Proposer-Builder Separation (PBS) is a design philosophy and protocol-level mechanism for Ethereum that divides the role of block creation into two distinct actors: builders, who construct optimized blocks by ordering and selecting transactions, and proposers (validators), who simply select the most profitable block from builders and propose it to the network. In Ethereum’s original design, validators performed both roles — selecting transactions from the mempool, ordering them, and proposing the resulting block. This concentration of responsibility created MEV (Maximal Extractable Value) centralization pressures, as validators with sophisticated MEV extraction capabilities had significant economic advantages over regular validators. PBS addresses this by creating a competitive market where specialized builders compete to construct the most valuable blocks, and validators earn MEV revenue by auctioning off their block proposal rights to the highest-bidding builder. Currently, PBS is implemented in practice through MEV-Boost, an out-of-protocol sidecar developed by Flashbots that connects validators to a network of builders via relays. Enshrined PBS (ePBS) is the long-term goal, which would embed this builder-proposer separation directly into the Ethereum protocol itself, removing reliance on trusted third-party relays. PBS is a foundational component of Ethereum’s roadmap for mitigating MEV centralization while preserving validator decentralization and censorship resistance.
Origin & History
| Date | Event |
|---|---|
| Apr 10, 2019 | Philip Daian, Steven Goldfeder, and six co-authors from Cornell Tech, UIUC, CMU, and ETH Zurich publish “Flash Boys 2.0” on arXiv, identifying MEV as a systemic consensus-layer risk |
| Late 2020 | Flashbots co-founded by Phil Daian and others to democratize MEV extraction and reduce its negative externalities |
| Jan 2021 | Flashbots Auction launches for PoW Ethereum miners, introducing searcher-builder dynamics |
| Q4 2021 | Vitalik Buterin formally proposes PBS as a core protocol mechanism for post-Merge Ethereum |
| Sep 2022 | The Merge transitions Ethereum to PoS; MEV-Boost by Flashbots implements out-of-protocol PBS |
| Q4 2022 | MEV-Boost adoption exceeds 90% of Ethereum validators within months of The Merge |
| Q1 2023 | OFAC censorship concerns arise as dominant relays filter sanctioned transactions |
| Q2 2023 | Min-bid and optimistic relaying introduced to improve PBS relay efficiency |
| Q1 2024 | Enshrined PBS (ePBS) research intensifies; EIP-7732 proposed for protocol-level builder separation |
| Q1 2025 | ePBS remains a key focus of Ethereum’s research agenda; inclusion lists proposed as an interim solution |
How It Works
| Component | Current (MEV-Boost) | Future (ePBS) |
|---|---|---|
| Builder | Off-chain entity constructing blocks | Same, but interacts with protocol directly |
| Proposer | Validator running MEV-Boost sidecar | Validator with native protocol PBS support |
| Relay | Trusted intermediary (Flashbots, bloXroute, etc.) | Eliminated — protocol handles commit-reveal |
| Trust Model | Trust relay to be honest and available | Trustless — enforced by consensus rules |
| Censorship Resistance | Relies on relay diversity | Inclusion lists force transaction inclusion |
| Payment | Builder pays proposer via relay bid | Builder payment enforced by protocol |
In Simple Terms
The problem PBS solves: In Ethereum, the validator who builds a block gets to decide which transactions go in and in what order. Sophisticated validators can extract MEV (sandwich attacks, arbitrage) that regular validators cannot, creating an unfair advantage and centralization risk.
The separation: PBS splits the job in two. Specialists called builders compete to construct the most valuable block, and validators just pick the highest bid. Validators do not need to be sophisticated; they simply auction off their block space.
How MEV-Boost works today: Validators run MEV-Boost software that connects to relays. Builders send their best blocks to relays, relays verify them and forward the bids to validators. The validator signs the highest-paying block header without seeing the full contents (a blind auction), then the relay releases the block.
Why enshrined PBS matters: Currently, PBS depends on trusted relays. If a relay is down or dishonest, the system breaks. Enshrined PBS would build this separation into Ethereum’s protocol itself, making it trustless and more robust.
The bigger picture: PBS keeps validators decentralized (anyone with 32 ETH can validate profitably) while allowing MEV extraction to be handled by a competitive builder market, preventing MEV from becoming a centralizing force.
Real-World Examples
| Scenario | Implementation | Outcome |
|---|---|---|
| MEV-Boost adoption | Over 90% of Ethereum validators run MEV-Boost post-Merge | Validators earn MEV revenue without running complex strategies; builder market competition ensures fair pricing |
| Builder market competition | Builders like Flashbots, BeaverBuild, and Titan compete to produce highest-value blocks | Competitive dynamics drive most MEV revenue to proposers, with builders earning thin margins |
| Censorship resistance concern | Some relays filtered OFAC-sanctioned transactions in late 2022 | Community pushed for relay diversity and non-filtering relays; incident highlighted need for ePBS and inclusion lists |
| Solo staker MEV access | Home stakers running MEV-Boost on consumer hardware | Solo stakers earn comparable block rewards to institutional validators, preserving decentralization |
Advantages
| Advantage | Description |
|---|---|
| Validator decentralization | Regular validators earn MEV revenue without needing sophisticated extraction infrastructure |
| Competitive builder market | Multiple builders competing ensures efficient price discovery and fair MEV distribution |
| Reduced centralization pressure | Separating building from proposing prevents MEV from concentrating validator power |
| MEV democratization | All validators, including solo home stakers, benefit from MEV through builder bids |
| Modular design | Separation of concerns allows each role to be independently optimized and upgraded |
Disadvantages & Risks
| Risk | Description |
|---|---|
| Relay trust assumptions | Current MEV-Boost relies on trusted relays; dishonest or unavailable relays can disrupt block production |
| Builder centralization | A small number of builders currently produce the majority of blocks, creating a new centralization vector |
| Censorship at the builder level | Builders may choose to exclude certain transactions for regulatory or strategic reasons |
| Latency advantages | Builders with lower latency connections to relays and proposers gain unfair competitive edges |
| Complexity | PBS adds architectural complexity to Ethereum’s block production pipeline |
Risk Management Tips:
- Validators should connect to multiple relays (Flashbots, bloXroute, Ultra Sound, Agnostic) for redundancy
- Support and monitor efforts toward Enshrined PBS to reduce relay dependency
- Advocate for inclusion lists that force proposers to include transactions, mitigating censorship
- Monitor builder market concentration metrics on tools like mevboost.pics and relayscan.io
- Understand that MEV-Boost is optional — validators can always fall back to local block building
FAQ
Q: Do all Ethereum validators use PBS?
A: Not mandatorily, but over 90% of validators run MEV-Boost (the current PBS implementation) because it significantly increases their block rewards. Validators who do not use MEV-Boost still produce blocks normally but miss out on builder bid revenue.
Q: How much extra revenue does PBS provide to validators?
A: MEV-Boost bids typically add 10-50% on top of base block rewards, though this varies with network activity. During high-MEV periods (like NFT mints or market volatility), builder bids can be substantially higher.
Q: What is the difference between PBS and MEV-Boost?
A: PBS is the design concept of separating block building from block proposing. MEV-Boost is the current practical implementation of PBS, built by Flashbots as an out-of-protocol sidecar. Enshrined PBS (ePBS) would implement the same concept directly in Ethereum’s protocol.
Q: Could builders censor transactions?
A: Yes, builders can choose which transactions to include. This is why inclusion lists and forced transaction inclusion mechanisms are being researched — they would require proposers to include certain transactions regardless of the builder’s choices.
Q: When will Enshrined PBS be implemented?
A: Enshrined PBS is an active area of Ethereum research with proposals like EIP-7732. It is not yet scheduled for a specific hard fork but is considered a high-priority item on Ethereum’s long-term roadmap. Interim solutions like inclusion lists may arrive sooner.
Related Terms
MEV, MEV-Boost, Flashbots, Validator, Block Builder, Searcher, Relay, Censorship Resistance, The Merge, Inclusion List, EIP-7732
UPay Tip: If you are running an Ethereum validator, using MEV-Boost is strongly recommended — it connects you to the builder market and significantly increases your block rewards without requiring any MEV extraction expertise. Connect to multiple relays for maximum reliability and revenue.
Disclaimer: This content is for educational purposes only and does not constitute financial advice. Always conduct your own research (DYOR) and consult qualified financial advisors before making investment decisions.
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