How to Plan Proposer Builder Separation

Proposer-Builder Separation (PBS) fundamentally restructures how blocks are created on Ethereum. In the traditional model, a validator (the proposer) is responsible for both selecting transactions from the mempool and constructing the block. PBS splits this role in two: a block builder competes to create the most valuable block, while a block proposer (a validator) simply selects the most profitable block from a public auction. This separation is enforced through a two-phase protocol, often implemented via a commit-reveal scheme or a trusted relay, ensuring the proposer cannot see the block's contents before committing to it.

The primary driver for PBS is Maximal Extractable Value (MEV). Without PBS, validators with sophisticated MEV strategies (like running arbitrage bots) have a significant advantage, leading to centralization as they out-earn and out-compete smaller validators. PBS democratizes access to MEV by creating a competitive market for block building. Specialized builders, which can be anyone from solo operators to large firms, use complex algorithms to extract and bundle MEV. They then bid for the right to have their block included, with the proceeds (the bid) going directly to the proposer. This allows even small validators to capture MEV revenue simply by running reliable consensus software.

Implementing PBS requires careful protocol design. A common approach uses a builder API where proposers receive block bids through a relay. The builder submits a block header and a bid to the relay. The proposer selects the header with the highest bid, signs a commitment, and receives the full block body only after this commitment is broadcast. This prevents the proposer from stealing the builder's work. Key technical components include the execution payload (the block body with transactions), the execution payload header (a commitment to that body), and the validator's signature on the header, which finalizes the selection.

For developers and node operators, planning for PBS involves understanding the new software requirements. Proposers will need to run consensus client software (like Prysm, Lighthouse) that integrates with a builder API. Builders require execution client software (like Geth, Nethermind) and sophisticated transaction ordering logic. The ecosystem relies on neutral relays (like the Flashbots Relay or BloXroute) to facilitate the auction. Code examples for builders often involve constructing ExecutionPayload and SignedBuilderBid objects as defined in Ethereum's Builder API specification.

The long-term vision for PBS is its enshrinement directly into the Ethereum protocol, known as enshrined PBS or ePBS. Current implementations like mev-boost are considered "in-protocol PBS," acting as a temporary crutch. ePBS aims to bake the proposer-builder auction and anti-censorship measures (like crLists) into the consensus layer itself, removing reliance on external, potentially trusted relays. This evolution is a key part of Ethereum's roadmap to create a credibly neutral and resilient base layer for decentralized applications.

Before writing any code, you must define the scope and objectives of your PBS implementation. Are you building a private mempool for a centralized exchange, a permissioned builder for a specific rollup, or a public, competitive builder network? Your goal dictates the architecture. Key decisions include whether to implement in-protocol PBS (ePBS) using the Ethereum consensus layer or out-of-protocol PBS via MEV-Boost for immediate compatibility. You must also decide on the builder's role: will it be a simple block assembler, or will it incorporate sophisticated MEV extraction strategies like arbitrage and liquidation bundling?

The technical foundation requires expertise in several core areas. Your team needs proficiency in Ethereum execution and consensus clients (e.g., Geth, Nethermind, Prysm, Lighthouse), as builders interact with both layers. Deep knowledge of the Engine API and the proposed Builder API specifications is non-negotiable. You must be prepared to handle the builder's core responsibilities: receiving transactions and order flow, constructing a valid block payload, generating a commitment (bid), and submitting it to a relay. This involves complex transaction simulation, gas optimization, and state management.

Operational readiness is critical for reliability and profitability. You need robust infrastructure: high-performance servers for low-latency block building, redundant Ethereum node connections to avoid stale data, and secure, isolated signing environments for your proposer and builder keys. Establishing relationships with multiple trusted relays (like the Flashbots Relay, BloXroute, or a private relay) is essential for out-of-protocol PBS to ensure bid distribution and censorship resistance. Furthermore, you must implement comprehensive monitoring for metrics like bid success rate, block inclusion latency, and MEV revenue captured.

Economic and security planning cannot be an afterthought. As a builder, you need a strategy to source profitable transaction flow, which may involve partnerships, running searchers, or operating a private mempool. You must secure funding for bid collateral; in ePBS, builders must bond ETH, while in MEV-Boost, payment is trust-minimized via the relay. Security audits for your block construction and signing software are mandatory to prevent exploits that could lead to slashing (for validators) or stolen MEV. Finally, develop a clear legal and compliance understanding regarding the regulatory status of MEV activities in your jurisdiction.

Proposer-Builder Separation (PBS) fundamentally restructures the block production process on Ethereum. It introduces two distinct roles: block proposers (validators) and block builders (specialized entities). In this model, the validator's duty is split. They no longer construct the block's contents themselves. Instead, they simply select the most profitable block header from a competitive, open market of builders. This separation is enforced at the protocol level, creating a clear boundary between the role of proposing (consensus) and the role of building (execution).

The primary driver for PBS is to manage Maximal Extractable Value (MEV). Without PBS, validators who can identify and capture MEV have a significant advantage, leading to centralization pressures as only large, sophisticated operators can run optimized MEV strategies. PBS externalizes the complex task of MEV extraction to a competitive builder market. Builders compete in auctions by submitting full block bids to proposers, who then choose the block with the highest bid. This commoditizes MEV capture and distributes its rewards more broadly across the validator set.

Implementation occurs through two main phases. First, a builder API allows builders to submit blocks to relays. Second, a protocol-level mechanism like ePBS (enshrined PBS) is required for full trust minimization. Current interim solutions, like those used by MEV-Boost, rely on trusted relays. In ePBS, the builder commits to their block via a cryptographic commitment (e.g., a KZG polynomial commitment) in the consensus layer, allowing the proposer to verify the block's validity and value without seeing its full contents until after selection, preventing theft of the builder's work.

For validators, planning for PBS involves running MEV-Boost software alongside their consensus and execution clients. This software connects to a network of relays, which aggregate bids from builders. The validator's duty is simplified: their client software automatically selects the header with the highest bid from trusted relays. The key operational consideration is relay choice; validators should connect to multiple relays to ensure liveness and censorship resistance. Builder selection is abstracted away from the validator, handled entirely by the competitive market.

For builders and searchers, PBS creates a new ecosystem. Builders must develop sophisticated infrastructure to construct highly profitable blocks by aggregating transactions and MEV bundles from searchers. This requires low-latency connections to the mempool, execution clients, and relays. The economic model shifts: builders profit from the difference between the total MEV they capture and the bid they pay to the proposer. Searchers submit transaction bundles to builders via private channels, competing to have their arbitrage or liquidation strategies included in the next block.

The long-term goal of enshrined PBS (ePBS) is to eliminate trust in external relays and create a credibly neutral, protocol-native auction. This will further decentralize the builder market and strengthen Ethereum's censorship resistance. Understanding these concepts—the separation of roles, the MEV market dynamics, and the path from outsourced to enshrined PBS—is essential for validators, developers, and researchers operating in Ethereum's post-merge landscape.

Planning for Proposer-Builder Separation (PBS) requires a clear understanding of the two primary roles and their technical boundaries. The block proposer (or validator) is responsible for selecting and proposing a block header, while the block builder assembles the block's content, including transactions and MEV extraction. Your first step is to decide which role your project will fulfill. Will you operate a relay to connect builders and proposers, build a solver to compete in the builder market, or modify your validator client to support PBS? This foundational decision dictates your entire technical roadmap and resource allocation.

Once the role is defined, you must select a PBS implementation framework. The dominant standard is mev-boost, a middleware that allows Ethereum validators to outsource block building via a trusted relay. For builders, the reference is the builder-specs repository, which defines the API and block submission format. If you are building a relay, you must implement the Relay API and establish a reputation system for builders. Each component choice has implications for latency requirements, hardware specifications, and security assumptions. For example, running a high-performance builder demands optimized transaction simulation and access to low-latency mempools.

Technical implementation begins with environment setup and dependency management. For a validator integrating mev-boost, the core steps are: installing the mev-boost binary, configuring it with a list of trusted relay URLs (e.g., https://0xac6e77dfe25ecd6110b8e780608cce0dab71fdd5ebea22a16c0205200f2f8e2e3ad3b71d3499c54ad14d6c21b41a37ae@boost-relay.flashbots.net), and modifying your validator client's startup command to point to the local mev-boost instance. Builders must implement the /eth/v1/builder/submitBlindedBlock endpoint and connect their block construction engine—often a modified version of Geth or Erigon—to a transaction supply chain, which may include a private mempool or a service like Flashbots Protect.

A critical phase is testing and simulation before mainnet deployment. Use testnets like Goerli or Holesky to validate your integration. For builders, this involves submitting bid transactions to a test relay and analyzing win rates and profitability. For relay operators, test the block validation logic and censorship resistance policies. Tools like mev-boost-test` can help simulate the proposal flow. Establish monitoring and alerting from day one, tracking metrics such as bid inclusion rate, relay latency, and builder censorship events. This data is essential for optimizing performance and ensuring protocol compliance.

Finally, consider the economic and governance model. PBS introduces new revenue streams (builder profits, relay fees) and costs (infrastructure, R&D). You must plan for ongoing maintenance, including software updates for new Ethereum hard forks like Dencun or Prague. Engage with the PBS community through channels like the Flashbots Discord or Ethereum R&D forums to stay informed on protocol changes. A successful PBS implementation is not a one-time project but a continuous operation that adapts to the evolving landscape of MEV and Ethereum consensus.

Successfully implementing PBS requires moving from theory to a concrete, phased rollout. Start by auditing your current validator setup. Identify your existing infrastructure, including your execution client (e.g., Geth, Nethermind), consensus client (e.g., Lighthouse, Prysm), and any MEV-boost relay connections. Document your current block production and proposal workflow to establish a baseline. This audit will highlight dependencies and potential integration points for the new PBS components.

Next, develop a staged testing plan. Begin in a controlled environment like a local testnet (e.g., using Kurtosis) or a public testnet like Holesky. Phase 1 should involve running a block builder in simulation mode, constructing blocks without submitting them to a live network. Phase 2 integrates with a trusted relay in testnet mode to practice receiving and validating ExecutionPayloadHeader objects. The final phase is a mainnet shadow run, where you process real-time data but delay or omit the actual block proposal submission to assess performance and reliability.

Key technical decisions await. You must choose between running your own block builder software (e.g., mev-boost in builder mode, flashbots/builder) or outsourcing to a professional builder service. If running your own, you'll need to develop or integrate MEV strategy logic for transaction ordering and bundle creation. You also need to select one or more relays (like the Flashbots Relay, BloXroute, or Ultra Sound) based on their reputation, censorship policies, and uptime guarantees. This choice directly impacts your validator's resilience and revenue.

Finally, establish monitoring and fallback procedures. Your system must track key metrics: builder bid values, relay latency, and proposal success rates. Implement a robust fallback mechanism—often called a crutch—that allows your validator to seamlessly revert to building a block locally if the external PBS flow fails. This is critical for maintaining validator health and avoiding missed proposals. Tools like mev-boost have built-in configurations for this, but they require careful testing.

The PBS landscape is evolving with Ethereum Protocol PBS (ePBS) on the horizon, which aims to bake these mechanics directly into the consensus layer. Staying informed through resources like the Ethereum Research forum and the Flashbots documentation is essential. By methodically planning your PBS implementation, you can enhance your validator's efficiency, contribute to network decentralization, and capture MEV revenue securely.