Builder dominance is the mining pool problem 2.0. The same economic forces that consolidated Bitcoin's hash power into pools like Foundry USA now concentrate Ethereum block production with builders like Titan Builder and beaverbuild. This creates a single point of failure for MEV extraction and transaction censorship.
comparison-of-consensus-mechanisms
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Why Builder Dominance is the New Mining Pool Problem
An analysis of how the centralization of block building under entities like Flashbots mirrors the hashpower consolidation of Bitcoin mining pools, creating systemic risks for Ethereum's neutrality and censorship resistance.
introduction
THE POWER SHIFT
Introduction
The centralization of block production in a few professional builders has recreated the systemic risks of Bitcoin's mining pool problem.
The validator's role is now ceremonial. With Proposer-Builder Separation (PBS), validators outsource block construction. They select the highest-paying header, ceding control to the builder's optimization engine. This separates economic from consensus power, a critical vulnerability.
Flashbots' SUAVE is the canonical response. This decentralized block-building marketplace aims to fragment builder power. Its success is not guaranteed, competing with entrenched players like bloXroute and the inherent efficiency of vertical integration seen in EigenLayer's vertically integrated services.
thesis-statement
THE NEW CENTRALIZATION VECTOR
The Core Argument
The economic dominance of professional builders has recreated the mining pool centralization problem at the application layer, threatening protocol neutrality and user value capture.
Builder dominance is the new mining pool problem. Just as a few mining pools (e.g., Foundry USA, Antpool) once controlled Bitcoin's hash power, a handful of sophisticated builders like Jito Labs and Flashbots now dominate block production on Ethereum and Solana. This centralizes the critical function of transaction ordering and value extraction.
The MEV supply chain is the new mining rig. Professional builders operate complex infrastructure for Maximal Extractable Value (MEV), using private order flow, proprietary algorithms, and cross-chain arbitrage bots. This creates an insurmountable capital and data asymmetry versus retail users or smaller validators, mirroring the ASIC arms race.
Protocols are becoming clients of builders. The PBS (Proposer-Builder Separation) framework, while elegant in theory, outsources the core competitive function. In practice, builders like Titan and beaverbuild are the real decision-makers on transaction inclusion, making the decentralized validator set a passive rubber stamp.
Evidence: On Ethereum post-merge, the top three builders consistently produce over 80% of blocks. On Solana, Jito's MEV-boosted blocks command a ~90% market share, demonstrating that economic incentives inevitably consolidate around the most efficient extractors.
key-trends
WHY BUILDER DOMINANCE IS THE NEW MINING POOL PROBLEM
The Centralization Playbook: A Side-by-Side
The same economic forces that consolidated Bitcoin mining are now concentrating block building and sequencing power, creating systemic risks for L1s and L2s.
01
The MEV Supply Chain Cartel
A handful of entities like Flashbots, BloXroute, and Titan now dominate the flow of transactions from users to the chain. They control the order flow and block building process, extracting value and censoring at will.\n- ~90% of Ethereum blocks are built by a few centralized builders.\n- Proposer-Builder Separation (PBS) failed; builders now capture the value.
~90%
Blocks Built
3-5
Dominant Entities
02
The L2 Sequencer Monopoly
Rollups like Arbitrum, Optimism, and Base operate with a single, centralized sequencer. This creates a single point of failure and allows the sequencer to extract maximal extractable value (MEV) and reorder transactions.\n- ~$10B+ TVL secured by centralized sequencers.\n- 0-1 second finality is a privilege the sequencer can revoke.
$10B+
TVL at Risk
1
Active Sequencer
03
The Staking-as-a-Service Oligopoly
Just as mining pools consolidated hash power, staking providers like Lido, Coinbase, and Binance are consolidating stake. This threatens the crypto-economic security of Proof-of-Stake chains by creating central points of control.\n- Lido commands ~33% of Ethereum's staked ETH.\n- Top 3 providers control >50% of staking market share.
33%
Lido's Share
>50%
Top 3 Control
04
The Solution: Credibly Neutral Infrastructure
The counter-trend is protocols that enforce decentralization at the protocol layer, not just in whitepapers. This includes SUAVE for MEV, Espresso Systems for shared sequencing, and EigenLayer for decentralized validation.\n- Force economic competition at the base layer.\n- Decouple trust from any single entity's brand.
0
Trusted Parties
Protocol
Layer Enforcement
MEV SUPPLY CHAIN CONCENTRATION
The Builder Market Share Dashboard
A comparison of the top three builder entities by market share, highlighting the centralization risks and competitive dynamics in the post-merge Ethereum block production landscape.
| Metric / Feature | Flashbots (SUAVE) | beaverbuild | rsync-builder |
|---|---|---|---|
7-Day Avg. Market Share | 32.7% | 22.1% | 11.4% |
30-Day Avg. MEV-Boost Relay Win Rate | 28.5% | 19.8% | 10.1% |
Exclusive Order Flow Source | Mev-Share Bots | Private RPC (e.g., Alchemy) | Jito-Solana AMM Arb |
Cross-Chain Intent Routing | |||
Avg. Builder Payment to Proposer | 0.105 ETH | 0.098 ETH | 0.112 ETH |
Proposer-Builder Separation (PBS) Compliance | Full (via mev-boost) | Full (via mev-boost) | Full (via mev-boost) |
Centralization Risk (Censorship Slots) | High | Medium | Low |
deep-dive
THE CENTRALIZATION PLAYBOOK
From Hashrate to Orderflow: The Slippery Slope
The economic logic that created mining pool dominance is now repeating itself in the MEV supply chain, concentrating power in a few builders.
Builder dominance replicates mining pools. Just as miners pooled hashrate for consistent rewards, searchers and validators now route orderflow to builders like Jito Labs and bloXroute for reliable block inclusion and MEV extraction.
The economic flywheel is identical. Concentrated orderflow attracts more validators, which further increases builder market share and profit, creating a winner-take-most market. The top three builders control over 80% of Ethereum blocks post-PBS.
This is a protocol-level failure. Proposer-Builder Separation (PBS) outsourced centralization from validators to builders. Without enforceable decentralization (e.g., enshrined PBS, permissionless relays), the network's censorship resistance and liveness degrade.
Evidence: Flashbots' SUAVE aims to decentralize this stack, but adoption is nascent. Meanwhile, Jito's dominance on Solana demonstrates how quickly a liquid staking + MEV bundle can capture a chain.
counter-argument
THE NEW CENTRALIZATION VECTOR
The Rebuttal: "But PBS is Incomplete"
Proposer-Builder Separation (PBS) solves validator centralization but creates a new, more dangerous concentration of power in the builder layer.
Builder dominance replicates mining pools. PBS shifts the profit motive and block construction power from validators to specialized builders. This creates a winner-take-all market where the most efficient builder with the best MEV extraction and order flow wins every block, mirroring Bitcoin's mining pool centralization.
The builder market is not permissionless. Unlike validators, builders require sophisticated infrastructure and exclusive order flow deals. This creates high barriers to entry, leading to a market dominated by a few entities like Flashbots' SUAVE or Jito Labs, which already command significant market share on Solana.
Vertical integration is the endgame. The logical conclusion is builder-captured proposers. Dominant builders will economically coerce validators via mechanisms like mev-boost relays, recreating the validator centralization PBS was designed to prevent. The censorship resistance problem simply moves down the stack.
Evidence: On Ethereum post-Merge, over 90% of blocks are built by just five builders. The top builder, beaverbuild, consistently captures over 30% of blocks, demonstrating rapid market consolidation that PBS cannot inherently prevent.
risk-analysis
BUILDER DOMINANCE
The Bear Case: What Could Go Wrong?
The shift to Proposer-Builder Separation (PBS) has concentrated power in a handful of sophisticated builders, creating systemic risks reminiscent of Bitcoin's mining pool centralization.
01
The MEV Cartel
Top builders like Flashbots, BloXroute, and Titan control >80% of blocks. This concentration enables:
- Censorship: Blacklisting OFAC-sanctioned transactions.
- Extraction: Skimming maximal value from user transactions via private order flow.
- Collusion: Implicit coordination to exclude smaller builders and maintain fee markets.
>80%
Block Share
$1B+
Annual MEV
02
The PBS Failure Mode
If the builder market collapses (e.g., due to regulation or a critical bug), the chain reverts to a naive first-price auction. This causes:
- Instability: Volatile, unpredictable block production.
- Inefficiency: MEV is captured by validators directly, worsening centralization.
- User Harm: Frontrunning and sandwich attacks become rampant again, as seen pre-PBS.
~0s
Fallback Time
+300%
Fee Spikes
03
The Data Availability Monopoly
Builders rely on centralized data availability (DA) layers for speed. This creates a single point of failure:
- Fragility: An outage at EigenDA, Celestia, or a centralized RPC provider halts block production.
- Oligopoly: High capital requirements for in-house DA lock out competitors.
- Vendor Lock-in: Builders become dependent on a few DA providers, stifling innovation.
~100ms
DA Latency
2-3
Major Providers
04
The Enshrined Solution Trap
Proposals for enshrined PBS (e.g., Ethereum's ePBS) aim to mitigate risks but introduce new ones:
- Protocol Bloat: Increases core protocol complexity and attack surface.
- Rigidity: Hard-forks required to adapt to new MEV forms, slowing innovation vs. agile outsourced builders like SUAVE.
- Incomplete Fix: May not solve underlying economic centralization, just moves it.
2-3 Years
Dev Timeline
High
Complexity Cost
05
Vertical Integration Death Spiral
Dominant builders are integrating upstream (RPCs, wallets) and downstream (validators, restaking). This leads to:
- Anti-competitive Bundling: Exclusive order flow deals with Coinbase, MetaMask.
- Restaking Capture: Using EigenLayer to back their services, creating too-big-to-fail entities.
- Regulatory Targeting: A single regulated entity could control a critical chain segment.
>60%
RPC Market Share
$10B+
Restaked TVL
06
The L2 Replication Problem
The builder dominance model is being replicated on major L2s (Arbitrum, Optimism), but with weaker decentralization guarantees:
- Sequencer Centralization: A single entity often runs the sequencer, which is also the builder.
- Fast Lane Rent-Seeking: Services like Flashbots Protect become mandatory for users, extracting rent.
- Cross-Chain MEV: Builders coordinate across chains, potentially exacerbating systemic risk.
1
Active Sequencer
All Major L2s
Scope
takeaways
BUILDER DOMINANCE
TL;DR for Busy CTOs
The centralization of block production in the hands of a few professional builders (e.g., Flashbots, bloXroute) is the post-Merge equivalent of mining pool centralization, creating systemic risks.
01
The Problem: Censorship & MEV Extraction
Dominant builders like Flashbots control the ordering of transactions, enabling OFAC compliance and value extraction at the protocol level. This undermines credible neutrality.
- ~80%+ of Ethereum blocks are built by a few entities.
- Proposer-Builder Separation (PBS) is a band-aid, not a cure.
80%+
Blocks Controlled
OFAC
Censorship Risk
02
The Solution: SUAVE & Decentralized Sequencing
A specialized chain for decentralized block building. It aims to separate execution from consensus and democratize MEV.
- Universal preference environment for users.
- Cross-chain MEV becomes a public good, not private rent.
- Competes with centralized builders and layerzero's executor network.
0
Trusted Parties
Cross-Chain
Scope
03
The Hedge: Intent-Based Architectures
Protocols like UniswapX and CowSwap bypass the builder's ordering power entirely. Users express outcomes, solvers compete.
- No frontrunning or sandwich attacks.
- Better price execution via CoW (Coincidence of Wants).
- Shifts power from builders to a solver network.
No MEV
User Protection
Solvers
Competitive Market
04
The Metric: Time-to-Finality vs. Liveness
Builder centralization trades liveness for economic finality. A censoring builder doesn't halt the chain, but can indefinitely delay transactions.
- Single-Slot Finality (e.g., Solana) reduces builder leverage window.
- Ethereum's ~12s slot time is a vulnerability window for MEV extraction.
12s
Vulnerability Window
Single-Slot
Target
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Confidentiality24h Response
Time to ValueDirectly to Engineering Team
No Sales Fluff10+
Protocols Shipped
$20M+
TVL Overall