Bundlers are the new mining pools. They aggregate, order, and submit user operations to a shared execution environment, capturing MEV and transaction fees. This centralizes economic power in a way that mirrors the hash rate consolidation seen in Bitcoin.
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Why Bundlers Are the New Mining Pools
The rise of ERC-4337 bundlers is not just a technical upgrade; it's recreating the economic and centralization dynamics of Bitcoin mining pools. We analyze the fee capture, MEV extraction, and staking incentives that will define the next wave of infrastructure centralization.
introduction
THE SHIFT
Introduction
Bundlers are becoming the primary economic and infrastructural layer for user transactions, mirroring the centralizing force of Bitcoin mining pools.
The parallel is infrastructural dominance. Just as mining pools like Foundry USA control block production, bundlers like Pimlico and Stackup control access to the user operation mempool. They dictate transaction ordering and finality for applications built on ERC-4337.
This creates a new market structure. The competition shifts from pure block space (Ethereum L1) to service quality and reliability at the bundler layer. Projects like Alchemy's Account Kit and Coinbase's Smart Wallet are vertically integrating this function to capture users.
Evidence: Over 60% of ERC-4337 user operations are currently bundled by just three providers. This concentration replicates the early dynamics of Bitcoin, where a handful of pools controlled the majority of hash power.
key-trends
WHY BUNDLERS ARE THE NEW MINING POOLS
The Inevitable Centralization Playbook
Permissionless entry creates a competitive race to the bottom, but economies of scale and MEV extraction inevitably lead to oligopoly.
01
The Problem: Permissionless Entry, Centralized Execution
Anyone can run a bundler, but the capital and infrastructure demands for competitive performance create a steep barrier. The result is a facade of decentralization masking a few dominant players who control transaction flow and ordering.
- Capital at Risk: Top-tier bundlers require $1M+ in staked ETH for reputation and slashing risk.
- Latency Arms Race: Winning the P2P mempool requires sub-100ms propagation, favoring centralized, co-located infrastructure.
- Oligopoly Formation: The top 3-5 bundlers (e.g., Pimlico, Alchemy, Stackup) consistently win over 60% of blocks.
60%+
Top 5 Share
$1M+
Stake Required
02
The Solution: Vertical Integration & MEV Siphoning
Dominant bundlers don't just bundle—they vertically integrate into the entire transaction supply chain, capturing value that should flow to users or builders. This mirrors mining pools extracting MEV from miners.
- Sealed-Bid Auctions: Builders like Flashbots and bloxroute operate their own bundlers, creating a closed loop.
- Cross-Chain MEV: Bundlers with RPC endpoints (e.g., Alchemy) have a first-look advantage on cross-chain arbitrage via intents and bridges like LayerZero.
- Proposer-Builder Separation (PBS) Failure: In practice, the same entities often control both roles, re-centralizing the stack.
Closed Loop
Builder-Bundler
First-Look
RPC Advantage
03
The Endgame: The L2-as-a-Service Bundler
The final consolidation occurs when the largest bundlers become the default infrastructure for entire L2 ecosystems. Rollup sequencers will outsource block building to these specialized, centralized entities for reliability and profit.
- Infrastructure Moats: Services like Caldera and Conduit offer bundled sequencer + bundler packages.
- Protocol Capture: A dominant bundler can subtly influence protocol upgrades to entrench its position, similar to miner-led hard forks.
- Regulatory Attack Surface: Centralized control points make the entire network vulnerable to sanctions and compliance demands.
Full Stack
L2 Package
Single Point
Of Failure
04
The Counterplay: SUAVE & Distributed Validators
The only viable resistance is architectural: decentralizing the critical functions of block building and validation itself. This requires new primitives that break the bundler's monopoly on order flow.
- SUAVE Chain: Aims to create a neutral, decentralized marketplace for preference expression and execution, separating the bundler role.
- Distributed Validator Technology (DVT): Projects like Obol and SSV can distribute the proposer role, preventing a single entity from controlling the entire pipeline.
- Force-Inclusion Lists: Protocol-level mandates (like Ethereum's crLists) that bypass the bundler's ordering power for certain transactions.
Neutral Market
SUAVE Goal
DVT
Proposer Defense
deep-dive
THE ECONOMIC ENGINE
The Bundler's Fee Engine: More Than Gas
Bundlers are the new mining pools, capturing value through sophisticated fee extraction beyond simple gas arbitrage.
Bundlers are profit-maximizing entities. They operate as specialized block producers for account abstraction rollups, competing to include user operations in the next block. Their revenue is the delta between what users pay and the actual L1 settlement cost.
The fee market is multi-dimensional. Unlike L1 miners, bundlers optimize for MEV extraction, cross-domain arbitrage, and priority fee auctions. This creates a complex, non-transparent bidding layer atop the base gas auction.
Infrastructure is the new moat. Leading bundlers like Pimlico and Stackup bundle operations but also operate paymasters and signer services. This vertical integration captures more of the transaction value chain than a simple gas relayer.
Evidence: On networks like Arbitrum and Optimism, over 60% of AA transactions are processed by the top three bundlers. Their revenue models increasingly rely on sponsored transactions and intent-based routing fees, not just gas.
INFRASTRUCTURE EVOLUTION
Mining Pool vs. Bundler: A First-Principles Comparison
This table compares the core operational and economic models of traditional Proof-of-Work mining pools with modern ERC-4337 bundlers, highlighting the shift from hardware-centric to logic-centric infrastructure.
| Feature / Metric | Proof-of-Work Mining Pool | ERC-4337 Bundler |
|---|---|---|
Primary Resource | Hashrate (Physical ASICs) | Capital & Mempool Access |
Revenue Source | Block Reward + Base Fee | User-Paid Priority Fee + Potential MEV |
Capital Efficiency | High Capex, Low Liquidity Needs | Low Capex, High Staked/Working Capital |
Settlement Finality Role | Proposer (Creates Block) | Relayer (Submits to Entry Point) |
Key Operational Risk | Hardware Failure, Pool Hopping | Transaction Reversion, Censorship |
Profit Maximization Tactic | Optimize Hashrate/Energy Cost | Optimize Orderflow & Bundle Composition |
Typical Fee to User | 0.5% - 2% of block reward | User-Pays-Gas Model + Potential Slippage |
Representative Entities | Foundry, Antpool, F2Pool | Pimlico, Stackup, Alchemy, Etherspot |
counter-argument
THE CENTRALIZATION TRAP
The Hopium: "But Paymasters and Alt Mempools Will Save Us"
Proposed solutions to bundler centralization create new, more complex centralization vectors.
Paymasters centralize sponsorship logic. A paymaster is a centralized service that pays gas fees for users. This creates a single point of failure and censorship, as the paymaster operator controls which transactions get sponsored. Major protocols like ERC-4337 and Starknet's account abstraction depend on this model.
Alternative mempools shift, not solve, centralization. Projects like SUAVE or Flashbots Protect propose private order-flow auctions. This moves centralization from block builders to a cartel of searchers and relay operators who control the flow of user intents.
Bundlers are the new mining pools. Just as Bitcoin mining consolidated into pools like Foundry and Antpool, bundling will consolidate into a few dominant services. The economic incentive to run a bundler is low for individuals but high for professional operators.
Evidence: The top three Ethereum validators control ~50% of stake. The same dynamic will apply to bundlers, where infrastructure giants like Alchemy and Blockdaemon will dominate the market.
risk-analysis
WHY BUNDLERS ARE THE NEW MINING POOLS
The New Attack Vectors: Bundler-Centric Risks
The shift from block producers to transaction orderers centralizes new forms of economic and technical power, creating systemic risks for Account Abstraction and the entire ERC-4337 ecosystem.
01
The Problem: Censorship as a Service
Bundlers, like mining pools before them, can filter or reorder user operations (UserOps) based on MEV potential or blacklists. A dominant bundler can effectively censor transactions from sanctioned addresses or front-run entire sectors of activity, undermining the permissionless promise of Ethereum.
- Single Point of Failure: A top-3 bundler controlling >33% of the mempool can impose de facto censorship.
- Regulatory Pressure: Compliance-focused bundlers could fragment the global mempool, breaking atomic composability.
>33%
Censorship Threshold
0
Native Slashing
02
The Problem: Cartelized MEV Extraction
Bundlers are the gateway to the ERC-4337 mempool, a rich new source of order-flow. Without enforceable commitments like PBS (Proposer-Builder Separation), bundlers can internalize all MEV, creating a more opaque and extractive system than today's public mempool.
- Vertical Integration: Bundlers can also be searchers and builders, capturing value that should flow to users.
- Stifled Innovation: Independent searchers and builders are locked out, reducing competition and efficiency gains.
100%
MEV Capture
Opaque
Auction Model
03
The Problem: Liveness & Trust Assumptions
User account security now depends on at least one honest bundler including their UserOp. If all available bundlers are malicious or offline, a user's funds can be frozen. This reintroduces a liveness assumption that EOAs (Externally Owned Accounts) don't have.
- Geopolitical Risk: Bundler infrastructure concentrated in specific jurisdictions creates a new attack vector.
- Protocol Brittleness: Unlike validator staking, there's no significant economic stake slashed for liveness failures.
1-of-N
Honest Assumption
$0
Slashable Stake
04
The Solution: SUAVE-Like Shared Mempools
Decouple transaction ordering from execution by creating a neutral, shared mempool for UserOps. Inspired by Flashbots' SUAVE, this creates a competitive marketplace where searchers bid for order-flow, and bundlers simply win the right to execute.
- Credible Neutrality: Separates the power to censor from the power to execute.
- Efficiency: Enables open competition, pushing MEV savings back to users and dApps.
Decoupled
Order vs. Execution
Open
Auction
05
The Solution: Enshrined PBS for 4337
The endgame is protocol-level enshrinement of Proposer-Builder Separation for the ERC-4337 mempool. This would mandate that bundlers (proposers) must accept blocks from a competitive builder market, with cryptographic commitments to prevent tampering.
- Protocol-Level Guarantees: Removes trust in bundler altruism.
- Aligned with Ethereum Roadmap: Complements ePBS for consensus layer, creating a unified, secure design.
Enshrined
In Protocol
Trustless
Commitments
06
The Solution: Reputation & Staking Slashing
Implement a staking mechanism with slashing conditions for bundlers, similar to validators. Combine this with a reputation system based on liveness, inclusion guarantees, and MEV redistribution transparency. Projects like AltLayer and Stackup are exploring early models.
- Skin in the Game: Forces bundlers to have economic alignment with network health.
- User Choice: Reputation scores allow wallets and dApps to route UserOps to more reliable bundlers.
Slashable
Stake
Reputation
Based Routing
future-outlook
THE INCENTIVE SHIFT
The Staking Endgame: Bonded Bundlers and Slashing
Bundlers are evolving into bonded validators, transforming the rollup landscape from a permissionless relay race into a staked security market.
Bundlers become bonded validators. The current model of permissionless, trust-minimized bundling is a temporary phase. The endgame is a staked security model where bundlers post substantial bonds to guarantee liveness and correctness, mirroring the evolution from CPU mining to ASIC farms.
Slashing enforces economic alignment. A bonded bundler that censors transactions or withholds blocks faces direct economic penalties. This slashing mechanism, pioneered by protocols like EigenLayer and AltLayer, shifts security from social consensus to automated, cryptoeconomic enforcement.
This creates mining pool 2.0. Just as mining pools consolidated hashpower, staking pools like Lido and Rocket Pool will aggregate bundler bonds. The result is a professionalized infrastructure layer where uptime and compliance are financially mandated, not optional.
Evidence: The EigenLayer AVS model demonstrates this shift, with operators staking ETH to secure new services. Rollups like Arbitrum and Optimism are actively exploring integrated staking modules for their sequencers, signaling the inevitable convergence.
takeaways
WHY BUNDLERS ARE THE NEW MINING POOLS
TL;DR for Protocol Architects
The shift from block production to user operation sequencing is creating a new, extractable infrastructure layer with profound implications for MEV, UX, and network control.
01
The Problem: MEV as a Public Good
Miner Extractable Value (MEV) is a multi-billion dollar market inefficiency. In Proof-of-Work, miners captured this value, creating opaque, centralized pools. With PoS and account abstraction, the sequencing right—the power to order transactions—is the new battleground. This right must be managed to prevent systemic risk and rent extraction.
$1B+
Annual MEV
>80%
Pool Concentration
02
The Solution: The Bundler as a Sequencer
Bundlers in ERC-4337 (Account Abstraction) and rollup sequencers are the new mining pools. They aggregate user operations, order them, and submit them to the blockchain. This creates a competitive market for inclusion and ordering, decoupling execution from consensus. Entities like EigenLayer AVS operators and AltLayer are already positioning here.
~500ms
Latency Target
10-100x
Throughput Gain
03
The New Revenue Stack: Fees + MEV
Bundlers don't just earn gas fees. Their core revenue is priority fees and captured MEV from optimal ordering (e.g., arbitrage, liquidations). This creates a direct incentive alignment with sophisticated searchers and builders, mirroring the Flashbots block-builder model but at the user operation layer.
+30-50%
Revenue Boost
PBS Model
Architecture
04
The Centralization Risk: Staking & Slashing
Like mining pools, bundler networks risk centralization. High-performance nodes require staking (for slashing) and reliable infrastructure, favoring large operators. The control over transaction ordering presents a censorship vector. Solutions like distributed validator technology (DVT) and permissionless bundler sets are critical.
$ETH Stake
Collateral
Critical
Liveness Risk
05
The Protocol Design Mandate
Architects must design for a multi-bundler future. This means: standardizing APIs (RPC eth_sendUserOperation), enabling fee market mechanisms for user ops, and implementing partial block auction designs. Protocols that ignore bundler economics will face higher costs and worse UX.
ERC-4337
Core Standard
Must-Optimize
Gas Efficiency
06
The Endgame: Intents & SUAVE
Bundlers are a stepping stone to intent-based architectures (UniswapX, CowSwap). Here, users submit desired outcomes, not transactions. Solvers (advanced bundlers) compete to fulfill them. The ultimate abstraction is a shared sequencer/block builder network like SUAVE, aiming to democratize MEV and become a universal plug-in for all chains.
Intent-Centric
Next Paradigm
Chain-Agnostic
SUAVE Goal
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