What is Proposer-Builder Separation (PBS)?

Proposer-Builder Separation (PBS) is an Ethereum block production architecture that separates two responsibilities that can otherwise belong to the same participant: constructing the contents of a block and proposing that block to the network. Under PBS, specialised builders compete to create valuable blocks, while the validator selected as proposer chooses among available block offers and proposes the winning block.

The idea addresses an economic consequence of Maximal Extractable Value (MEV). Ethereum blocks can contain opportunities involving decentralised exchange arbitrage, liquidations, transaction ordering, and other strategies. Efficiently identifying these opportunities requires specialised software, low-latency infrastructure, and sophisticated search algorithms.

If every validator had to compete directly in block construction, professional operators with advanced MEV infrastructure could have a structural advantage over smaller validators. PBS separates this specialised activity from consensus participation. Builders can focus on constructing blocks, while validators can remain responsible for proposing blocks without needing to become expert MEV searchers.

Ethereum already uses an external implementation of this general model through MEV-Boost and the proposer-builder market. The longer-term protocol direction has focused on bringing stronger proposer-builder separation mechanisms into Ethereum itself rather than relying entirely on infrastructure outside the core protocol.

Why Ethereum Separates Builders from Proposers

Ethereum’s Proof of Stake consensus periodically selects validators to propose blocks. A block proposer must ultimately publish a valid block, but constructing the economically optimal block is a separate problem.

Transactions do not all have the same economic value. A builder may be able to construct a block containing profitable arbitrage sequences or bundles submitted by specialised searchers. Different transaction orderings can therefore produce different amounts of revenue even when all resulting blocks are valid.

Before specialised builder markets became common, validators could theoretically construct blocks locally. In practice, extracting competitive MEV requires capabilities that ordinary validators may not possess.

This creates a centralisation pressure. Large staking organisations could invest in sophisticated block-building infrastructure, while smaller validators would earn less because their locally constructed blocks captured fewer opportunities.

PBS changes the division of labour. Builders compete to construct blocks and offer part of their expected value to proposers. The proposer can select an attractive bid without knowing how to discover every underlying MEV opportunity.

The architecture therefore aims to preserve broad validator participation while allowing block construction itself to remain highly competitive.

From Searchers to the Final Block

PBS is easier to understand when block production is viewed as an economic supply chain rather than a single validator operation.

Searchers identify profitable transaction combinations. For example, a searcher may discover that prices for the same asset differ between two decentralised exchanges. It can create a bundle that performs the required trades and submit it to builders.

Builders combine transactions from users, searcher bundles, and other available sources to construct candidate blocks. Their objective is generally to produce a valid block that generates enough value to win the right to have it proposed.

The block production flow can involve:

1. Users submit ordinary Ethereum transactions.
2. Searchers identify MEV opportunities and construct transaction bundles.
3. Builders combine transactions and bundles into candidate blocks.
4. Builders compete by offering bids representing the value they can provide to the proposer.
5. The selected Ethereum validator evaluates available bids.
6. The proposer signs and proposes the chosen block according to the applicable protocol and market mechanism.
7. Ethereum validators attest to the resulting block as part of normal consensus.

This separation creates specialised markets at several stages. Searchers compete for MEV opportunities, builders compete to assemble blocks, and proposers monetise their temporary right to propose an Ethereum block.

Importantly, the proposer does not surrender its consensus responsibility. It remains the validator selected by Ethereum to propose the block. The builder provides the block contents rather than replacing the proposer in Proof of Stake.

MEV-Boost and Today’s Builder Market

Ethereum’s current proposer-builder ecosystem developed largely through MEV-Boost, open-source software introduced by Flashbots around Ethereum’s transition to Proof of Stake.

MEV-Boost allows validators to access blocks created by external builders. Relays act as intermediaries between builders and proposers, helping coordinate bids and block delivery.

The architecture is commonly described as proposer-builder separation, but it is not the final protocol-native form of PBS. It is an external market layered around Ethereum’s consensus protocol.

The distinction can be summarised as follows:

Relays have played an important role because builders do not necessarily want to reveal complete block contents before a proposer commits to a bid. Without protection, a proposer could inspect a valuable block, copy its transactions, and attempt to publish the block without compensating the builder.

Relays help solve this coordination problem by connecting builders and validators. However, they also create additional infrastructure dependencies, which is one reason Ethereum researchers have explored ways to implement PBS properties more directly within the protocol.

MEV Is the Economic Reason PBS Matters

MEV refers to value that can be extracted by controlling transaction inclusion, exclusion, or ordering within a block.

A simple arbitrage can be beneficial because it helps align prices across markets. Other forms of MEV can be harmful to users. Sandwich attacks, for example, exploit knowledge of a pending trade by placing transactions before and after it.

PBS does not eliminate MEV. Instead, it changes the market structure through which MEV is captured.

Without an efficient builder market, sophisticated validators could have a significant advantage because they could combine staking with advanced block construction. With PBS, a small validator can potentially receive competitive block bids from the same builder market used by much larger operators.

This helps separate economies of scale in block building from economies of scale in staking.

However, it can move centralisation pressure elsewhere. If a small number of builders consistently construct the most profitable blocks, block building itself can become concentrated even if validator participation remains decentralised.

The design challenge is therefore not simply to maximise builder efficiency. Ethereum also needs a block production system that maintains censorship resistance and prevents builders from gaining excessive control over transaction inclusion.

Builder Centralisation and Censorship

Specialisation naturally favours infrastructure providers that can process information quickly and maintain relationships with searchers and order-flow sources. Successful builders may receive more private transaction flow, which can help them construct more valuable blocks and attract even more order flow.

This creates a potential feedback loop.

A highly concentrated builder market could influence which transactions reach Ethereum blocks. Even though proposers remain independent validators, they may repeatedly choose bids from the same builders because those bids provide the highest revenue.

Important risks associated with PBS include:

• concentration of block construction among a small number of builders;
• dependence on specialised relays or other intermediaries;
• censorship by builders that exclude particular transactions;
• private order flow reducing visibility into the block-building market;
• sophisticated participants gaining informational advantages;
• latency advantages favouring operators with specialised infrastructure.

Censorship resistance is particularly important because purely economic proposer behaviour can reinforce builder power. If a censoring builder consistently offers the highest bid, proposers focused only on revenue may continue selecting its blocks.

Ethereum’s PBS research therefore intersects with mechanisms designed to preserve proposer influence over transaction inclusion.

Inclusion Lists and Proposer Agency

One approach to limiting builder censorship is to give proposers a mechanism for requiring certain transactions to appear in a block.

This idea is generally discussed through inclusion lists. Instead of allowing the builder to have complete discretion over block contents, the proposer can specify transactions that should be included, subject to protocol rules and available block capacity.

The builder remains responsible for constructing an efficient block around those requirements.

The concept is important because PBS deliberately transfers much of block construction away from validators. Without additional protections, this could weaken the proposer’s ability to help censored transactions enter the blockchain.

Mechanisms under discussion around PBS and censorship resistance include:

• proposer-created inclusion lists;
• constraints requiring builders to include eligible transactions;
• alternative paths for transactions ignored by dominant builders;
• protocol rules limiting the ability of builders to censor indefinitely;
• designs that preserve proposer influence without requiring proposers to construct complete blocks themselves.

These mechanisms illustrate a broader principle behind PBS development. Separating responsibilities should not mean transferring all meaningful control from one centralised group to another.

The objective is to specialise block production while keeping Ethereum permissionless and resilient.

PBS and Ethereum’s Block Production Architecture

Proposer-Builder Separation also helps explain why saying that an Ethereum proposer simply “orders all transactions” can be misleading.

Modern Ethereum block production can involve users, searchers, builders, relays, and validators. The validator selected as proposer has the protocol-level right to propose a block, but the detailed construction and ordering of that block may be performed by an external builder.

This distinction is relevant beyond Ethereum Layer 1. Based rollups, preconfirmation systems, shared sequencing research, and other scaling architectures increasingly interact with Ethereum’s block production pipeline. Understanding who constructs a block and who has the final right to propose it becomes important when these systems attempt to inherit Ethereum’s sequencing or liveness properties.

PBS also demonstrates that decentralisation cannot be measured simply by counting validators. Ethereum can have a large validator population while block construction is concentrated among a much smaller group of specialised builders.

For that reason, block builder diversity, censorship resistance, relay dependence, and access to order flow have become important parts of Ethereum’s decentralisation discussion.

The Direction of Protocol-Native PBS

The external proposer-builder market demonstrated that separating these roles can work economically, but relying on external relays is not an ideal final architecture.

Protocol-native PBS aims to formalise more of the builder-proposer relationship within Ethereum’s protocol. The broad objective is to preserve competitive block building while reducing trust and coordination requirements imposed by external infrastructure.

Achieving this is technically difficult. Builders need confidence that their valuable block contents cannot simply be stolen, proposers need confidence that a winning builder will deliver a valid block, and the network needs mechanisms that preserve liveness if something goes wrong.

The protocol also needs to account for censorship resistance and builder concentration rather than treating the highest bid as the only relevant property.

PBS is therefore not merely an optimisation for increasing validator revenue. It is an architectural response to the reality that transaction ordering has significant economic value.

By separating block construction from block proposal, Ethereum can allow specialised participants to compete for MEV without requiring every validator to build sophisticated trading infrastructure. The challenge is ensuring that this specialisation improves efficiency without allowing the builder market to become a new central point of control over Ethereum block production.