- Proposer-Builder Separation (PBS) aims to integrate at the Ethereum protocol level to enhance security and reliability.
- MEV-Boost operates as an optional layer using external relayers to create a competitive block market.
The Ethereum network is considering two approaches to improve transaction processing: Proposer-Builder Separation (PBS) and MEV-Boost. These methods aim to enhance the efficiency and integrity of block creation within the blockchain.
Proposer-Builder Separation is a proposed integration within Ethereum’s core protocol. If implemented, it would alter how validators propose and assemble blocks, incorporating this process directly into Ethereum’s consensus mechanism.
The method eliminates the need for external parties in the block proposal process, potentially increasing the security and reliability of the blockchain.
Contrasting with PBS, MEV-Boost functions as an optional layer that validators can apply. It depends on third-party relayers to establish a competitive market for block space. In this market, block builders compete to have their blocks selected by offering a share of the profits derived from maximizing the transaction value in each block.
This approach introduces some level of centralization due to its reliance on external entities, which may raise concerns about the fairness and potential for control concentration.
In these systems, specific roles are defined: ‘searchers’ identify profitable transaction opportunities, such as price differences that can be exploited through arbitrage. ‘Builders’ are responsible for incorporating these opportunities into new blocks. Although a searcher can also be a builder, the roles are generally specialized to increase processing efficiency.
nearly 90% of all Ethereum validators outsource their block construction to Flashbot's MEV-Boost PBS auction, while the remainder opt for building their own blocks.
Flashbots reached a $1B valuation in private markets last year, while @jito_sol currently trades at a $2B FDV.… https://t.co/hm1Ja6LiSG
— shard (@shardverse) February 12, 2024
MEV-Boost includes safeguards against unethical practices such as front-running by proposers. It uses commit-reveal schemes and encrypted transactions to keep the block details hidden from proposers until their inclusion in the blockchain is secured. This ensures proposers cannot modify the order of transactions for personal advantage.
These advancements illustrate Ethereum’s continuous efforts to refine its technology. By considering the integration of methods like PBS and the optional use of MEV-Boost, Ethereum is working to enhance its platform’s capability to handle transactions securely and fairly.
With this, it maintains its position as a leading technology in the blockchain space, aiming to provide a dependable and fair environment for digital transactions.
