PBS is incomplete decentralization. It separates block proposal from construction, but the builder market consolidates power. Dominant builders like Flashbots and bloXroute centralize MEV extraction, creating new oligopolies.
mev-the-hidden-tax-of-crypto
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Why Proposer-Builder Separation is Just the First Step
PBS separates roles but doesn't solve MEV's core economic problem. This analysis argues that true mitigation requires enforcing redistribution rules at the consensus layer, examining MEV burn and MEV-Share as the necessary next evolution.
introduction
THE ARCHITECTURAL GAP
The PBS Illusion: Separation ≠Solution
Proposer-Builder Separation addresses censorship but fails to solve the fundamental economic and security problems of block production.
Economic incentives remain misaligned. PBS does not fix the proposer's dilemma: validators still profit from selling block space to the highest bidder, which perpetuates transaction ordering games and user exploitation.
The security model is unchanged. The consensus layer security still depends on the proposer's honesty. A malicious proposer can still withhold or reorder transactions, making PBS a trusted relay layer, not a trustless one.
Evidence: Ethereum's post-merge data shows >90% of blocks are built by just five entities. This concentration proves PBS shifts, rather than eliminates, centralization risks.
key-trends
BEYOND THE SPLIT
The Post-PBS Reality: Three Inevitable Trends
Proposer-Builder Separation solved MEV centralization, but it created a new oligopoly of builders. The next evolution is already underway.
01
The Problem: Builder Cartels
PBS concentrated power in a few dominant builders like Flashbots SUAVE, Titan, and rsync. This creates systemic risk and rent extraction.
- ~80% of blocks are built by the top 3 builders.
- Builder fees are opaque, adding hidden costs to users.
- Centralized failure points threaten chain liveness.
~80%
Blocks Controlled
Opaque
Fee Market
02
The Solution: Decentralized Builders & MEV-Share
The counter-trend is permissionless builder networks that democratize block construction and redistribute value.
- MEV-Share protocols like Flashbots enable searchers & users to capture value via order flow auctions.
- Distributed validator technology (DVT) from Obol and SSV allows for trust-minimized, decentralized block building.
- Creates a credibly neutral foundation for the PBS stack.
1000+
Node Operators
User-Captured
MEV Value
03
The Endgame: Intents & Solver Networks
The ultimate abstraction: users declare what they want, not how to do it. Builders become just one execution path.
- Intent-based architectures like UniswapX, CowSwap, and Anoma shift competition to solver networks.
- Cross-domain intents are executed via bridges like Across and LayerZero.
- Result: Better prices, gasless UX, and execution guaranteed by economic security, not trust.
Gasless
User Experience
Multi-Chain
Execution
deep-dive
THE NEXT LOGICAL STEP
From Separation to Redistribution: The Consensus Layer Mandate
Proposer-Builder Separation (PBS) solves centralization but fails to redistribute value; the consensus layer must now enforce fair value distribution.
PBS is incomplete. It separates block production from validation to prevent validator centralization, but it creates a new monopoly: the builder cartel. Builders like Flashbots and bloXroute capture the MEV supply chain, extracting value from users and validators.
The builder market centralizes. Without protocol-level rules, builders with the best order flow and data access win. This replicates the validator centralization PBS aimed to solve, just one layer up the stack.
Consensus must enforce redistribution. Protocols like EigenLayer and SUAVE propose new primitives. The consensus layer must integrate mechanisms for credibly neutral, in-protocol MEV distribution to end-users and stakers.
Evidence: Post-PBS Ethereum sees >90% of blocks built by three entities. This concentration proves separation without redistribution fails. The mandate shifts from preventing centralization to architecting fair value flows.
BEYOND PBS
PBS vs. Redistribution: A Protocol Economics Comparison
Comparing the economic and security models for mitigating MEV centralization post-Proposer-Builder Separation.
| Economic Mechanism | Proposer-Builder Separation (PBS) | Proposer Redistribution (e.g., MEV-Boost++) | Enshrined PBS (Long-term) |
|---|---|---|---|
Core Objective | Separate block building from proposing | Redistribute MEV revenue to validators/protocol | Protocol-native separation with slashing |
Primary Actor | Builder (searcher/relay) | Proposer (validator) | Enshrined Builder (protocol role) |
MEV Revenue Flow | Builder → Proposer (via bid) | Builder → Proposer → Validator Set/Protocol Treasury | Enshrined Builder → Proposer (via protocol) |
Censorship Resistance | Relay-dependent; requires inclusion lists | Enhanced via in-protocol redistribution incentives | Protocol-enforced, slashing for censorship |
Validator Extractable Value (VEV) | Low (proposer gets bid only) | High (proposer captures more complex MEV) | Medium (structured by protocol rules) |
Implementation Complexity | Off-chain, requires relay infrastructure | Protocol upgrade (consensus layer change) | Major protocol overhaul (hard fork) |
Time to Mainnet | Live (Ethereum post-Merge) | Research phase (EIP-7547, etc.) | Post-2025 (Ethereum roadmap) |
Key Risk | Relay cartelization & centralization | Increased protocol complexity & attack surface | Reduced builder competition & innovation |
counter-argument
THE NEXT LOGICAL STEP
The Libertarian Counter: Let Markets Decide
Proposer-Builder Separation (PBS) is not the endgame but a catalyst for a more radical, market-driven architecture.
PBS is a market primitive that commoditizes block production, creating a new layer for competition. This separates the who from the how, enabling specialized actors like Flashbots and bloXroute to optimize for profit.
The natural evolution is MEV-Boost++, where the auction expands beyond block space to include execution. This creates a competitive market for state transitions, where builders bid to include complex intents and cross-chain bundles.
This market will subsume bridges. Why use a static bridge like Stargate when a builder can source the best route across UniswapX, Across, and LayerZero in real-time? The builder becomes the universal liquidity aggregator.
Evidence: Ethereum's PBS adoption hit 90%+ post-Merge. The next metric is the percentage of cross-domain transactions settled via builder auctions, which protocols like Suave aim to capture.
takeaways
BEYOND PBS
TL;DR for Protocol Architects
PBS mitigates MEV centralization but fails to solve the underlying economic game. The next layer is about controlling the flow of value.
01
The PBS Illusion: Builders Are the New Validators
PBS shifts power from validators to builders, but builder markets naturally re-centralize. The real problem is the opaque, extractive auction for block space.
- Builder cartels control >80% of Ethereum blocks.
- MEV revenue is captured off-chain, creating asymmetric information.
- The protocol has no visibility into the ~$500M/year in extracted value.
>80%
Blocks Controlled
$500M/yr
Opaque Value
02
Solution: Enshrined Proposer-Builder Separation (ePBS)
Bakes PBS into the consensus layer, removing trust in relay operators. This is Ethereum's endgame, but it's a coordination-heavy multi-year upgrade.
- Eliminates relay risk (e.g., censorship, downtime).
- Enables credible commitment for builder bids via consensus.
- Still doesn't solve MEV distribution; just makes the auction canonical.
0
Trusted Relays
2-3 yrs
Timeline
03
The Real Frontier: SUAVE - A Universal MEV Market
Flashbots' SUAVE is the logical next step: a decentralized mempool and block builder network. It abstracts complexity away from individual chains.
- Cross-chain MEV becomes a native primitive.
- Preference Auctions let users express intents (see: UniswapX, CowSwap).
- Turns MEV from a bug into a programmable revenue stream for users and chains.
Universal
Mempool
Cross-Chain
Scope
04
Architectural Imperative: Integrate an Intent Layer
PBS optimizes for builders. The next leap is optimizing for users via intents. This flips the model from transaction execution to outcome fulfillment.
- User signs a "what", not a "how".
- Solvers (like builders) compete on fulfillment, creating better price discovery.
- See it in action with UniswapX, Across, and layerzero's DVN auctions.
10-100x
More Options
-20%
Avg. Cost
05
The Endgame: MEV-Aware Protocol Design
L1/L2 designers must bake MEV redistribution into core economics. PBS is infrastructure; capturing value for the protocol is strategy.
- Proposer rewards from MEV (e.g., EigenLayer).
- In-protocol ordering rules (e.g., time-boosting, FIFO).
- Native MEV burn to turn extractive value into a public good.
Protocol-Owned
MEV
Public Good
Revenue
06
Data: The New Oil in the PBS Stack
Who controls the flow of transaction data controls the market. Relays and builders are data monopolies. Decentralizing this layer is critical.
- Mempool privacy (e.g., shroud, ditto) prevents frontrunning.
- Credible neutrality in data access prevents information asymmetry.
- The stack's weakest link is now the data availability layer.
~500ms
Advantage Window
Single Point
Of Failure
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