MEV Centralization Is an Economic Outcome

The most profitable MEV strategies require low-latency infrastructure and private order flow access, creating a massive economic moat. This leads to the rise of dominant players like Flashbots and Jito Labs, who control the majority of block space and transaction ordering on their respective chains.\n- Result: Top 5 searchers capture >60% of extracted value.\n- Risk: Censorship and front-running become systemic.

Proposer-Builder Separation (PBS) and encrypted mempools like Shutter Network's aim to structurally separate the roles of block building and proposing. This prevents vertical integration and commoditizes block production.\n- Ethereum's PBS via mev-boost decentralizes proposer power.\n- Encrypted Mempools neutralize the advantage of private order flow by hiding transactions until execution.

Even with PBS, the builder role has re-centralized. A handful of professional builders like Flashbots Builder and Titan Builder win >80% of blocks due to exclusive order flow (EOF) deals and superior optimization. This recreates a single point of failure and control.\n- Builder OFA Cartels create a closed ecosystem.\n- Risk: A dominant builder can impose arbitrary transaction inclusion rules.

The endgame is a fully decentralized block building market. Flashbots' SUAVE envisions a universal, decentralized sequencer for all chains. EigenLayer-based decentralized builders like EigenDA and Espresso Systems use cryptoeconomic security to challenge the OFA cartel model.\n- Commoditizes computation and memory.\n- Shifts trust from entities to cryptographic guarantees.

Latency is king. Searchers and builders cluster in <5ms proximity to validators, typically in AWS us-east-1. This creates geographic centralization risk and makes the network vulnerable to regional outages or regulatory action. The entire MEV supply chain depends on a handful of cloud providers.\n- Risk: A single AWS region outage could cripple chain activity.\n- Reality: Decentralization is a lie if it all runs on AWS.

Moving away from transaction-based models bypasses the latency arms race. Intent-based systems like UniswapX, CowSwap, and Across let users specify a desired outcome (e.g., 'buy X token at best price'). Solvers compete off-chain, removing the need for front-running and reducing the value of pure speed.\n- Shifts competition from latency to optimization.\n- Aligns incentives with user outcomes, not adversarial extraction.

PBS (e.g., Ethereum's PBS roadmap) separates block building from proposing but fails to decentralize the builder market. The result is a winner-takes-most dynamic where a few builders (Flashbots, bloXroute) dominate due to capital and data advantages.

• Builder centralization shifts power from validators to a few opaque entities.
• ~80%+ of Ethereum blocks are built by the top 3-5 builders post-Merge.
• Creates a new, harder-to-regulate central point of failure.

Move PBS into the protocol layer (Enshrined PBS) to standardize the builder market and reduce trust assumptions. Parallel efforts like Flashbots' SUAVE aim to create a decentralized, shared mempool and executor network to commoditize block building.

• Protocol-level auctions ensure neutral access and reduce builder moats.
• SUAVE's shared order flow fragments the information advantage held by private mempools.
• Long-term goal: turn MEV extraction into a permissionless, competitive service.

Shift from transaction-based to intent-based systems to abstract away execution complexity from users. This moves the MEV competition from the public mempool to a solver network, capturing value for users.

• Users submit what they want, not how to do it (e.g., "swap X for Y at best rate").
• Solvers (like CowSwap, Across) compete to fulfill intents, bundling and optimizing execution.
• MEV is internalized as better prices for users, not extracted as wasted gas.

MEV doesn't respect chain boundaries. Bridges and cross-chain swaps (LayerZero, Axelar, Wormhole) are massive, opaque MEV pools. The lack of a global mempool creates arbitrage opportunities that are captured by centralized relayers and sequencing services.

• Cross-chain arbitrage is a multi-billion dollar opportunity.
• Current solutions rely on trusted relayers, creating centralization and high fees.
• The race is on to build a decentralized cross-chain sequencer network.