Proposer-Builder Separation (PBS)

Proposer-Builder Separation (PBS) is a protocol design that formally separates the role of the block proposer (or block producer) from the block builder. In this model, the proposer is responsible for selecting and publishing the next block header, while specialized builders compete in an open market to construct the most valuable full block contents, including ordering transactions and maximizing Maximal Extractable Value (MEV). This separation is a core architectural response to the centralization pressures observed in proof-of-stake (PoS) networks like Ethereum, where validators who can access sophisticated MEV extraction techniques gain a significant economic advantage.

The primary mechanism enabling PBS is a commit-reveal scheme. Builders create blocks and submit cryptographic commitments (like blinded bids) to proposers. The proposer then selects the block with the highest attached bid without seeing its contents, preventing them from stealing the profitable transaction ordering. Only after the proposer commits to a header does the winning builder reveal the full block for validation. This process, often facilitated by a relay to prevent censorship, ensures the proposer's role is neutral and reduces their ability to manipulate the chain for personal gain.

PBS addresses critical ecosystem risks: it mitigates validator centralization by democratizing access to MEV profits, as even small validators can earn rewards by selling their block proposal rights. It also enhances chain quality by incentivizing builders to include the most economically optimal set of transactions. On Ethereum, PBS is implemented through mev-boost for the execution layer and is being formalized in-protocol with ePBS (enshrined PBS) as part of the roadmap. This evolution is fundamental to maintaining a credibly neutral and resilient blockchain infrastructure.

Proposer-Builder Separation (PBS) is a blockchain architectural pattern that formally divides the roles of block proposal and block construction into two distinct, specialized market participants: the proposer (or block proposer) and the block builder. This separation was conceived to address critical issues in permissionless blockchains, primarily the trend towards proposer centralization caused by Maximal Extractable Value (MEV). In a naive PoS system, the entity selected to propose the next block (the validator) also has the sole right and responsibility to construct its contents, creating a natural monopoly on MEV capture and leading to the rise of sophisticated, centralized searcher networks.

The intellectual and practical origins of PBS are deeply intertwined with the study of MEV. Researchers, notably from the Flashbots collective, identified that the competition to extract MEV was creating systemic risks, including network congestion, unfair transaction ordering, and the centralization of validator operations into a few large, MEV-specialized pools. The core insight was that by creating a competitive, transparent market for block space (the builder's role) separate from the role of attesting to chain consensus (the proposer's role), the negative externalities of MEV could be mitigated. This led to the development of PBS as a credible commitment mechanism, where proposers outsource block building to a specialized market.

The initial and most prominent implementation of PBS is mev-boost, an out-of-protocol (or "enshrined") middleware for Ethereum following its transition to PoS. mev-boost operates through a relay network, where builders submit complete, MEV-optimized blocks with a fee bid, and proposers simply select the highest-paying header. This design allows even small-scale validators to access sophisticated block production and capture MEV rewards, thereby promoting decentralization. The long-term vision for Ethereum, as outlined in its roadmap, is to enshrine PBS directly into the core protocol consensus layer, moving the functionality from an optional middleware to a mandatory, cryptographically enforced part of the blockchain's state transition rules.

Proposer-Builder Separation (PBS) is a blockchain architecture that formally separates the role of the block proposer (who chooses the next block) from the block builder (who constructs the block's contents). In this model, the proposer, typically a validator, does not create the block itself. Instead, it receives a complete, pre-built block from a specialized builder via a marketplace. The proposer's primary duty is to select the most profitable or otherwise optimal block from competing builders and attest to its validity, a process often facilitated by a relay to prevent manipulation. This separation is a direct response to the complexities and risks of Maximal Extractable Value (MEV).

The core mechanism enabling PBS is a commit-reveal scheme within a builder marketplace. Builders compete by constructing blocks that include user transactions and optimize for fee revenue and MEV opportunities (e.g., through arbitrage or liquidations). They then submit block bids—cryptographic commitments containing the block header and a bid amount—to a neutral relay. The relay presents these blinded bids to the proposer of the slot. The proposer selects the header with the highest associated bid, signs it, and returns it to the relay. The winning builder then reveals the full block body, which the proposer publishes to the network, ensuring they cannot steal the MEV strategies contained within.

PBS introduces several critical cryptoeconomic benefits. It democratizes access to MEV by allowing specialized, capital-efficient builders to compete, rather than requiring every validator to run sophisticated MEV-searching infrastructure. It also enhances network security by mitigating proposer centralization; validators no longer need vast resources to capture MEV, reducing the advantage of large staking pools. Furthermore, it can improve user experience by allowing builders to implement transaction ordering rules (like fair ordering) and offer services like transaction inclusion guarantees. Ethereum's roadmap implements PBS through ePBS (enshrined PBS), which aims to bake these mechanisms directly into the protocol's consensus layer for greater robustness and decentralization.

The Proposer-Builder Separation (PBS) flow is a multi-stage auction mechanism designed to create a specialized market for block construction. It begins with builders—specialized nodes that compile transactions from the mempool, optimize them for maximum value (e.g., via MEV extraction), and cryptographically commit to a completed block. They then submit this block, along with a bid, to a relay, which acts as a trusted intermediary. The relay validates the block's correctness and the bid's attached payment, creating a block auction where the highest bid wins the right to have its block proposed.

In the next phase, a block proposer (a validator selected by the consensus protocol) connects to the relay to view the available bids. The proposer does not see the block's contents, only the associated bid value and a commitment hash. The proposer selects the highest bid and signs a builder commitment, which includes the block hash and the promised payment. This signature is returned to the winning builder via the relay. This separation ensures the proposer's role is limited to choosing the most valuable bid, insulating them from the complex and potentially risky process of block construction.

Finally, the winning builder reveals the full block data to the relay, which verifies it matches the earlier commitment. The relay then forwards the valid block to the proposer. The proposer simply publishes this pre-built block to the network, and the builder's promised payment is automatically distributed via the proposer payment mechanism, often a direct transfer to the proposer's fee recipient address. This entire flow—builder competition, blind bidding, and outsourced execution—enhances network efficiency, reduces centralization risks in validation, and transparently markets MEV value.

MEV-Boost is the foundational, out-of-protocol implementation of Proposer-Builder Separation (PBS) on Ethereum, introduced post-Merge to mitigate centralization risks from Maximal Extractable Value (MEV). It operates as a trusted, permissioned relay network where specialized block builders compete to construct the most profitable blocks, which are then proposed by validators via a relay. This separation allows validators to earn higher rewards without needing sophisticated MEV extraction capabilities, while builders optimize block content for profit. However, MEV-Boost's reliance on centralized relays and its off-chain nature introduced new trust assumptions and potential censorship vectors, highlighting the need for a more robust, in-protocol solution.

The limitations of MEV-Boost catalyzed the design of enshrined PBS, a planned upgrade to Ethereum's consensus layer that would bake PBS directly into the protocol. The core innovation is a two-step block proposal process using a commit-reveal scheme. First, a validator commits to a block header (containing the execution payload hash) without seeing the full block contents. Second, the validator reveals and attests to the full block body in a subsequent slot. This cryptoeconomic mechanism prevents validators from stealing or censoring transactions, as they are bound to the header they committed to. Enshrined PBS aims to eliminate the need for trusted relays, reduce centralization, and provide stronger anti-censorship guarantees at the protocol level.

Key technical components enabling enshrined PBS include builder-side proofs and a crList (censorship resistance list) mechanism. Builders may be required to provide cryptographic proofs (like a ZK-SNARK) that their block construction follows specific rules, such as including all transactions from the mempool. The crList allows proposers to force the inclusion of certain transactions, providing a backstop against builder censorship. The transition is a complex protocol change, requiring consensus (CL) and execution (EL) client upgrades, and is a central part of Ethereum's The Scourge roadmap, which focuses on mitigating MEV and centralization risks to create a more credibly neutral and resilient network.