Block Assembly

The most straightforward strategy where the block producer selects pending transactions in descending order of their attached transaction fee or gas price. This maximizes the producer's immediate revenue but can lead to transaction starvation for low-fee users.

• Primary Goal: Maximize block producer profit.
• Consequence: Can increase network congestion costs.
• Example: Bitcoin and Ethereum miners historically used this approach.

Transactions are included based on the time they were first seen by the block producer, often measured by their arrival timestamp in the mempool. This promotes fairness but is inefficient and vulnerable to manipulation via transaction flooding.

• Primary Goal: Transaction fairness and predictability.
• Limitation: Does not optimize for block space or producer revenue.
• Variant: Can be combined with a minimum fee threshold.

Block producers actively search for and construct bundles of transactions that extract Maximal Extractable Value (MEV). This involves reordering, inserting, or censoring transactions to capture arbitrage, liquidations, or other on-chain value.

• Tools: Use specialized software like Flashbots' MEV-Boost or private mempools.
• Impact: Can significantly increase producer revenue but centralizes block building and may harm user experience.
• Related Concept: Proposer-Builder Separation (PBS).

Aims to establish a canonical, fair order of transactions across the network to prevent front-running. Strategies may use cryptographic proofs of receipt time or consensus on transaction order before execution.

• Goal: Mitigate MEV and malicious reordering.
• Approaches: Aequitas, Themis, or consensus-layer ordering protocols.
• Challenge: Requires additional coordination or protocol changes, often trading off some latency for fairness.

Transactions are submitted to the network in an encrypted form. During block assembly, the block producer includes them without seeing the contents, which are only revealed after the block is proposed. This strategy prevents front-running and MEV extraction based on transaction content.

• Goal: User privacy and MEV resistance.
• Implementation: Complex; requires threshold decryption or secure enclaves.
• Example: Phala Network's Secure Enclave auctions.

The blockchain protocol itself enforces specific rules for block assembly, overriding the producer's discretion. This can include fixed ordering, mandatory inclusion lists, or rules that penalize certain transaction types.

• Primary Goal: Enforce network-level policies (e.g., anti-censorship).
• Example: Ethereum's Proposer-Builder Separation (PBS) with crLists (censorship resistance lists) requires builders to include certain eligible transactions.
• Example: Some chains mandate random transaction ordering.

In Proof-of-Stake (PoS) and Delegated Proof-of-Stake (DPoS) systems, a designated block producer or validator is responsible for assembling a new block during their assigned slot. Their tasks include:

• Selecting transactions from the mempool (transaction pool).
• Prioritizing transactions, often by highest fee (e.g., gas price in Ethereum).
• Executing transactions locally to ensure state transitions are valid.
• Creating a block header with metadata like the previous block hash and a Merkle root of the transactions.

The mempool is the source of all unconfirmed transactions. Block assemblers use selection algorithms, with fee market dynamics being the primary driver in networks like Ethereum and Bitcoin. Key strategies include:

• Highest-Fee-First (Greedy): Maximizes the assembler's revenue from transaction fees.
• MEV (Maximal Extractable Value): Sophisticated searchers and builders may reorder or include specific transactions to capture arbitrage, liquidation, or other value, often using flashbots bundles.
• First-In-First-Out (FIFO): A simpler, less common approach used in some early or niche chains.

Proposer-Builder Separation (PBS) is an advanced design, central to Ethereum's roadmap, that decouples block building from block proposing. It creates two distinct roles:

• Block Builders: Specialized entities that compete to create the most valuable (fee-maximizing) block contents, often using complex MEV strategies.
• Block Proposers (Validators): Simply choose the most profitable block header from builders via a commit-reveal auction (e.g., mev-boost on Ethereum). This separation democratizes MEV rewards and reduces the centralizing pressure on validators.

Block assembly logic is tightly coupled with the underlying consensus algorithm.

• Bitcoin (PoW): The winning miner assembles their own candidate block; selection is typically greedy fee-based.
• Solana: The Leader for a given slot streams transactions and executes them in real-time, with a focus on throughput.
• Avalanche: A validator builds a block containing a vertex of transactions for the Directed Acyclic Graph (DAG)-based consensus.
• Cosmos SDK: The BeginBlock -> DeliverTx -> EndBlock ABCI messages define the lifecycle for the application to assemble state changes.

The economics of block assembly create significant centralization pressures and Maximal Extractable Value (MEV) concerns.

• MEV Auctions: Without PBS, validators with the best MEV extraction software earn more, leading to wealth concentration.
• Transaction Censorship: A dominant block producer could systematically exclude transactions from certain addresses.
• Time-Bandit Attacks: A miner could attempt to re-mine past blocks to capture newly discovered MEV, undermining finality. Solutions like PBS, encrypted mempools, and fair ordering protocols aim to mitigate these risks.

A specialized ecosystem of tools and services has emerged to optimize block assembly.

• Block Builders: Specialized nodes (e.g., from Flashbots, BloXroute) that construct high-value blocks for proposers.
• Relays: Trust-minimized intermediaries (used in mev-boost) that receive blocks from builders and deliver headers to proposers, preventing theft.
• Searcher Bots: Automated systems that identify and bundle MEV opportunities for builders.
• Mempool APIs: Services like Alchemy, QuickNode, and Blocknative provide enhanced access to pending transaction data.

The block proposer (or miner/validator) is the network participant responsible for assembling and proposing a new block. In Proof-of-Stake systems, proposers are chosen via a pseudo-random algorithm weighted by stake. Their key tasks include:

• Selecting transactions from the mempool.
• Executing them to compute state changes.
• Signing and broadcasting the proposed block to the network.

Transaction ordering is a critical step in block assembly that determines the sequence of transactions within a block. The order affects:

• State execution (later transactions see the state from prior ones).
• Maximum Extractable Value (MEV) opportunities.
• Front-running and sandwich attack vulnerabilities. Proposers can order transactions to capture arbitrage profits, making this a central concern for decentralized network fairness.

The block gas limit is a protocol-enforced constraint on the total computational work (gas) a block can contain. During assembly, the proposer must select transactions whose cumulative gas does not exceed this limit. This parameter controls:

• Network throughput and block size.
• Congestion and fee markets.
• The speed of state growth. It is a key scalability parameter adjusted through governance or automated mechanisms.

The block header is a metadata summary of the block, created during assembly. It contains cryptographic commitments to the block's contents, including:

• Parent hash (links to previous block).
• State root (Merkle root of the world state).
• Transactions root (Merkle root of transactions).
• Receipts root.
• Timestamp and difficulty/slot number. The header is the primary data structure used by other nodes to efficiently verify the block's validity.