From MEV-Boost to BuilderNet: Can True MEV Fair Distribution be Achieved?

Written by 0XNATALIE

The current status of centralization in Ethereum block construction

Currently, the Ethereum block building market faces a high degree of centralization. About 92% of Ethereum blocks are built by MEV-Boost, with approximately 94% of blocks dominated by two main block builders (Beaverbuild and Titan).

Flashbots launched MEV-Boost to mitigate the scale effect of large staking pools on MEV extraction, avoiding large validators from leveraging more MEV revenue to expand their competitive advantage, and thus forcing small validators to join large staking pools, exacerbating network centralization. MEV-Boost separates the block proposal and construction process through the Proposer-Builder Separation (PBS) mechanism. Block proposers (validators) are responsible for proposing new blocks, while block builders are responsible for transaction ordering and block construction. In this way, validators are no longer directly involved in block construction, but instead introduce independent builders to redistribute MEV and reduce the monopoly of large staking pools.

However, with the popularity of MEV-Boost, the block construction market has instead become highly centralized, with over 90% of blocks being constructed by two builders. This centralization not only erodes the decentralization of Ethereum, but also leads to a vicious cycle of high participation costs, mainly manifested in two aspects: order flow and block value. The value of the block is determined by the order flow. To obtain this transaction data, builders need to sign exclusive agreements with order flow providers (such as users, wallets, applications, etc.), which often come with high costs. Without paying these fees, builders find it difficult to compete in the market. This exclusivity makes a few builders form a monopoly with specific order flow providers, increasing the vulnerability of the system, as the failure of any builder could potentially affect the stability of the entire system. The second aspect is that block construction requires a large amount of capital to support infrastructure (such as relays), further raising the barriers to entry.

BuilderNet: Reinventing the MEV ecosystem

To address these issues, Flashbots, Beaverbuild, and Nethermind have teamed up to develop BuilderNet, a decentralized block-building network. By leveraging a Trusted Execution Environment (TEE) and multiple independent nodes to build blocks together, BuilderNet is able to increase Ethereum's censorship resistance, decentralization, and transparency, as well as redistribute MEV, ensuring that all participants benefit fairly.

Core Team

Flashbots: A technical team focused on Ethereum MEV optimization, dedicated to improving the transparency and decentralization of the block building market. Flashbots has developed protocols such as MEV-Boost and MEV-Share to provide a more transparent and fair mechanism for the block building market.

Beaverbuild: One of the major Ethereum block builders, currently holding about 50% of the market share.

Nethermind: A company that provides Ethereum clients and infrastructure solutions, focusing on the implementation, performance optimization, and security of the Ethereum protocol. Nethermind provides important technical support for BuilderNet to ensure efficient operation and security of the system.

Working principle: TEE+ order flow sharing = income distribution based on contributions

BuilderNet relies on a decentralized multi-party collaboration model. In the traditional mode, one node runs a block builder, while in BuilderNet mode, multiple nodes run a block builder together.

In a block builder, each node can run an independent block building instance in its own TEE. TEE is a hardware-level security environment that can ensure the privacy of transaction data, prevent operators from tampering with transaction flows or leaking user data, and only authorized participants can verify and send encrypted transaction flows to these TEE instances. In this way, the privacy of transaction data and the security of the system are ensured. Each instance obtains order flow from the entire network and independently constructs a complete block, while sharing the order flow with other instances in the same builder. Then, all blocks are submitted to the MEV-Boost relay and the bidding mechanism is used to select which block is finally included in the chain. The selected block will allocate refunds based on the contributions of each participant providing order flow for the block, such as applications, wallets, searchers, and instances.

BuilderNet not only supports the Ethereum mainnet, but also plans to introduce more features to the L2 network through Rollup-Boost. In the long run, as more users choose to use BuilderNet, larger builders will also tend to join the platform. More trading volume and a more efficient way of operating will allow them to earn more consistent gains.

Participants

Users, wallets, and applications: can participate by sending transactions to BuilderNet nodes and receive refunds based on their contributions.

Searchers: can submit transaction packages to BuilderNet and get a refund while enjoying privacy protection. It provides independent searchers with the same economic rewards and privacy protection as integrated searchers - builders.

Builder (Node): independently run block building instances, submit blocks to MEV-Boost, and receive corresponding rewards based on contributions.

Validators: In the early stages of BuilderNet's launch, the economic model of validators will not have a significant impact, as the existing MEV revenue is usually not directly paid to validators. More MEV will be reallocated to validators in the future.

Operator: responsible for managing and maintaining the infrastructure of BuilderNet nodes and ensuring the normal operation of the TEE environment.