Author: 0XNATALIE

The current status of Ethereum blockchain centralization

Currently, the Ethereum block construction market faces a highly centralized problem, with about 92% of Ethereum blocks built by MEV-Boost, of which about 94% are dominated by two major block builders (Beaverbuild and Titan).

Flashbots launched MEV-Boost to alleviate the scale effect of large staking pools on MEV extraction, to prevent large validators from using more MEV revenue to expand their competitive advantage, thereby forcing small validators to join large staking pools and exacerbating the centralization of the network. MEV-Boost separates the block proposal and construction process through the Proposer-Builder Separation (PBS) mechanism. The block proposer (validator) is responsible for proposing new blocks, and the block builder is responsible for transaction sorting and block construction. In this way, validators no longer directly participate in block construction, but 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 become highly centralized. More than 90% of the blocks are built by two builders. This centralization not only erodes the decentralized nature of Ethereum, but also leads to a vicious cycle of high participation costs, which is mainly reflected in two aspects: First, order flow. The value of the block is determined by the order flow. In order to obtain these transaction data, builders need to sign exclusive agreements with order flow providers (such as users, wallets, applications, etc.), and these agreements are often accompanied by high fees. If these fees are not paid, it will be difficult for builders to compete in the market. This exclusive agreement allows a small number of builders to form a monopoly with specific order flow providers, increasing the fragility of the system, because the failure of any builder may affect the stability of the entire system. Second, block construction requires a lot of capital to support infrastructure (such as relays, etc.), which further raises the threshold for participation.

BuilderNet: Reshaping the MEV Ecosystem

To address these issues, Flashbots, Beaverbuild, and Nethermind jointly developed BuilderNet, a decentralized block construction network. By leveraging a trusted execution environment (TEE) and multiple independent nodes to jointly build blocks, BuilderNet is able to improve Ethereum's censorship resistance, decentralization, and transparency, and redistribute MEV to ensure that all participants can benefit from it fairly.

Core Team

  • Flashbots: A technical team focused on Ethereum MEV optimization, committed to improving the transparency and decentralization of the block construction market. Flashbots has developed protocols such as MEV-Boost and MEV-Share to provide a more transparent and fair mechanism for the block construction market.
  • Beaverbuild: A major Ethereum block builder, and one of the largest block builders currently, with about 50% of the market share.
  • Nethermind: A company that provides Ethereum client and infrastructure solutions, focusing on the implementation, performance optimization and security of the Ethereum protocol. Nethermind provides important technical support for BuilderNet to ensure the efficient operation and security of the system.

Working principle: TEE + order flow sharing = profit distribution according to contribution

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

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 ensures the privacy of transaction data, prevents 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 builds a complete block, while sharing the order flow with other instances in the same builder. All blocks are then submitted to the MEV-Boost relay, and a bidding mechanism is used to select which block is ultimately included in the chain. The selected block will distribute refunds based on the contribution of each participant (such as applications, wallets, searchers, instances, etc.) who provides order flow for the block.

BuilderNet not only supports the Ethereum mainnet, but also plans to introduce more features to the L2 network through Rollup-Boost support. In the long run, as more users choose to use BuilderNet, large builders will also tend to join this platform. More transaction volume and more efficient operation methods will enable them to obtain more stable income.

Participants

  • Users, wallets, and applications can participate by sending transactions to BuilderNet nodes and receive refunds based on their contributions.
  • Seekers: can submit transaction packages to BuilderNet and receive refunds while enjoying privacy protection. Independent Seekers are provided with the same economic rewards and privacy protection as integrated Seeker-Builders.
  • Builder (node): independently runs a block building instance, submits blocks to MEV-Boost, and receives corresponding rewards based on contributions.
  • Validators: In the early stage of BuilderNet’s launch, there will be no significant impact on the economic model of validators, because the existing MEV income is usually not paid directly to validators. More MEV will be redistributed 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.