How to Design a PBS-Compatible Validator Setup

Proposer-Builder Separation (PBS) is a core architectural upgrade to Ethereum's consensus layer designed to decentralize Maximum Extractable Value (MEV). It formally separates the roles of block proposer (validator) and block builder (specialized searcher). Under PBS, validators no longer construct blocks themselves. Instead, they outsource this task to a competitive marketplace of builders who submit complete, fee-optimized block bids. The validator's role is simplified to selecting the most profitable bid via a trusted relay. This guide details how to configure your validator setup to be PBS-ready.

The foundation of a PBS-compatible setup is your consensus client. You must run a client that supports the builder API, such as Lighthouse, Teku, Prysm, or Nimbus. Configuration involves enabling the external builder feature in your client's settings, typically via a flag like --builder or --builder-api. This allows your validator to receive block bids from relays. Crucially, you must also configure your fee recipient address. This is the Ethereum address (an Externally Owned Account, or EOA) that receives the transaction priority fees and MEV rewards from the winning bid. This setting is separate from your validator's withdrawal credentials.

You do not interact with builders directly. Instead, you connect to one or more relays. Relays are trusted intermediaries that receive block bids from builders, perform basic validity and censorship resistance checks, and forward them to proposers. To maximize profitability and resilience, validators should connect to multiple reputable relays. Your consensus client configuration will include a list of relay URLs. Examples include the Flashbots Relay, BloxRoute, and Titan. Using multiple relays ensures you see the broadest market of block bids and reduces reliance on a single operator.

When your validator is selected to propose a block, the PBS workflow activates. Your consensus client requests bids from all configured relays. Each bid contains a complete, executable block header and an associated payment to your fee recipient address. Your client's duty is to select the bid with the highest payment. It then signs and returns a blinded block—a block where the transactions are hidden—to the winning relay. The relay forwards it to the builder, who reveals the full block body for propagation. Your validator never sees the transactions, mitigating ethical and regulatory risks associated with MEV extraction.

Designing for PBS requires planning for validator performance. Since selecting the best bid adds a step, your system must have low latency to the relays to avoid missing the slot. Geographic proximity to major relays can improve performance. Furthermore, you must manage your fee recipient address securely, as it will accumulate significant ETH. Best practices include using a multisig wallet or a smart contract with withdrawal limits for this address. Monitoring tools like mevboost.org/pbs can help you track your proposal success rate and earnings from different relays.

Looking ahead, PBS is expected to be enshrined directly into the Ethereum protocol with ePBS (enshrined Proposer-Builder Separation). While today's implementation (via mev-boost) is an out-of-protocol "fork," the core principles remain. A well-designed setup today will transition smoothly to ePBS. Your key takeaways are: run a builder-enabled consensus client, configure multiple trusted relays, securely set your fee recipient, and monitor your system's performance. This setup optimizes rewards while contributing to a more fair and decentralized Ethereum ecosystem.

Proposer-Builder Separation (PBS) fundamentally changes how Ethereum blocks are produced. In a PBS model, the role of the block proposer is separated from the block builder. Your validator, acting as the proposer, no longer constructs the block itself. Instead, it receives a complete, pre-built block from a specialized builder via a relay. This requires a new set of software and a clear understanding of the trust and economic model. The core prerequisite is running a consensus client (like Lighthouse, Prysm, or Teku) that supports the builder API, typically via the builder or execution-engine flags.

Your validator client must be configured to outsource block construction. This is done by enabling the external builder option. For example, in a Lighthouse validator client, you would set --builder-proposals in your startup command. This instructs your validator to listen for block bids from relays instead of requesting a block from your local execution client. You must also configure the URL of a trusted relay, such as https://boost-relay.flashbots.net, using the --builder-relay flag. This connection is how your validator receives block bids containing the builder's payload and the associated fee.

Choosing and trusting a relay is a critical security and economic decision. Relays are intermediaries that receive blocks from builders and forward the most profitable, valid bid to proposers. You must trust the relay to: censor-resistance (not filter transactions), correctness (deliver valid blocks), and fair ordering (present the highest bid). Major relays include those operated by Flashbots, BloXroute, and Ultra Sound. It's advisable to configure multiple relays for redundancy and better fee opportunities, as your client will select the header with the highest bid.

Your local execution client (Geth, Nethermind, Besu, Erigon) remains necessary but its role changes. It is no longer used for block construction during PBS proposals, but it is still required for validating the state of incoming blocks and for proposing blocks when PBS fails (e.g., if the relay is offline). Ensure your execution and consensus clients are fully synced and communicating via the Engine API (on port 8551 by default). This fallback mechanism is essential for maintaining validator uptime and network health.

Finally, understand the economic flow. Builders compete in an open market to create the most valuable block by including MEV (Maximal Extractable Value). They send their block header and a bid to the relay. Your validator client evaluates the header with the highest attached bid. If selected, your validator signs and proposes the builder's header, and in return, the builder's fee is paid directly to your fee recipient address. This process maximizes your staking rewards but delegates the complex work of transaction ordering and MEV extraction to the builder ecosystem.

Proposer-Builder Separation (PBS) is a design paradigm that decouples the roles of block building and block proposing on Ethereum. In practice, this is achieved through the MEV-Boost middleware, which allows a validator (the proposer) to outsource block construction to a competitive market of specialized builders. To participate, a validator must run their consensus client (e.g., Lighthouse, Teku) alongside MEV-Boost software, which acts as a relay between the proposer and external block builders. This setup is optional but critical for accessing the most profitable blocks and contributing to a healthy, competitive MEV ecosystem.

Your validator's architecture needs three core components: the Execution Client (e.g., Geth, Nethermind), the Consensus Client (e.g., Prysm, Nimbus), and the MEV-Boost service. The consensus client must be configured with the --builder or --builder-proposals flag enabled and pointed to the local MEV-Boost endpoint (typically http://127.0.0.1:18550). MEV-Boost itself must be configured with a set of trusted relays, such as bloxroute, flashbots, or ultrasound. These relays aggregate blocks from builders and perform basic validity checks before forwarding them to proposers. A key configuration is setting a minimum bid value to avoid proposing low-value blocks.

When your validator is selected to propose a block, the flow is automated. Your consensus client signals its readiness to MEV-Boost. MEV-Boost requests block headers from all connected relays, which have received sealed bids from builders. It selects the header with the highest bid and returns it to your consensus client. Your validator signs this header and broadcasts it to the network, committing to the block. Only after this commitment does the relay release the full block body to your execution client for execution and propagation. This commit-reveal scheme prevents theft of the block's MEV.

Choosing relays is a security-critical decision. You should connect to multiple reputable relays to maximize competition and censorship resistance. Each relay has different policies, geographic presence, and builder sets. For example, the Flashbots Relay is a widely used option. It's recommended to run MEV-Boost with a monitoring setup, using its metrics endpoint (port 18551) to track metrics like received_bids and best_bid_value_gwei. This helps you verify that your node is receiving bids and participating correctly in the auction.

For a production setup, consider redundancy and failover. Run MEV-Boost as a systemd service for resilience. Your consensus client should be configured with a fallback behavior: if MEV-Boost is unreachable or returns no bids, the client should fall back to building a local block using its connected execution client. This ensures your validator never misses a proposal. The command to start MEV-Boost typically includes relay URLs and a fee recipient address: mev-boost -relays https://0xrelay1.com,https://0xrelay2.com -relay-check -min-bid 0.05. Always use the -relay-check flag to verify relay registration on startup.

The future of PBS is enshrined PBS (ePBS), which will move the auction protocol into the core consensus layer. While MEV-Boost is an interim, out-of-protocol solution, designing your validator setup around it today ensures a smooth transition. It familiarizes you with the separation of concerns, the importance of relay trust, and the mechanics of a block auction. A well-configured PBS setup today directly contributes to validator revenue maximization and the overall decentralization and efficiency of Ethereum's block production market.

MEV-Boost is a middleware client that allows Ethereum validators to outsource block building to a competitive marketplace of specialized builders. By integrating MEV-Boost, a validator proposer receives a complete, pre-built block header from a relay, rather than constructing the block locally. This setup, known as Proposer-Builder Separation (PBS), is crucial for accessing the most profitable blocks while maintaining network decentralization and validator simplicity. The validator's duty is reduced to signing the header, trusting the relay to have validated the builder's execution payload.

The core integration involves running the mev-boost binary alongside your existing validator and beacon clients. Your consensus client (e.g., Lighthouse, Prysm, Teku, Nimbus) must be configured to connect to the local MEV-Boost service. This is typically done by setting the --builder or --proposer flags on your validator client, pointing to http://localhost:18550. The MEV-Boost service itself then connects to multiple trusted relays—such as those operated by Flashbots, BloXroute, and Agnostic—which act as intermediaries between validators and builders.

A critical step is selecting and configuring relays in your MEV-Boost command. You must only use reputable relays that filter for censorship resistance and perform payload validation. The command to launch MEV-Boost includes relay URLs: mev-boost -relays https://0xac6e77dfe25ecd6110b8e780608cce0dab71fdd5ebea22a16c0205200f2f8e2e3ad3b71d3499c54ad14d6c21b41a37ae@boost-relay.flashbots.net. It is a security best practice to connect to at least three relays to ensure liveness and redundancy. Your validator will automatically select the most profitable header offer from its connected relays at each proposal opportunity.

For a production setup, you must manage the service lifecycle. Using a process manager like systemd ensures MEV-Boost restarts on failure and boots on startup. A sample systemd service file defines the executable path, the user (e.g., mev-boost), and the command-line arguments with your chosen relays. Monitoring is also essential; track metrics like connected_relays, header_submissions, and payload_delivery_latency to ensure the service is functioning correctly and receiving bids from the builder network.

Post-merge, the validator's role in a PBS world is streamlined. When your validator is assigned to propose a block, the beacon client requests a block header from MEV-Boost. MEV-Boost queries its relays for bids, selects the highest-value one, and returns the SignedBuilderBid to the validator client for signing. Upon receiving the validator's signature, the relay delivers the full execution payload for the block. This entire process happens automatically, with the key benefit being significantly higher rewards compared to locally built blocks, often sourced from arbitrage and liquidation bundles.

Proposer-Builder Separation (PBS) fundamentally changes how Ethereum blocks are produced. Instead of a validator (the proposer) creating a block themselves, they outsource this task to a specialized block builder. The proposer's role is reduced to selecting the most profitable block from a public auction. A PBS-compatible setup requires running two distinct software components: a validator client (like Prysm, Lighthouse, or Teku) and a block builder relay. The relay acts as a trusted intermediary, receiving blocks from builders and presenting them to the proposer. Your primary security goal is to ensure your validator only signs and proposes valid, profitable blocks from this relay.

The core trust model in PBS revolves around the relay. You must trust that the relay: (1) correctly validates block contents and MEV bundles, (2) runs a fair, censorship-resistant auction, and (3) reliably delivers the winning block to your validator. To mitigate this trust, choose a reputable relay with a strong track record and transparent operations, such as the Flashbots Relay or bloXroute Max Profit Relay. Configure your validator client's builder endpoint (--builder or --suggested-fee-recipient flags) to point to your chosen relay's URL. Never sign a block header you did not receive through your configured relay.

For maximum security and redundancy, implement multiple relay fallbacks. Configure your validator to connect to several relays (e.g., Flashbots, bloXroute, Eden). This ensures block proposal continuity if one relay fails and reduces your dependency on a single entity. Use monitoring tools like mevboost.org/pbs to track relay performance and uptime. Your setup should also include robust validator key management. The signing key used for proposing blocks must be kept in a secure, isolated environment, typically within the validator client itself, separate from any builder or relay infrastructure to prevent key exposure.

A critical consideration is validator software configuration. Ensure your client supports external builders via the Engine API and is updated to the latest stable release. For example, in Lighthouse, you would use the --builder flag: --builder http://relay.example.com. Test your setup on a testnet (like Goerli or Holesky) before mainnet deployment. Monitor for log entries confirming successful connections to the relay and successful block proposals. Be aware of the proposer payment flow; with PBS, transaction fees and MEV are paid directly to your configured fee recipient address by the builder, not included in the block itself.

Long-term, in-protocol PBS (ePBS) aims to bake these mechanisms into Ethereum's consensus layer, eliminating the need for trusted relays. Until then, your PBS setup is a hybrid trusted system. Stay informed about protocol upgrades and relay developments. Regularly audit your configuration, update software, and review the security practices of your relay providers. A well-designed PBS setup maximizes MEV rewards while minimizing operational risk and centralization pitfalls inherent in the current builder market.

Implementing a PBS-compatible validator setup is a strategic move to maximize rewards and contribute to a healthier, more decentralized Ethereum network. The core requirements are clear: running a block builder (like MEV-Boost Relay) to access competitive blocks, ensuring your consensus client (e.g., Lighthouse, Teku) is configured for external block sources, and maintaining robust fallback mechanisms to handle relay failures. This separation of roles allows validators to capture MEV rewards without the operational complexity of running sophisticated block construction software themselves, aligning economic incentives with network security.

The PBS landscape is rapidly evolving. The current reliance on trusted relays in the MEV-Boost model is a temporary, practical solution. The protocol's endgame is enshrined proposer-builder separation (ePBS), where the separation logic is baked directly into the Ethereum consensus layer. Proposals like the Builder API and Two-Slot PBS aim to reduce trust assumptions, mitigate centralization risks in the builder market, and streamline the block proposal process. Validators should monitor EIP-7547 and other core developer discussions to prepare for this transition.

For operators today, the development roadmap focuses on enhancing the resilience and performance of the existing PBS stack. Key areas include: - Relay diversity and monitoring: Using tools like mevboost.org to monitor relay performance and distributing bids across multiple relays to avoid single points of failure. - Local block building: Exploring integrations like Ethereum Execution Client (EL) APIs for constructing fallback blocks locally when relays are unresponsive. - Validator client features: Awaiting broader client support for the standard builder and proposer APIs to replace the need for sidecar services like MEV-Boost.

The future of PBS is intrinsically linked to solving MEV. Research into MEV smoothing, MEV burn, and credibly neutral ordering rules (like based sequencing) will directly impact validator economics and builder strategies. As a validator, staying informed through resources like the Ethereum Research forum, Client team documentation, and Flashbots' updates is crucial. Your setup is not static; it's a component of a live protocol upgrade that will continue to shape Ethereum's fee market and decentralization for years to come.