Proposal Builder

A Proposal Builder (also known as a block builder) is a critical component in modern blockchain architectures, particularly those utilizing Proposer-Builder Separation (PBS). Its primary function is to assemble an optimized set of pending transactions—known as a block payload or block body—from the mempool. The builder's goal is to create the most valuable block possible for the block proposer (or validator), typically by maximizing transaction fee revenue through sophisticated algorithms that include MEV (Maximal Extractable Value) extraction strategies such as arbitrage and liquidation bundling.

The builder operates in a competitive marketplace. Multiple builders bid in an auction, submitting their constructed block along with a payment to the proposer. The winning bid's block is the one the proposer commits to the chain. This separation of roles enhances network decentralization and censorship resistance, as the entity proposing the block (often a solo staker) is distinct from the entity choosing the transactions. Key technical implementations include mev-boost on Ethereum, which facilitates this auction via relays, and SUAVE (Single Unifying Auction for Value Expression), a dedicated decentralized network for block building.

Builders employ complex software to maximize profitability. This involves simulating transaction execution, searching for profitable MEV opportunities like DEX arbitrage or NFT minting bundles, and optimizing gas usage and transaction ordering. They must also consider censorship resistance lists and regulatory compliance. The builder's output is a complete, executable block header and body that is cryptographically committed to before the auction concludes.

The rise of Proposal Builders has created a specialized block-building market dominated by entities with advanced infrastructure and capital. This has led to concerns about centralization in the building layer, prompting research into builder decentralization solutions. Alternatives like enshrined PBS aim to formalize the separation within the protocol itself, while MEV smoothing and MEV burn mechanisms seek to redistribute the captured value more evenly across the network or destroy it to benefit all token holders.

A proposal builder is a user interface that abstracts the complexity of crafting raw, executable blockchain transactions for DAO governance. It allows a community member—the proposer—to define an action, such as transferring treasury funds or upgrading a smart contract, through a structured form. The builder then encodes this intent into the precise calldata and target addresses required for the on-chain vote, significantly reducing technical barriers and the risk of proposal errors that could lead to failed execution or lost funds.

The core function involves transaction simulation and gas estimation. Before submission, the builder often runs a local simulation of the proposed transaction using tools like Tenderly or a forked network. This dry-run verifies the proposal will execute as intended without reverting, estimates the gas cost, and previews the resulting state changes. This step is critical for complex proposals involving smart contract interactions, as it provides transparency and security assurances to both the proposer and future voters.

Advanced builders integrate governance frameworks and template libraries. They are configured for specific DAO platforms like Compound Governor, OpenZeppelin Governor, or Aragon OSx, ensuring proposal formatting meets the protocol's exact requirements. Many offer pre-built templates for common actions—treasury disbursements, parameter adjustments, delegate calls—further simplifying the process. This standardization helps maintain consistency across proposals and reduces the learning curve for new community participants.

Finally, the builder handles the submission transaction. After the proposer provides the necessary details and passes simulations, the tool constructs the final transaction to the DAO's governance contract, typically invoking a function like propose(). The proposer signs and broadcasts this transaction, paying the associated gas fee and often a proposal deposit. Once confirmed on-chain, the proposal enters a timelock or voting period, becoming a formal item for the DAO's tokenholders to debate and decide upon.

A Proposal Builder standardizes the complex process of creating governance actions by providing a guided form or wizard. Users input key parameters—such as the target smart contract, function to call, and arguments—into predefined fields. The builder then compiles this data into a properly formatted transaction payload, often generating the necessary calldata. This abstraction is critical because directly crafting proposal transactions requires deep technical knowledge of the protocol's ABI and low-level encoding, making the builder an essential accessibility layer for decentralized governance.

Beyond simple creation, advanced builders integrate simulation and validation engines. Before submission, a proposal can be dry-run against a forked version of the mainnet or a testnet to verify its on-chain effects, estimate gas costs, and catch potential errors or unintended consequences. This simulation step is a vital risk mitigation tool, preventing the submission of proposals that could fail execution or cause protocol damage. Some builders also check for compliance with the DAO's own governance rules, such as minimum proposal deposits or voting durations.

For integration, Proposal Builders are typically accessed via a DAO's dedicated governance front-end or third-party platforms like Tally or Sybil. They interact directly with the protocol's governance smart contracts, such as Governor Bravo or custom implementations. The final output is a transaction ready for submission, which often requires a proposal deposit. The builder's role concludes once the signed transaction is broadcast, with subsequent voting and execution managed by the core governance module. This separation of concerns allows builders to focus on usability and safety during the creation phase.