Proposer-builder separation (PBS) formalizes a division of labor that already existed. Validators (proposers) outsource block construction to specialized builders like Flashbots, who compete in auctions to have their block accepted. This creates a professionalized market for block space that is more efficient but also more centralized than mining pools.
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Why Proposer-Builders Are the New Mining Pools
The rise of integrated proposer-builder entities under Proposer-Builder Separation (PBS) is replicating the centralization and outsized governance influence of Bitcoin mining pools, creating a new, concentrated power layer in the MEV supply chain.
introduction
THE POWER SHIFT
Introduction
The post-Merge Ethereum landscape has centralized block production within a new, extractive layer of specialized actors: proposer-builder separation (PBS).
Builders are the new mining pools, but with greater leverage. They control transaction ordering (MEV) and bundle construction, extracting value that once went to miners. Protocols like EigenLayer and Espresso Systems are now building to decentralize this critical function, recognizing it as the new base-layer bottleneck.
The builder market is winner-take-most. Data from mevboost.pics shows the top three builders consistently produce over 80% of blocks. This concentration creates systemic risks, including censorship and chain reorganizations, that the original Proof-of-Work design mitigated through competitive hashrate.
thesis-statement
THE POWER SHIFT
Thesis Statement
Proposer-Builder Separation (PBS) transforms block production into a specialized market, making builders the new mining pools.
PBS creates a new market. The Ethereum merge eliminated physical mining, but the economic logic of pooling resources for block rewards persists. PBS formalizes this by separating the role of proposing a block (the proposer) from constructing it (the builder).
Builders are specialized capital allocators. Unlike mining pools that competed on hash power, builders compete on Maximal Extractable Value (MEV) capture and network efficiency. They aggregate transactions and optimize ordering to outbid rivals for the proposer's slot.
This shifts power to infrastructure. The winning builder's block is a product of sophisticated MEV-Boost auctions and private mempools like Flashbots Protect. Proposers become passive rent-seekers, while builders like Blocknative and bloXroute control transaction inclusion.
Evidence: Post-merge, over 90% of Ethereum blocks are built via MEV-Boost. The builder market is already consolidating, with the top three builders consistently producing over 50% of blocks, mirroring early mining pool centralization.
key-trends
PROPOSER-BUILDER SEPARATION
Key Trends: The Centralization Playbook
The MEV supply chain is consolidating power into specialized, opaque entities, mirroring the centralization of Bitcoin mining pools.
01
The Problem: The Solo Validator is Dead
Maximizing MEV extraction requires sophisticated infrastructure that is impossible for a solo staker to run. This creates a massive economic disadvantage for anyone not using a professional builder.
- ~99% of Ethereum blocks are now built by professional builders like Flashbots.
- The builder market is a winner-take-most game, dominated by a few players.
99%
Builder Blocks
~$1B+
Annual MEV
02
The Solution: The Builder Cartel (Flashbots, bloXroute, etc.)
Specialized builders aggregate transactions, run complex simulations, and auction complete blocks to the highest-bidding validator. This is the new mining pool.
- They offer guaranteed payments via MEV-boost, making staking yields predictable.
- They control transaction ordering, creating a new layer of censorship risk and opaque fee markets.
90%+
MEV-Boost Usage
5-10
Dominant Builders
03
The Endgame: Vertical Integration (Jito, EigenLayer)
The logical conclusion is vertical integration of the entire stack: staking pool, builder, and searcher network. This creates unbeatable economies of scale and data advantages.
- Jito on Solana bundles the validator client, MEV engine, and liquid staking token.
- EigenLayer restakers could subsidize builders, further entrenching incumbents.
$10B+
Restaked TVL
30%
Solana Stake
PROPOSER-BUILDER SEPARATION (PBS)
Data Highlight: The New Oligopoly
Comparing the dominant MEV supply chain entities that control block production, analogous to the mining pool oligopoly of Proof-of-Work.
| Key Metric / Capability | Flashbots (SUAVE) | bloXroute | Titan Builder | rsync Builder |
|---|---|---|---|---|
Market Share of Top 100 Blocks | 24% | 18% | 15% | 11% |
Avg. MEV Extracted per Block (7d) | 0.31 ETH | 0.22 ETH | 0.19 ETH | 0.15 ETH |
Private RPC / Orderflow Access | ||||
Cross-Chain MEV Capability | ||||
Proposer Payment (Tip) Premium | 8-12% | 5-8% | 3-5% | 1-3% |
Integration with Major CEXs | ||||
Builder Software (e.g., mev-geth) | ||||
Relay Market Share |
|
| <10% | <5% |
deep-dive
THE POWER SHIFT
Deep Dive: From Hash Rate to Block Space
The competitive edge in block production has shifted from raw computation to sophisticated block space optimization, creating a new professional class of proposer-builders.
Proposer-Builder Separation (PBS) redefined the block production stack. This architectural split creates a specialized market where builders compete to construct the most profitable block for proposers to sign. The builder role now requires complex MEV extraction and transaction ordering, a task far beyond simple block validation.
Builders are the new mining pools. They aggregate user transactions and compete on execution quality, not hash power. This mirrors the centralization dynamics of Bitcoin mining pools but with a focus on software and capital efficiency rather than physical hardware. The competitive landscape is now defined by algorithms, not ASICs.
The builder's edge is data. Superior performance requires access to private order flow and sophisticated MEV-Boost relays like Flashbots and bloXroute. Builders like Titan Builder and rsync win auctions by maximizing extractable value through arbitrage and liquidation bundles that generic nodes cannot see.
Evidence: Post-EIP-1559, over 90% of Ethereum blocks are built by a handful of professional builders. The builder market cap for a single block often exceeds $50,000, making it a high-stakes, winner-take-most game driven by information asymmetry and execution speed.
counter-argument
THE NEW MINING POOL
Counter-Argument: Isn't PBS the Solution?
Proposer-Builder Separation (PBS) centralizes block production into a new cartel, replicating the extractive economics of Proof-of-Work mining pools.
PBS centralizes block production. It creates a professionalized builder market where only sophisticated actors with MEV extraction software and private mempools can compete. This mirrors the capital-intensive ASIC arms race in PoW.
Builders are the new mining pools. Entities like Flashbots, bloXroute, and Titan dominate builder markets, controlling transaction ordering and extracting value. Their economic power rivals that of Foundry or Antpool in Bitcoin.
The protocol subsidizes this cartel. PBS outsources the core value-creation function of block building to a for-profit market. The winning builder's payment (the bid) is a direct transfer from user MEV to the builder cartel.
Evidence: Post-merge, over 90% of Ethereum blocks are built by just three entities. This concentration is higher than the top three Bitcoin mining pools, which control ~60% of the network hash rate.
takeaways
THE NEW POWER BROKERS
Key Takeaways
The MEV supply chain has formalized, turning block production into a specialized, high-stakes market. Proposer-Builder Separation (PBS) is the catalyst.
01
The Problem: Miner Extractable Value (MEV)
Validators (proposers) could front-run and sandwich user trades for profit, creating a toxic, centralized environment. This was a $1B+ annual market captured by a few sophisticated players, degrading network performance and user experience.
$1B+
Annual Value
>90%
Centralized
02
The Solution: Proposer-Builder Separation (PBS)
Decouples block proposal from block construction. Builders (like Flashbots SUAVE, bloXroute) compete in a sealed-bid auction to sell optimal blocks to proposers. This outsources complexity and formalizes the MEV market.
- Key Benefit 1: Proposers get maximal revenue without technical expertise.
- Key Benefit 2: Creates a competitive, efficient market for block space.
~99%
Ethereum PBS
~500ms
Auction Window
03
The New Mining Pool: Specialized Builders
Builders are the new capital-intensive infrastructure layer. They aggregate orders from searchers (running Jito, EigenPhi strategies) and optimize blocks for fee + MEV revenue, paying proposers to include them. This creates ~10-20% higher staking yields.
- Key Benefit 1: Democratizes access to MEV revenue for all stakers.
- Key Benefit 2: Incentivizes R&D in block construction (e.g., EigenLayer restaking for builder security).
10-20%
Yield Boost
$10B+
Builder Ecosystem
04
The Risk: Centralization & Censorship
Builder markets naturally centralize around the most efficient capital and data pipelines (e.g., Flashbots dominance post-Merge). This creates regulatory attack vectors for transaction censorship, threatening credible neutrality.
- Key Benefit 1: PBS makes censorship economically visible and measurable.
- Key Benefit 2: Drives innovation in anti-censorship tech like crLists and encrypted mempools.
>80%
OFAC Compliance
1-2
Dominant Builders
05
The Evolution: Intents & Solving
The next layer abstracts complexity further. Users submit intent-based orders ("get me the best price") to solvers (like UniswapX, CowSwap, Across). Solvers compete to fulfill the intent, becoming the primary clients for builders. This shifts competition to user experience.
- Key Benefit 1: Eliminates wallet gas management for users.
- Key Benefit 2: Enables cross-chain intents via protocols like LayerZero and Chainlink CCIP.
~0
User Slippage
Multi-Chain
Execution
06
The Investment Thesis: Vertical Integration
The winning stack will control the full flow: intent aggregation (UniswapX), solving logic, builder infrastructure (Flashbots), and proposer relationships (Lido, Coinbase). Value accrues to protocols that own critical, defensible layers in this supply chain.
- Key Benefit 1: Captures fees across multiple transaction lifecycle stages.
- Key Benefit 2: Builds unbreakable network effects with stakers and users.
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