Block Template

A block template is a structured data object containing the essential components for a potential new block. Key elements include:

• Block Header: Contains metadata like the previous block hash, timestamp, and Merkle root.
• Candidate Transactions: A mempool selection, prioritized by fee and validity.
• Coinbase Transaction: A special transaction awarding the block reward and fees to the miner/validator. The template is constantly updated with new transactions until it is finalized for proof-of-work or proof-of-stake consensus.

In Proof-of-Work (PoW) systems like Bitcoin, the block template is the data structure that miners repeatedly hash. They increment the nonce and other fields in the header to find a hash below the network's target difficulty. The getblocktemplate RPC call is commonly used by mining pools to fetch updated templates from full nodes, ensuring miners are working on valid transactions and the latest chain state.

In Proof-of-Stake (PoS) networks like Ethereum, a validator selected to propose a block builds a block template. They select transactions from the mempool, execute them in the EVM to update state, and assemble the header. The template is then signed and broadcast. PoS block builders often optimize for Maximal Extractable Value (MEV) by ordering transactions to maximize profit from arbitrage and liquidations before finalizing the template.

Block templates are built from a node's mempool (transaction pool). The constructing node selects transactions based on:

• Gas/Fee Priority: Higher fee-per-gas transactions are typically included first.
• Dependencies: Ensuring parent transactions are included before their children.
• State Validity: Transactions must execute successfully against the current state. The template is dynamic; as new transactions arrive, they can be added to an unfinalized template to increase fee revenue.

In advanced PoS ecosystems, the role of creating the block template has been specialized. Proposer-Builder Separation (PBS) is a design where:

• Builders (specialized nodes) compete to create the most valuable block template, optimizing for MEV.
• Proposers (validators) simply select the highest-paying template from a builder marketplace. This model, implemented via protocols like mev-boost on Ethereum, reduces centralization risks and MEV-related inefficiencies for validators.

A malicious miner discovers a valid block but withholds its propagation to the network. This can be used in selfish mining strategies to gain an unfair advantage or in time-bandit attacks to attempt chain reorganizations. The withheld block template becomes a private asset for manipulation.

• Goal: To orphan honest blocks or increase the attacker's relative revenue.
• Impact: Reduces network security and trust in block finality.

The entity creating the block template has unilateral power to include, exclude, or order transactions. This can be used to:

• Censor specific addresses or smart contract interactions.
• Implement Maximal Extractable Value (MEV) strategies like frontrunning and sandwich attacks by reordering transactions for profit.
• Centralization Risk: If template creation is dominated by a few large pools, they can enforce network-wide censorship policies.

An attacker can fill a block template with invalid or spam transactions before broadcasting it to other miners/validators.

• Waste Resources: Forces peers to waste computational power validating a doomed block.
• Delay Propagation: Slows down the honest network, increasing the attacker's chance of winning the next block.
• This is a form of Denial-of-Service (DoS) attack against the peer-to-peer layer.

In Proof-of-Stake systems, the right to create a block template is often determined by a verifiable random function (VRF). Stake-grinding is an attempt to manipulate this randomness by iterating through minor changes to the block template (e.g., nonce, transaction order) to unfairly influence future validator selection.

• Goal: Gain a higher probability of being selected as a proposer in subsequent slots.
• Mitigation: Requires robust, unbiasable randomness beacons.

In both Proof-of-Work and Proof-of-Stake, the process of building the optimal block template (for fees or MEV) is computationally intensive. This leads to:

• Specialized Software: Dominance of builders like mev-boost in Ethereum.
• Centralized Builders: A few entities may control the most profitable template construction, creating a single point of failure and censorship.
• This separates block proposal from block building, introducing new trust assumptions.

A proposer broadcasts a block template header but withholds the corresponding transaction data (the block body). Peers see a valid header but cannot verify the transactions within.

• Core Attack: Enables invalid state transitions to be accepted, breaking security if not caught.
• Mitigation: Addressed by Data Availability Sampling (DAS) and erasure coding in modular blockchain designs (e.g., danksharding).

The mempool (memory pool) is the source of transactions for a block template. It's a node's local, temporary storage of unconfirmed transactions broadcast across the network. When building a template, the node selects transactions from its mempool based on factors like fee priority and timestamp. The mempool's state directly influences which transactions are included.

The coinbase transaction is the first transaction in any valid block template. It is a special transaction created by the miner or validator that:

• Has no inputs (it creates new coins).
• Includes the block reward (newly minted cryptocurrency plus collected fees).
• Can contain a small amount of arbitrary data in its coinbase field. This transaction is essential for incentivizing block production.

In Proof-of-Work blockchains, the block template contains fields specifically for the mining process:

• Nonce: A 32-bit field that miners increment to vary the block header hash.
• ExtraNonce: As the nonce space is limited, miners also vary the coinbase transaction (e.g., by changing the scriptSig) to create a new merkle root, effectively expanding the search space for a valid hash below the target difficulty.

The block header is a compact (80-byte in Bitcoin) summary derived from the finalized block template. It contains the cryptographic commitments to the block's data, including:

• Previous block hash
• Merkle root of transactions
• Timestamp
• Difficulty target
• Nonce (for PoW) Miners hash this header, not the full template, to find a valid proof-of-work.

The entity that builds and proposes a block template is determined by the consensus mechanism:

• Proof-of-Work: Any node can build a template and attempt to mine it.
• Proof-of-Stake: A validator is pseudo-randomly chosen based on the amount of cryptocurrency staked. Only the selected validator for a given slot creates the authoritative template.
• Delegated Proof-of-Stake: Elected block producers are responsible for template creation.