The Future of Block Building: Trust-Minimized Auctions and Modular Sovereignty

Today's PBS is dominated by a few builders like Flashbots, Titan, and beaverbuild, creating a risk of censorship and MEV centralization. This undermines the core promise of decentralized block production.

• >80% of Ethereum blocks are built by three entities.
• Creates single points of failure for transaction inclusion.
• Limits competition, keeping builder fees artificially high.

New protocols like SUAVE, Astria, and Espresso are decoupling the auction from the builder. They act as neutral, decentralized mempools and auction houses, enabling permissionless participation.

• Builders compete in a cryptographically verifiable environment.
• Proposers receive attestable proofs of execution correctness.
• Breaks the cartel by commoditizing the auction layer.

Current builders are monolithic stacks. They bundle MEV search, transaction simulation, and block construction, forcing a one-size-fits-all approach. This stifles specialization and innovation in components like privacy or cross-domain arbitrage.

• Inefficient for novel MEV strategies (e.g., intent-based).
• High barrier to entry for specialized searchers.
• Cannot natively serve a multi-chain future.

The future is a marketplace of specialized modules. Think UniswapX for intents, RISC Zero for ZK proofs, and EigenLayer for fast finality. Builders become orchestrators, assembling the best components for each job.

• Specialized MEV searchers plug into shared infrastructure.
• Rollup-specific builders optimize for their native environment.
• Enables verifiable delay functions (VDFs) and encrypted mempools.

From user to searcher to builder to proposer, value extraction is a black box. Users get rekt by frontrunning, and proposers capture only a fraction of the total MEV. This misalignment destroys user experience and protocol security.

• >$1B/year in MEV extracted, mostly from users.
• Proposer revenue is a tiny slice of the total pie.
• No accountability for harmful extraction (e.g., time-bandit attacks).

Modular PBS enables programmable revenue flows via smart contracts on the auction layer. Protocols can implement MEV burn, user rebates, or staking rewards directly into the block-building logic.

• EIP-1559-like mechanisms for MEV, burning excess profit.
• CowSwap-style batch auctions protect users.
• Aligns incentives by letting the protocol decide who benefits.

Today's dominant builders like Flashbots operate as black-box order flow auctions, creating a single point of failure and censorship. Validators are forced to trust the builder's execution and fairness.

• Centralization Risk: Top 3 builders control >80% of Ethereum blocks.
• Trust Assumption: Validators cannot verify the builder's claim of delivering the 'best' block.
• Censorship Vector: Opaque logic enables transaction filtering.

SUAVE decouples the roles of preference expression, execution, and block building into a modular, chain-agnostic network. It creates a competitive, transparent marketplace for block space.

• Decentralized Auction: Users express intents; specialized solvers compete to fulfill them.
• Prover-Verifier Model: Builders must provide cryptographic proofs their block is optimal.
• Chain Agnostic: Serves as a mempool and executor for Ethereum, Arbitrum, Optimism, etc.

To enable fair auctions without frontrunning, transaction privacy is non-negotiable. Projects like Shutter Network use threshold distributed key generation (DKG) to encrypt the mempool.

• Frontrunning Resistance: Solvers bid on encrypted bundles, revealed only after the auction.
• Trust-Minimized: No single entity holds the decryption key.
• Modular Component: Can be plugged into SUAVE, Cosmos, or any intent-based system.

Rollups like Arbitrum, Optimism, and zkSync no longer need to outsource sequencing. They can run their own decentralized sequencer set that uses SUAVE for optimal block building.

• Sovereign Revenue: Rollups capture their own MEV and set their own policy.
• Interop via Intents: Native cross-chain swaps via shared preference layer (e.g., UniswapX on SUAVE).
• Fast Finality: Specialized execution layers enable sub-second pre-confirmations.

This new paradigm enables novel applications that separate intent from execution.

• MEV-Share: Allows users to auction their transaction flow back to searchers for a rebate.
• UniswapX: A fully intent-based DEX aggregator that outsources routing to a competitive solver network.
• Cross-Chain Intents: Chainlink CCIP and Across Protocol can use this layer for secure, optimized cross-domain settlement.

The ultimate trade-off. The new builder market optimizes for user-aligned value instead of pure extractable value.

• Proposer-Builder Separation (PBS): Ethereum's core roadmap enforces this division.
• Verifiable Builders: EigenLayer restakers can provide cryptoeconomic security for builder attestations.
• Endgame: A multi-builder ecosystem where competition drives fees to zero and quality of service to the max.

Trust-minimized auctions like SUAVE aim to democratize block building, but a dominant builder network could still form a cartel. This centralizes censorship power and recreates the extractive dynamics of today's Flashbots relay.

• Risk: A single builder controlling >33% of slots can censor transactions or enforce OFAC compliance.
• Vector: Economic incentives naturally consolidate stake and order flow to the most profitable, well-connected entity.

A sovereign rollup with its own data availability (DA) layer, like Celestia or Avail, faces a unique failure mode: if its sequencer halts, users cannot force transactions onto L1 for a safe exit.

• Risk: Frozen funds if the sovereign chain's sole sequencer fails or acts maliciously.
• Vector: No smart contract on Ethereum L1 to enforce withdrawals, unlike optimistic rollups. Requires active, social coordination for recovery.

Modular chains with fast finality (e.g., EigenLayer) enable new cross-domain MEV extraction. A validator can propose a block on one chain, see profitable arbitrage on another, and intentionally reorg its own block—a risk impractical in monolithic Ethereum.

• Risk: Unstable block finality undermines user and dApp guarantees.
• Vector: Economic value of cross-chain arbitrage outweighing the slashing penalty for the reorg.

If a modular stack's Data Availability layer (e.g., Celestia, EigenDA) experiences downtime or censorship, it cascades failure to every rollup built on top. This creates a single point of failure for potentially $100B+ in TVL.

• Risk: Systemic, correlated failure across the modular ecosystem.
• Vector: DA layer validators colluding or suffering a catastrophic bug, making state updates unverifiable.

The interaction surface between modular components (Execution, Settlement, DA, Consensus) is vast and untested. A bug in one layer's light client verification or in a cross-chain messaging protocol like LayerZero or IBC can lead to fund loss.

• Risk: Inscrutable failure modes that are harder to audit and recover from than a monolithic chain bug.
• Vector: A faulty validity proof in a zk-rollup's verifier contract on the settlement layer.

Providers of restaked security (e.g., EigenLayer) or decentralized sequencer networks may not have their incentives perfectly aligned with the rollups they secure. This can lead to liveness failures or cheap attacks.

• Risk: A restaker optimizing for yield on another network neglects its duties on your chain.
• Vector: Slashing penalties set too low relative to the profit from attacking a high-value appchain.

Today's builder market is dominated by a few entities like Flashbots SUAVE, controlling >80% of Ethereum blocks. This creates censorship vectors and re-introduces trusted intermediaries into a trustless system.

• Single point of failure for network liveness.
• Opaque order flow auctions undermine fair price discovery.
• Regulatory capture becomes trivial when control is centralized.

Privacy is the prerequisite for fair auctions. Protocols like Shutter Network and EigenLayer's MEV Privacy use threshold encryption to hide transaction content until inclusion.

• Front-running resistance for users and DEXs like Uniswap.
• True price discovery as builders bid on blinded bundles.
• Enables cross-domain MEV without leaking intent to intermediaries.

Modular chains (Celestia, EigenDA) and rollup frameworks (OP Stack, Arbitrum Orbit) shift control to rollup operators. They will run their own in-protocol block builders to capture value and ensure liveness.

• Revenue capture: Keep sequencer/MEV fees within the rollup's economy.
• Liveness control: No dependency on external builder uptime.
• Custom auction logic: Tailor rules for app-specific chains (e.g., a DEX rollup).

Users express desired outcomes ("sell X for at least Y") instead of precise transactions. Solvers (like in UniswapX or CowSwap) compete to fulfill them, abstracting away block building complexity.

• Better UX: Gasless, cross-chain swaps via Across and LayerZero.
• Efficiency gains: Solvers find optimal routing across liquidity pools and chains.
• Builder commoditization: Value shifts to solver networks and intent infrastructure.

As L2s and alt-L1s compete, single-slot finality becomes critical. Builders must integrate with fast finality layers (e.g., EigenLayer restaking, Babylon) to offer guaranteed inclusion.

• Capital efficiency: Faster finality unlocks re-staked capital.
• Cross-chain arbitrage: Enables secure bridging between chains with minimal delay.
• Builders become finality providers, a higher-value service.

Two models will dominate: Integrated Stacks (single entity controls chain, builder, and solver) vs. Modular Markets (specialized builders, relays, and solvers compete). The winner depends on chain philosophy and regulatory stance.

• Integrated: Higher margins, tighter control, seen in app-chains.
• Modular: More resilient, innovative, and composable, favored by general-purpose L2s.
• Invest in infrastructure that serves both models.