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Blockchains sell blocks. A complex market of actors are paid to assemble those blocks, but a part of that market — specifically block builders — is a duopoly between two players (Beaverbuild and Titan).
This duopoly is bad for various reasons, but chiefly in regard to maximal-extractable value (MEV).
MEV is believed to be monetary value that the end user creates, so returning it to them is ethically preferable. But when a few block builders dominate block building, that creates maximal value extraction that is suboptimal for the Ethereum end user.
To mitigate this, the Flashbots team announced today BuilderNet, a new block building network designed to return more MEV and gas fees to users.
Operating alongside Nethermind and the same Beaverbuild, BuilderNet looks to split up the presently “monolithic process” of block building.
This division of labor would allow existing stakeholders such as block builders, searchers and dapps to join a “multioperator network” and concurrently run the same block builder together. When blocks are assembled, rewards are then refunded back to stakeholders based on the amount of market value they’ve contributed to a block.
With BuilderNet, any application can permissionlessly and privately submit transaction order flow to a block builder and be paid for it on a pro rata basis.
Transactions stay private since the BuilderNet network will run in a “trusted execution environment” (TEE), an encrypted secure enclave that allows data to be processed without revealing order flow data.
Operators will also be able to permissionlessly deploy a block builder in BuilderNet.
According to official docs, this will enable an “even playing field where independent searchers can receive the same financial outcomes and privacy that integrated searcher-builders do today.”
BuilderNet in effect looks to thwart current industry practices in the block builder market that have sought to internalize MEV from end users. These include exclusive MEV revenue-sharing agreements between apps/wallets and block builders.
Another way block builders have sought to capture greater MEV is vertical integration within the MEV supply chain. The Titan block builder, for instance, launched its own relayer back in April 2024 that only accepted its own blocks, thereby defeating the entire purpose of the offchain proposer-builder-separation (PBS) that Flashbots’ MEV-boost software introduced.
Though BuilderNet will primarily benefit the Ethereum L1 today, it eventually plans to be available for decentralized sequencing on L2s through Rollup-Boost, the block building platform that will be used on Unichain.
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