Why PBS is the Only Viable Path for Ethical MEV

Miner/Validator Extractable Value (MEV) is not a bug but a fundamental property of permissionless blockchains. The current model, where block proposers also build blocks, creates a perverse incentive alignment that centralizes power and extracts value from users.

Without PBS, decentralization fails. Validators are incentivized to run sophisticated MEV extraction software like Flashbots MEV-Boost, creating a centralizing arms race. This leads to proposer centralization as smaller validators are priced out, undermining network security.

PBS is the only viable path because it separates roles. Specialized builders compete on block construction, while proposers simply select the highest-paying header. This creates a competitive market for block space and outsources MEV complexity away from the core consensus layer.

Evidence: Post-Merge Ethereum's adoption of PBS via MEV-Boost saw >90% of blocks built by external builders, proving the model's viability and the market's demand for specialized execution.

MEV is a protocol tax that cannot be eliminated, only managed. Attempts to suppress it, like encrypted mempools in protocols like Shutter Network, create more problems than they solve by introducing latency and centralization pressure. PBS accepts this reality and builds a control plane around it.

PBS formalizes the black market. It moves MEV extraction from a clandestine, network-destabilizing activity into a transparent, auction-based market. This is analogous to how Flashbots' SUAVE aims to create a neutral marketplace, turning a systemic risk into a measurable protocol revenue stream.

The alternative is vertical integration. Without PBS, the most profitable validators become monolithic entities that bundle block building and proposing. This creates an insurmountable centralization force, as seen in the mining pool dominance that preceded Ethereum's Merge. PBS is damage control against this inevitable consolidation.

Evidence: Post-merge Ethereum blocks built by professional builders like bloXroute and Beaver Builders consistently capture over 90% of MEV value. This proves the specialization is already happening; PBS merely codifies it into the protocol to enforce fairness and auditability.

MEV-Boost is a centralized oracle. It outsources block building to a competitive market but relies on a trusted relay network to filter and deliver bundles. This creates a centralized trust bottleneck where relays like Flashbots, BloXroute, and Agnostic can censor transactions or fail.

The protocol proves PBS works. MEV-Boost's success—over 90% of Ethereum blocks use it—validates the core PBS thesis: specialized builders extract more value than generalist validators. This created a $600M+ annual market for block space.

It is not protocol PBS. The current design is a middleware patch. Builders send full blocks to relays, which validators blindly sign. This creates MEV leakage and fails to solve long-term issues like builder censorship or centralization.

Evidence: The dominance of a few builders like beaverbuild and rsync-builder, alongside the collapse of the Titan builder due to a bug, highlights the market's efficiency and the systemic risks of the current outsourced model.

PBS separates roles. It creates a market between builders (who assemble blocks) and proposers (who select them). This specialization enables efficient MEV extraction while preventing validators from frontrunning their own users, a conflict of interest inherent in monolithic validator designs.

Alternatives are palliative. Private mempools like Flashbots Protect or MEV-Boost's current model are stopgaps; they centralize trust in relay operators. On-chain solutions like CowSwap's batch auctions or UniswapX's fillers are application-specific and cannot solve the systemic L1 problem.

PBS enables credible neutrality. By auctioning block space to the highest bidder, the protocol itself becomes a neutral clearinghouse. This is superior to validator collusion or opaque off-chain deals, which are the natural equilibrium in a monolithic system.

Evidence: Post-Merge Ethereum's adoption of MEV-Boost, a PBS prototype, saw over 90% of blocks built by specialized entities. This proves the market's demand for separation, even before enshrined PBS is implemented in-protocol.

PBS centralizes block production into a professional builder market. This creates a new capital-intensive oligopoly where only entities with sophisticated MEV extraction engines and massive staking pools can compete.

The builder role is not permissionless. The competitive advantage for builders like Flashbots SUAVE and Titan Builder is immense, creating high barriers to entry that favor incumbents with established order flow.

Relay centralization is the critical failure point. The network relies on a handful of trusted relays like BloXroute and Ultrasound to honestly mediate between builders and proposers, creating a single point of censorship and failure.

Evidence: Post-merge Ethereum block data shows that the top three builders consistently produce over 80% of blocks, demonstrating rapid market consolidation.