How to Design a PBS Rollout for a Proof-of-Stake Chain

Proposer-Builder Separation (PBS) is a design pattern that decouples the roles of block proposer and block builder in a Proof-of-Stake (PoS) consensus system. In a traditional PoS chain, a validator both proposes a block and selects its transactions. PBS introduces a competitive market where specialized builders construct blocks, and proposers simply choose the most profitable one. This separation mitigates centralization risks from MEV (Maximal Extractable Value) extraction and enhances network neutrality by distributing power.

Designing a PBS rollout requires defining the core auction mechanism. The two primary models are in-protocol PBS, where the consensus layer enforces the auction (e.g., via a commit-reveal scheme), and out-of-protocol PBS (or "PBS via the builder API"), which relies on a relay network. Ethereum's current path involves out-of-protocol PBS using the builder API specification, where validators receive block bids from builders via trusted relays. The key components are the block builder, the relay (which attests to bid validity and block contents), and the proposer (the validating node).

A critical technical requirement is integrating the PBS workflow into the validator client. The proposer must run software that connects to one or more relays, such as mev-boost for Ethereum. When it's a validator's turn to propose, it requests header bids from connected relays, selects the header with the highest bid, and signs it. The corresponding builder then reveals the full block to the relay, which forwards it to the network. This requires modifications to the block proposal logic and careful handling of fork choice rule updates to account for the delayed block body.

Security and trust assumptions must be explicitly defined. Out-of-protocol PBS introduces a trusted relay component. Proposers must trust that relays will correctly propagate the full block after header selection and will not censor transactions. To mitigate this, proposers can connect to multiple relays, and the ecosystem can develop relays with verifiable or minimal-trust designs using cryptographic attestations. The design must also guard against builder-proposer collusion and ensure the protocol remains credibly neutral.

The rollout plan should be phased. Start with a testnet deployment using a modified client (e.g., a fork of Lighthouse or Teku implementing the builder API). Monitor builder participation, relay performance, and economic incentives. Next, proceed to a shadow fork of the mainnet to test under real economic conditions without affecting the live chain. Finally, coordinate a mainnet activation via a consensus layer hard fork, which would include the necessary protocol changes (like ExecutionPayloadHeader separation) and client updates to enable PBS officially.

Proposer-Builder Separation (PBS) is a critical protocol upgrade that decouples block proposal from block construction, aiming to enhance censorship resistance, improve MEV management, and decentralize validator operations. Before committing to a PBS rollout, you must conduct a thorough pre-launch assessment. This involves evaluating your chain's current consensus model, validator set composition, and existing MEV ecosystem. Key prerequisites include a stable proof-of-stake (PoS) consensus layer, a mature validator client ecosystem, and established block-building infrastructure or a clear plan to foster it. Without these foundations, a PBS implementation risks instability or centralization.

The first technical assessment focuses on your validator software stack. PBS requires robust, PBS-aware validator clients. For Ethereum, this means clients like Prysm, Lighthouse, or Teku that support the builder and proposer separation via the Builder API. You must audit your validators' ability to run a relay for receiving blocks from builders and a block proposer that selects the most profitable header. Test integration with major relays like bloxroute, Flashbots, and Titan in a devnet environment. Ensure your validators can handle the new transaction flow where they receive execution payloads from builders rather than constructing them locally.

Next, analyze your chain's economic and MEV landscape. PBS fundamentally changes how MEV is captured and distributed. You need data on current MEV revenue: what percentage of validator rewards come from transaction ordering and arbitrage? Tools like mev-inspect-rs for Ethereum can provide a baseline. This assessment informs your PBS design choices, particularly around the payment flow. Will you implement a trusted centralized relay model initially, or aim for a more decentralized suggested builder list or permissionless auction? The decision impacts complexity, time to launch, and the initial trust assumptions for your validators and users.

A phased rollout strategy is essential for managing risk. Phase 1 typically involves an opt-in PBS system. Here, validators can choose to connect to a whitelisted relay. This allows you to test the new infrastructure with a subset of validators while monitoring for bugs in block validation and relay performance. Phase 2 progresses to proposer default, where the PBS flow becomes the standard unless a validator explicitly opts out. This phase requires extensive monitoring of builder market health to ensure blocks are consistently available and profitable. Each phase should have clear metrics for success, such as relay uptime, builder participation rate, and validator adoption percentage.

Finally, establish clear governance and communication channels for the upgrade. A PBS rollout is not just a technical change; it's a social coordination challenge. You must document the new roles (builders, proposers, relays), update staking guides, and provide tooling for validators to monitor their new reward streams. Prepare contingency plans, such as a mechanism to quickly disable the PBS fork choice rule if a critical bug is found in a relay. A successful launch depends on aligning your validator community, builder ecosystem, and core development team around a shared timeline and set of expectations for this transformative protocol change.

The first phase of a PBS rollout is fundamentally a governance exercise. The core development team or a dedicated research group must draft an Ethereum Improvement Proposal (EIP)-style document, such as EIP-4844 for danksharding or EIP-1559 for fee market reform. This specification serves as the single source of truth, detailing the proposed protocol changes, their rationale, and the intended security model. It must address how block building rights are separated from block proposal rights, define the communication protocol between builders and proposers (e.g., a commit-reveal scheme or a trusted relay), and specify the new reward distribution mechanics.

Stakeholder alignment is critical. The specification must be socialized with key network participants: validators, who will act as block proposers; block builders, who will emerge as a new economic actor; application developers, whose user experience may be affected; and core client teams (like Prysm, Lighthouse, Teku), who will implement the changes. Governance forums, community calls, and dedicated research workshops are essential to gather feedback, identify potential attack vectors, and build consensus around the technical direction. This process often involves iterative revisions to the initial specification.

A concrete example is Ethereum's path to ePBS (enshrined PBS). The initial specification, based on research from teams like Flashbots and the Ethereum Foundation, proposed modifications to the beacon chain's consensus layer. It defined new message types for builder bids, a safe default block-building fallback mechanism for proposers, and anti-censorship measures like crLists (censorship resistance lists). This spec was then debated and refined through Ethereum's All Core Developers (ACD) calls and the EthResearch forum before any code was written.

Parallel to the protocol spec, the governance phase must establish a clear rollout timeline and testing strategy. This includes planning for multiple testnet deployments (devnet, testnet, long-running public testnet) to simulate the new economic dynamics and stress-test the builder-proposer marketplace. The timeline should account for client implementation work, audit cycles, and final governance votes (e.g., via on-chain signaling by validators). Defining success metrics for each test phase, such as builder participation rates and relay latency, is crucial for a data-driven go/no-go decision for mainnet activation.

Proposer-Builder Separation (PBS) is a critical architectural upgrade for Proof-of-Stake (PoS) chains, designed to separate the roles of block proposal and block building. In a traditional PoS system, validators perform both tasks, which can lead to centralization as sophisticated actors with MEV (Maximal Extractable Value) extraction capabilities gain a competitive advantage. PBS mitigates this by introducing a market where specialized block builders compete to create the most valuable blocks, which are then proposed by validators via a trusted relay. This guide outlines the key design decisions for a successful PBS rollout.

The core of a PBS system is the relay infrastructure. A relay is a trusted, neutral intermediary that receives blocks from builders and delivers them to proposers. For a new chain, you must decide between a permissioned or permissionless relay model. A permissioned relay, managed by a foundation or consortium, offers faster bootstrapping and easier coordination but requires a credible commitment to decentralization. A permissionless, open relay network is ideal for long-term health but is more complex to launch. The relay's primary responsibilities are to receive builder bids, run basic validity checks, and maintain a censor-resistance list to ensure transaction inclusion.

Builders are the engine of the PBS economy. Your chain must provide clear specifications for the block construction API and the bid format. Builders typically submit a bid containing the block header, a commitment to the block body, and a fee to be paid to the proposer. The design must prevent front-running and ensure bid privacy until the auction concludes; otherwise, the MEV supply chain breaks down. Many implementations use a commit-reveal scheme or encrypted mempools. You'll need to integrate with existing builder software like mev-boost or develop a compatible API for your chain's execution client.

Proposers (validators) must be equipped with software that connects to one or more relays. This validator client software listens for the highest bid from the relay network and signs the corresponding block header. The critical requirement is trust minimization: the proposer must be able to verify that the block body corresponding to the winning header is valid and available. This is often solved by having the relay attest to body availability or by using cryptographic schemes like KZG commitments. The proposer's software should also allow for relay selection to avoid single points of failure or censorship.

A successful rollout requires careful phasing. Start with a testnet phase involving trusted builders and a single foundation-run relay to iron out protocol and client bugs. Next, move to a permissioned mainnet beta with a small set of vetted builders and a transparently operated relay, while collecting data on MEV revenue and network performance. The final phase is transitioning to a decentralized relay network. This can be achieved through on-chain governance to upgrade relay sets, or by designing a protocol where validators can choose from a dynamic list of relays based on performance and reliability metrics.

Finally, monitor key metrics post-launch: builder diversity (HHI index of block market share), relay latency, proposer participation rate, and censorship resistance (percentage of transactions included). Tools like EigenPhi or Flashbots SUAVE offer frameworks for MEV analysis. Continuous iteration is necessary; be prepared to update bid formats, slashing conditions for relay misbehavior, and incentives to ensure a healthy, competitive block-building market that serves the long-term decentralization of your chain.

The success of a PBS rollout hinges on validator adoption. This phase involves coordinating client software updates and launching a comprehensive education campaign. Validators must upgrade their consensus client (e.g., Prysm, Lighthouse, Teku) and execution client (e.g., Geth, Erigon, Nethermind) to versions that support the new PBS protocol specifications, such as the builder_* API endpoints defined in the Ethereum Builder API. A staggered rollout with a clear timeline and communication channels (e.g., Discord, forums, social media) is essential to ensure network stability.

Education must address the new validator roles. Proposers learn to source blocks from the open market via a relay, evaluating bids based on value (the payment to the proposer) and block_hash. Builders are taught to construct optimized, fee-maximizing blocks and submit sealed bids. Content should include tutorials on configuring client flags (e.g., --builder and --relay flags), setting a minimum bid threshold, and understanding the security implications of trusting a relay's attestations. Real-world examples using testnet transactions clarify the flow.

A critical educational component is the economic model. Validators must understand how PBS changes their revenue. Proposers earn MEV (Maximal Extractable Value) rewards directly from builders, which can significantly increase yields compared to standard block proposals. Explain concepts like the proposer payment field in a BuilderBid and how it differs from traditional priority fees. Provide analysis or tools for validators to compare relay performance and reliability, as choosing a trustworthy relay is a new operational decision that impacts profitability and censorship resistance.

Hands-on testing is non-negotiable. Before mainnet activation, validators should practice on a dedicated testnet or devnet configured with PBS. Guides should walk through the entire process: connecting to a testnet relay, submitting a bid, and verifying the proposed block. This builds muscle memory and confidence. Highlight common pitfalls, such as misconfigured fee recipient addresses or failure to handle empty builder responses, which should trigger a fallback to local block production to avoid missed slots.

Finally, establish ongoing support. Create a FAQ addressing concerns about relay centralization, validator liability for builder-constructed blocks, and the protocol's roadmap (e.g., enshrined PBS). Maintain a registry of approved relays and builder software. The goal is to transition the validator set from a group of block producers to savvy participants in a more complex, efficient, and specialized block-building market, ensuring the chain reaps the full benefits of PBS in terms of MEV democratization and network security.

Activation begins with a hard fork or a feature flag enabled via a governance vote. The core change is modifying the consensus client to enforce the new block validation rules, specifically that the block header must contain a valid ExecutionPayloadHeader signed by a recognized builder. This is implemented by updating the process_block function in the consensus state transition logic. A critical pre-activation step is a final shadow fork on a long-running testnet, where the new client software runs in parallel with the existing chain to simulate real-world conditions and catch any edge cases.

Once activated, continuous monitoring is essential. You must track key performance indicators (KPIs) across three layers: consensus, execution, and relay. For the consensus layer, monitor block proposal success rate, attestation effectiveness, and validator participation rates. A drop in proposal success rate could indicate relay connectivity issues or builder failures. On the execution layer, track gas usage patterns, MEV-Boost adoption rate (the percentage of blocks built externally), and average block value to builders. Use tools like the Beacon Chain explorer's API or custom Prometheus metrics exported by your clients.

Relay health is a lynchpin of PBS stability. Monitor each relay's uptime, latency (time from receiving a block to broadcasting it), and censorship resistance metrics, such as the rate of transactions from the public mempool being included. Set up alerts for relay downtime or if the dominant builder market share exceeds a threshold (e.g., >33%), which could indicate centralization risks. Implement a fallback mechanism in your validator clients, configuring them to propose a locally built block if no valid bid is received from the relay network within a specified timeframe.

Post-launch, the builder market will evolve. Your team should analyze the distribution of block builders and the diversity of block templates. Encourage ecosystem health by supporting the development of open-source builders like mev-boost or flashbots. Be prepared to respond to protocol-level threats, such as time-bandit attacks where a builder withholds a high-value block to try and reorg the chain for greater profit. Mitigations may involve adjusting the builder signing scheme or implementing cr-lists (censorship resistance lists) as defined in EIP-7266.

Finally, establish a clear incident response plan. Define roles for on-call engineers, create runbooks for common failure modes (e.g., relay outage, consensus fork), and maintain communication channels with major relay and builder operators. The goal of post-launch monitoring is not just uptime, but ensuring the PBS system fulfills its promises of credible neutrality, efficiency, and resilience for the entire proof-of-stake network.

The initial phase focuses on establishing a minimal viable PBS (MVP) system. This involves implementing a basic builder API, integrating a trusted relay, and running a centralized block builder. The goal is to validate the core protocol logic and economic incentives on a testnet. Key metrics to track include block inclusion rates, builder profitability, and validator adoption. This stage is about proving the concept works in a controlled environment before introducing complexity.

Following a successful MVP, the next phase is decentralizing the builder market. This involves encouraging multiple independent builders to compete, which is critical for censorship resistance and efficiency. Protocols should provide clear documentation, SDKs, and economic modeling tools to lower the barrier to entry. Monitoring for builder collusion or the emergence of a dominant builder becomes essential. The health of the builder market is a primary indicator of PBS success.

The long-term evolution involves protocol-enforced PBS, where the separation of proposer and builder roles is codified directly into the consensus layer. This moves away from out-of-protocol commitments via MEV-Boost to a native, in-protocol design. Ethereum's proposed EIP-4844 and the eventual integration of proposer-builder separation into the core protocol represent this final stage. This provides stronger security guarantees and simplifies the validator experience.

Continuous governance and parameter tuning will be required. Key parameters like the builder bid commitment window, the minimum bid, and slashing conditions for malicious builders may need adjustment based on network activity and attack vectors. Governance should be transparent and involve stakeholders from validators, builders, and the broader community. This ensures the system remains adaptive and resilient to new forms of MEV and market dynamics.

Ultimately, a well-designed PBS rollout strengthens the underlying Proof-of-Stake chain. It transforms MEV from a hidden, potentially toxic force into a transparent, competitive market. The end state is a more robust, efficient, and credibly neutral blockchain where validators can maximize rewards without needing sophisticated infrastructure, and users benefit from better execution and reduced consensus overhead.