The Future of Miner Extractable Value Under Monetary Stress

The PBS (Proposer-Builder Separation) model concentrates power in a few dominant builders like Flashbots, Titan, and beaverbuild. Under economic stress, this creates a single point of failure and censorship risk.

• >80% of Ethereum blocks are built by the top 3 entities.
• Relays become critical trust bottlenecks, with ~10 major players controlling access.

Protocols like SUAVE (Single Unified Auction for Value Expression) aim to decentralize the builder layer by creating a shared, neutral mempool and execution network.

• Decouples block building from specific chains.
• Enables cross-domain MEV capture via a unified auction.
• Reduces relay trust assumptions through cryptographic commitments.

EIP-1559's MEV-Burn proposal seeks to tax extractable value, but under tight monetary conditions, it could starve searchers and builders of necessary revenue, stifling innovation.

• Net-negative economic loops for sophisticated actors.
• Risks pushing more activity to private channels, increasing opacity.
• Conflicts with staking yields as a core security incentive.

To combat frontrunning and level the playing field, protocols like Shutter Network and EigenLayer's pre-confirmations are emerging.

• Encrypted mempools prevent sniping until execution.
• Pre-confirmations from stakers or builders offer sub-second finality for users.
• Creates a new market for fast-lane services without toxic MEV.

The relay layer, intended to be neutral, now captures significant value through censorship, ordering, and latency arbitrage. This is the new centralizing force post-PBS.

• Relays can exclude builders or transactions for profit.
• Latency games between builders and relays create a ~500ms arms race for priority.
• Creates a meta-MEV layer that extracts from the extractors.

To neutralize relay power, in-protocol force-inclusion lists (like those proposed for Ethereum) and decentralized reputation systems like EigenLayer's EigenDA for data availability are critical.

• Guarantees transaction inclusion, bypassing censorious relays.
• Staked reputation for relays and builders aligns incentives with network health.
• Shifts trust from entities to cryptographic and economic proofs.

EIP-1559's fee burn removes the "public good" subsidy for validators, concentrating all revenue on MEV. In a bear market with low base fees, >90% of validator income could come from extractable value. This creates perverse incentives for maximal extraction, pushing networks like Ethereum towards centralization as only sophisticated, capital-heavy players can compete.

To combat frontrunning, protocols like CowSwap and UniswapX adopt sealed-bid auctions solved off-chain by solvers. This centralizes MEV capture into a few solving entities, creating solver cartels. Under monetary stress, these cartels could collude to suppress payouts to validators or extract maximal value, creating a new layer of rent-seeking that defeats the purpose of decentralization.

Bridges like LayerZero and Across are natural MEV sinks due to latency in state finality. Under stress, validators may be incentivized to perform time-bandit attacks, reorging chains to steal cross-chain arbitrage. This isn't just profit—it's a direct attack on the security assumptions of optimistic rollups and light clients, threatening the entire interoperability stack.

PBS is the planned institutional solution, separating block building from proposing. However, under extreme fee pressure, the builder market can collapse to a single dominant builder (e.g., Flashbots SUAVE). If that builder censors transactions or goes offline, the chain halts. This creates a single point of failure more dangerous than miner centralization.

Rollups (Arbitrum, Optimism) batch transactions, compressing sequential opportunities into a single L1 slot. This creates super-blocks with outsized MEV. The sequencer capturing this value becomes a multi-billion dollar honeypot. Under stress, this invites L1 validators to attack the sequencer or for the sequencer to become extractive, breaking the L2's security model.

As MEV becomes the dominant revenue stream, it enters the regulatory spotlight. OFAC-sanctioned transactions are already being censored by major builders. Under economic stress, validators may be forced to comply with expansive regulations, turning the decentralized chain into a KYC'd order-flow auction. This kills permissionless innovation at the protocol layer.

When block rewards shrink, MEV becomes the primary validator income. This creates a powerful incentive for proposer-builder collusion (PBS) to centralize and extract maximum value, threatening chain neutrality.

• Risk: Centralized block building cartels.
• Impact: Censorship and transaction front-running by validators.

Protocols must bake PBS into the consensus layer to prevent off-chain cartel formation. This is Ethereum's long-term answer, moving MEV management from an opaque market to a transparent, auction-based system.

• Benefit: Democratizes access to block building.
• Benefit: Enforces credibly neutral transaction ordering.

Applications will migrate logic off-chain to bypass generalized front-running. UniswapX and CowSwap route via fillers, not public mempools. SUAVE aims to be a decentralized, preferential mempool and executor.

• Shift: From transaction execution to outcome fulfillment.
• Entities: UniswapX, Across, 1inch Fusion.

EIP-1559's fee burn already destroys a portion of MEV. Under stress, this acts as a deflationary pressure valve, recycling extractable value from validators back to all token holders via reduced supply.

• Mechanism: Turns a negative externality into a public good.
• Effect: Offsets validator revenue loss with increased token scarcity.

Liquidity fragmentation across Ethereum L2s, Solana, and Avalanche creates a massive opportunity for cross-domain arbitrage. This will drive demand for fast, reliable bridging and messaging like LayerZero and Wormhole.

• Opportunity: Multi-chain atomic arbitrage bundles.
• Risk: Bridges become central MEV extraction points.

Rollups like Arbitrum and Optimism can implement local fee markets and sequencer rules that internalize and redistribute MEV. This creates a competitive advantage by offering a fairer user experience.

• Tactic: Sequencer as a trusted, regulated service.
• Goal: User retention through MEV protection.