Why PBS is Inevitable for Sustainable L2s

Centralized sequencers are opaque MEV black boxes, extracting $100M+ annually from users. This creates toxic incentives and regulatory risk.

• Problem: Integrated proposer-builder model creates a single point of rent extraction and failure.
• Solution: PBS introduces a competitive builder market, pushing MEV profits back to the protocol and stakers via proposer payments.
• Entity Context: See Ethereum's PBS roadmap and Flashbots SUAVE for the canonical blueprint.

A single sequencer operator creates a single point of failure. Downtime halts the chain, forcing expensive forced inclusions via L1.

• Problem: Monolithic sequencers lead to ~12-24hr recovery times during outages, destroying UX and trust.
• Solution: PBS decouples block building from proposing. Multiple builders compete on block quality, while a decentralized set of proposers ensures liveness.
• Entity Context: This is the core resilience argument behind Espresso Systems and Astria.

A centralized sequencer is a legally identifiable censor. OFAC compliance can and will be enforced at this choke point.

• Problem: Integrated sequencers face binary compliance: censor transactions or face legal action, breaking credibly neutrality.
• Solution: PBS with decentralized proposers (e.g., based on DVT) creates a censorship-resistant pipeline. Builders can be compliant; proposers can select the most profitable, uncensored block.
• Entity Context: This is the primary driver for Ethereum's enshrined PBS post-Dencun.

Today's L2s operate as vertically integrated monopolies. The single sequencer role captures >90% of MEV and transaction ordering power, creating a single point of failure and censorship. This is the antithesis of Ethereum's credibly neutral ethos.

• Centralized Control: A single entity controls transaction inclusion and ordering.
• Captured Value: Billions in MEV and fees are extracted by the sequencer, not returned to users or the protocol.
• Systemic Risk: Network halts if the centralized sequencer fails.

Specialized PBS infrastructure layers are decoupling block building from proposing. Projects like Espresso Systems and Astria are creating shared, auction-based sequencing layers that multiple L2 rollups can use.

• Shared Security & Liquidity: Rollups outsource sequencing to a decentralized network of builders and proposers.
• MEV Redistribution: Auctions force builders to bid for block space, with proceeds returned to the L2 or its users.
• Interoperability: Enables atomic cross-rollup composability through a shared sequencing layer.

SUAVE is a universal preference environment that decentralizes the entire MEV supply chain. It's not just for L1; it's the endgame PBS architecture for all chains, including L2s.

• Decentralized Block Building: Separates block building into a competitive, specialized market.
• User Privacy: Encrypted mempools and conditional transactions prevent frontrunning.
• Optimal Execution: Users express intents; builders compete across domains (L1, L2s, sidechains) to fulfill them best.

Without PBS, L2 tokens have weak economic security and utility. PBS creates a native yield engine by auctioning the right to build blocks, generating protocol revenue that can be used to secure the chain via staking rewards.

• Protocol Revenue: Auction proceeds create a sustainable treasury and staking yield.
• Credible Decentralization: Stakers (proposers) and builders are separate, permissionless roles.
• Token Utility Shift: Token value accrues from securing the sequencing auction, not from being a license to extract rent.

PBS enables an intent-centric future where users submit desired outcomes, not transactions. This abstracts away chain boundaries, similar to UniswapX or CowSwap, but at the infrastructure level.

• Gasless UX: Builders subsidize fees and handle complexity.
• Optimal Routing: Builders execute intents across the best venue (any L2, L1, or alt-L1).
• Unified Liquidity: Breaks down liquidity silos between rollups, competing directly with monolithic chains.

Ethereum's core roadmap (EIP-4844, Danksharding) is built around PBS. L2s that ignore this architectural shift will become legacy systems, unable to integrate with Ethereum's scaling and security upgrades.

• Alignment with L1: Future L1 data availability and settlement assume a PBS model.
• Forced Adoption: To use Ethereum as a DA layer efficiently, L2s must adopt compatible PBS architectures.
• Network Effects: The L2 with the most decentralized, efficient PBS stack will attract the next wave of dApps and users.

L2s inherit MEV from their base layer and generate their own cross-domain MEV. Without PBS, this value is captured by a single, centralized sequencer, creating a massive economic leakage and centralization vector.

• Key Benefit 1: PBS externalizes the MEV auction, recapturing value for the protocol and users.
• Key Benefit 2: Separates transaction ordering from block building, neutralizing the sequencer's ability to front-run its own users.

A monolithic sequencer faces an impossible choice: low fees, robust censorship resistance, and profitability. In practice, they optimize for profit, leading to high margins and reliance on centralized RPC endpoints for censorship lists.

• Key Benefit 1: PBS introduces builder competition, driving costs toward marginal gas fees.
• Key Benefit 2: Enables credibly neutral block building, where the highest-paying bundle (often from a decentralized searcher network) wins, not a corporate policy.

Future L2 utility is cross-chain. Native PBS architectures like Suave or PBS-enabled rollups are prerequisites for efficient cross-domain intent settlement, competing with UniswapX and Across.

• Key Benefit 1: Creates a native, trust-minimized marketplace for cross-L2 arbitrage and bridging.
• Key Benefit 2: Unlocks intent-based user experiences where execution is optimally routed across domains by competing builders.

Without PBS, L2s are infrastructure commodities with thin margins. PBS transforms the sequencer from a cost center into a protocol-owned revenue source via MEV redistribution and builder bids.

• Key Benefit 1: Generates sustainable, native revenue beyond simple transaction fee take.
• Key Benefit 2: Funds can be directed to a DAO treasury or used for token buybacks and burns, creating a reflexive value accrual loop.

Centralized sequencers are a temporary bootstrap. PBS is the only viable path to a permissionless, multi-entity sequencer set without sacrificing performance or economic efficiency.

• Key Benefit 1: Enables a robust marketplace of builders and proposers, eliminating single points of failure.
• Key Benefit 2: Aligns with Ethereum's roadmap, ensuring L2s remain composable and secure as the base layer evolves with ePBS.

PBS doesn't just solve problems; it creates a new market. It incentivizes specialized builders, searchers, and data providers—similar to the Flashbots ecosystem on L1—to optimize L2 execution.

• Key Benefit 1: Drives R&D in pre-confirmation services and optimal block building algorithms.
• Key Benefit 2: Attracts capital and talent, creating a competitive moat for PBS-native L2s over static competitors.