Builder Block

A Builder Block is the core unit of production in the Proposer-Builder Separation (PBS) design paradigm. In this model, the traditional role of a validator is split: a block builder is responsible for constructing a profitable and valid block by selecting and ordering transactions from the mempool, while a block proposer (the validator) is responsible for simply proposing the highest-value block they receive. The builder block is the output of this specialized construction process, typically containing a payment to the proposer (a "bid") for its selection.

Builders compete in a marketplace, often via a relay, to have their blocks chosen. They use sophisticated strategies like MEV (Maximal Extractable Value) extraction—through arbitrage, liquidations, or transaction ordering—to maximize the block's total value. The builder's profit is the difference between the MEV they capture and the bid they pay to the proposer. This specialization allows for more efficient and competitive block production, as builders can invest in advanced hardware and algorithms that typical validators may not possess.

The primary implementation of this concept is on Ethereum, facilitated by MEV-Boost software. Here, validators outsource block building to an open market. A builder creates a block and submits it, along with a bid, to a relay. The relay verifies the block's validity and forwards the header to the proposer, who selects the header with the highest attached bid. This process decouples block proposal from construction, aiming to democratize access to MEV and reduce the centralizing pressures of in-house MEV extraction.

In the proposer-builder separation (PBS) framework, the builder block is the core product. A block builder is a specialized entity that competes in a sealed-bid auction run by a relay. The builder's goal is to construct the most profitable block possible by employing sophisticated algorithms to search for and capture Maximal Extractable Value (MEV) through transaction ordering and inclusion. This process involves analyzing the mempool, executing private order flow, and simulating complex transaction bundles to determine the optimal block composition that yields the highest total value, which is then offered as a bid to the relay.

The builder submits its completed builder block—containing a header, an ordered list of transactions, and an execution payload—along with a cryptographic commitment and a bid to a trusted relay. The relay validates the block's correctness (e.g., pays the proposer, does not contain invalid transactions) and conducts the auction. The winning block is then delivered to the block proposer (validator), who simply signs and publishes the pre-built block to the network. This separation of roles allows validators to outsource the complex and ethically fraught work of MEV extraction to specialized, competitive markets.

A builder block is distinct from a standard validator-built block in its optimization for profit. Builders use advanced strategies like arbitrage, liquidations, and sandwich trading to generate revenue. The value captured is shared between the builder and the proposer via the bid. Crucially, builders operate in a competitive environment; if one builder's strategy is suboptimal, another with a more profitable block will win the auction. This system is primarily enabled by protocols like mev-boost on Ethereum, which implements PBS in practice, though the end goal is to bake this functionality directly into the consensus protocol.

A builder block is a fully constructed block proposal created by a specialized block builder entity, which is then submitted to a proposer (validator) via a relay in a Proposer-Builder Separation (PBS) framework. Its primary role is to be the vehicle for MEV extraction, as builders compete to create the most profitable block by optimally ordering and including transactions—including arbitrage, liquidations, and sandwich trades—to maximize the total value paid to the proposer. The builder's profit, after paying this fee, constitutes their share of the extracted MEV.

The construction of a builder block is a complex optimization problem. Builders run sophisticated algorithms to simulate the Ethereum Virtual Machine (EVM), searching the mempool and private order flows (dark pools) for profitable transaction combinations. They must calculate gas usage, adhere to block gas limits, and ensure all transactions are valid. The resulting block bundle includes a block bid, a commitment to pay the validator a specified amount (in ETH) for selecting their block. This creates a competitive auction for block space, centralizing MEV capture in the builder market.

The separation of building from proposing, enforced by PBS, is a critical design choice. It prevents validators from leveraging their unilateral block production power for MEV, reducing the risk of consensus instability. Instead, economic competition between builders is meant to efficiently discover MEV and redistribute a portion of its value to validators (via the bid) and to users (via priority fees). However, this has led to concerns over builder centralization, as the role requires significant capital, infrastructure, and access to private order flow to be competitive.

Builder blocks are transmitted through trusted relays to prevent MEV theft, where a proposer might steal the profitable transaction ordering from a builder's submission. The relay receives encrypted blocks from multiple builders, reveals only the header and bid to the proposer, and only decrypts the full block body after the proposer commits to it. This relay model, while securing the builder's work, introduces additional trust assumptions and centralization points into the block production pipeline.

The evolution of builder blocks is closely tied to MEV-Boost, the dominant PBS implementation on Ethereum. Most Ethereum validators use MEV-Boost to outsource block building, meaning the vast majority of canonical chain blocks are, in fact, builder blocks. The long-term vision involves enshrining PBS directly into the protocol (ePBS) to mitigate reliance on external relays and reduce centralization risks, further cementing the builder's role in the blockchain's economic and security model.