers, like those emerging on Arbitrum and Optimism, resists censorship and capture.

Bundlers are not monolithic. The current model of a single entity performing user discovery, simulation, ordering, and execution is a temporary artifact of early ERC-4337 adoption. This vertical integration creates centralization risks and inefficiencies.

Specialization drives efficiency. Just as Lido separates staking from node operation, the bundler role will split. Independent searchers (like those on Flashbots) will compete on transaction discovery, while specialized builders (influenced by PBS) compete on block construction.

The market demands it. A single entity cannot be best-in-class at privacy, cross-chain intent routing (via Across or LayerZero), and optimal execution. Disaggregation allows protocols like CowSwap and UniswapX to plug into the most efficient component for each task.

Evidence: Ethereum's Proposer-Builder Separation (PBS) is the blueprint. It proved that separating block proposal from construction reduces centralization and improves economic efficiency. The same forces will dismantle the monolithic bundler.

Searcher-Builder-Block Producer Consolidation defines the current market. Entities like Flashbots and bloXroute act as integrated monopolies, controlling transaction ordering, block building, and block proposal. This vertical integration centralizes the most critical infrastructure layer.

The Integrated Monolith extracts maximum rent. By owning the full stack, these entities capture all MEV value, from simple arbitrage to complex cross-domain opportunities. This model disincentivizes specialization and innovation in individual supply chain components.

Account Abstraction fragments this stack. ERC-4337's bundler role is the first mandatory unbundling. Bundlers compete solely on user operation inclusion, separating the user-facing gateway from the block-building and proposal layers. This creates a new, competitive market.

Evidence: The rise of PBS (Proposer-Builder Separation) on Ethereum and the proliferation of specialized bundlers like Stackup and Alchemy prove the market demands disaggregation. The integrated model is a temporary bottleneck, not an endpoint.

Bundlers become orderflow gatekeepers. The ERC-4337 standard decouples transaction execution from user accounts, creating a new role that aggregates and submits user operations. This creates a competitive market for the right to sequence user intents, directly competing with block builders and validators for control.

This fragments the MEV supply chain. Traditional MEV flows from searchers to builders to proposers. With account abstraction, orderflow aggregation splits from block building. Bundlers like Pimlico and Stackup now compete for the right to sequence user ops, while builders like Flashbots and Titan compete to include those bundles in blocks.

The new market is for intent fulfillment. Bundlers do not just submit transactions; they compete to fulfill user intents expressed via ERC-4337 UserOperations. This creates a parallel, intent-based supply chain that bypasses traditional transaction pools, similar to how UniswapX and CowSwap operate on intent aggregation.

Evidence: The bundler market is already forming. The Ethereum Foundation's bundler spec has multiple implementations. Pimlico's Bundler and Alchemy's Account Kit are live, processing thousands of UserOperations daily, proving the demand for this new execution layer.

The re-bundling argument is flawed. It assumes builders and proposers will vertically integrate to capture more value, mirroring traditional finance. This ignores the core innovation of proposer-builder separation (PBS): it creates a competitive, permissionless market for block production.

Specialization creates more value. A monolithic entity cannot match the efficiency of specialized builders like Flashbots SUAVE, searcher networks like Jito, or order flow auctions. The modular MEV stack fragments because each layer optimizes for a different competitive advantage.

Fragmentation is the equilibrium. Just as Uniswap and 1inch fragmented liquidity aggregation, the MEV supply chain fragments into specialized roles. Builders compete on execution, relays on trust, and proposers on staking. This is the natural state of a liquid market.

Evidence: The Ethereum PBS roadmap explicitly enforces this separation. Post-Danksharding, the proposer role is commoditized, making vertical integration economically irrational. The profit is in specialization, not consolidation.

Bundlers become commodity infrastructure. The initial role of the bundler—aggregating and submitting user operations—is a low-margin, high-volume service. This commoditization will force bundlers to seek new revenue streams, primarily from MEV extraction.

Specialized searcher-bundlers will emerge. Just as Flashbots' searchers evolved on Ethereum, we will see bundlers that specialize in cross-domain arbitrage between Arbitrum and Optimism or intent fulfillment via UniswapX. Their edge is exclusive access to the user operation flow.

The supply chain fragments into three layers. We will see a clean separation between the execution layer (bundlers), the ordering layer (proposers/sequencers), and the settlement layer (L1). This creates a market where each layer competes on price and latency.

Evidence: The proliferation of SUAVE-like architectures and shared sequencer networks like Espresso and Astria proves the demand for unbundling. Their success depends on creating liquid markets for block space and order flow.