The MEV Supply Chain Wars: How Block Builder Cartels, Proposer Commitment Markets, and Exclusive Orderflow Arrangements Are Centralizing Ethereum’s Transaction Pipeline

Something strange is happening inside Ethereum’s plumbing, and most users don’t know they’re paying for it. Every time you swap tokens on Uniswap, bid on an NFT, or close a leveraged position on Aave, your transaction passes through a pipeline that has grown increasingly concentrated in the hands of a few sophisticated operators. These aren’t the miners of old, running GPUs in warehouses. They’re specialized firms with names like Flashbots, Beaverbuild, and Titan Builder, running proprietary algorithms in data centers milliseconds from major validators. And they’re fighting over who gets to arrange the transactions inside each block, how much profit they can extract from that ordering, and who gets shut out entirely.

The stakes are enormous. Maximal Extractable Value, or MEV, has evolved from a niche research topic into what some estimates suggest is a $1-2 billion annual market on Ethereum alone. But the real story isn’t the size of the pie. It’s who controls the knife. Over the past eighteen months, the MEV supply chain has consolidated around a handful of block builders who construct the actual contents of most Ethereum blocks. These builders have begun forming exclusive relationships with transaction originators, cutting side deals with validators, and experimenting with new “proposer commitment” mechanisms that could further entrench their positions. The result is a block production ecosystem that looks less like the decentralized ideal and more like a handful of competing cartels.

This matters right now because Ethereum is at an inflection point. The network’s much-hailed Merge to proof-of-stake in September 2022 was supposed to democratize block production. Instead, it created new choke points. The rise of restaking protocols, the emergence of builder-proposer separation as a formal architecture, and the ongoing debate over inclusion lists and censorship resistance have turned what was once a technical backwater into one of the most consequential governance battles in crypto. What’s being decided in the next year will shape whether Ethereum remains credibly neutral infrastructure or becomes a captured platform where access is sold to the highest bidder.

What MEV Actually Is, and How We Got Here

MEV is the profit that can be extracted by manipulating the order, inclusion, or exclusion of transactions within a block. The classic example is arbitrage: a bot sees that ETH is trading for $2,000 on Uniswap and $2,005 on SushiSwap, submits a buy transaction on the cheaper venue and a sell on the more expensive one, and captures the spread. But this simple picture obscures a much messier reality. MEV also includes liquidations, sandwich attacks where a trader’s order is front-run and back-run for profit, NFT sniping, and increasingly complex cross-chain strategies.

Before Ethereum’s Merge, miners controlled block production. They could run their own MEV extraction strategies or sell that right to specialized searchers. The Flashbots organization emerged in 2020 with a seemingly elegant solution: an off-chain auction called MEV-Geth that allowed searchers to submit transaction bundles directly to miners, reducing chain congestion and making the extraction process more transparent. It worked, sort of. But it also created a new intermediary: the relay, which sat between searchers and miners, verifying that blocks were valid before passing them along.

Post-Merge, the architecture shifted. Validators, who stake ETH rather than run mining hardware, generally lack the technical sophistication to build optimal blocks themselves. So they outsource this to specialized block builders through a system called MEV-Boost. The builder constructs the most profitable block possible, the relay verifies it, and the validator simply proposes it to the network. In theory, this separation of roles increases efficiency. In practice, it has concentrated enormous power in the builders and the relays they connect to.

The Rise of the Builder Oligopoly

The block builder market has consolidated faster than almost anyone predicted. Data from MEV-Boost.pics and other monitoring services shows that through much of 2023 and early 2024, the top three builders routinely produced between 50% and 70% of Ethereum blocks. Beaverbuild, Flashbots, and Titan Builder have emerged as the dominant players, with a long tail of smaller competitors fighting for scraps.

This concentration isn’t accidental. Building profitable blocks requires enormous infrastructure investment. Builders must maintain low-latency connections to major DeFi protocols, run sophisticated simulation environments to predict which transaction combinations will be most profitable, and manage complex relationships with searchers who supply the raw MEV opportunities. There are significant economies of scale: a larger builder sees more orderflow, can simulate more combinations, and thus builds more profitable blocks, which attracts more validators, which attracts more searchers, in a self-reinforcing cycle.

Exclusive Orderflow and the “Orderflow Auction” Problem

Perhaps the most concerning development is the rise of exclusive orderflow arrangements. Here’s how they work. A major DeFi protocol, wallet provider, or centralized exchange agrees to send its users’ transactions to a specific builder, or a small group of builders, rather than broadcasting them to the public mempool where anyone can see them. In exchange, the builder might guarantee faster inclusion, share some MEV profits back with the originator, or simply pay for the privilege.

This creates what researchers call an “orderflow auction” dynamic, but one that happens in private rather than through transparent mechanisms. The builder with exclusive access to Coinbase Wallet’s transactions, for instance, has a persistent informational advantage. They can construct blocks knowing with high confidence what major trades are coming, while competitors are flying blind.

The practical effects are significant. Public mempool transactions increasingly get relegated to “leftover” space in blocks, included only after the builder’s private orderflow has been accommodated. This raises effective gas costs for ordinary users, creates unpredictable inclusion delays, and means that the “fair” price discovery mechanism of the public mempool is slowly hollowing out.

The Case of Beaverbuild and Lido

One concrete example illustrates these dynamics. Beaverbuild, a builder that emerged from the former Flashbots team members who split off, developed particularly close ties with Lido, the dominant liquid staking protocol controlling roughly 30% of staked ETH. Through various integration efforts and what multiple sources describe as preferential technical arrangements, Beaverbuild became the default or strongly favored builder for a significant portion of Lido’s validator set.

This isn’t necessarily nefarious in isolation. Lido wants its validators to maximize returns for stakers; Beaverbuild offered reliable, profitable blocks. But the concentration effects are undeniable. When a single builder is constructing a substantial fraction of blocks for the largest staking pool, the theoretical diversity of Ethereum’s validator set translates into much less practical diversity in what actually goes into blocks. And when that builder also accumulates exclusive orderflow from major DeFi protocols, the competitive playing field tilts further.

Proposer Commitment Markets: The Next Frontier of Centralization

If the current situation sounds concentrated, emerging “proposer commitment” mechanisms could push it further. Here’s the basic idea. Under MEV-Boost, validators commit to proposing whatever block the builder sends them, but only at the last moment. They can’t easily pre-commit to specific types of blocks or guarantee inclusion of certain transactions, because they don’t know what the builder will construct.

Proposer commitment schemes flip this. Validators make binding promises about what they’ll include or how they’ll behave, before seeing the actual block. This might mean committing to include all transactions from a certain relay, guaranteeing a minimum base fee, or agreeing to specific censorship-resistance properties. These commitments can be traded, sold, or used as collateral in new markets.

The theoretical appeal is clear. Commitments could let validators credibly signal their preferences, creating a more robust market for blockspace with explicit guarantees. But the practical risk is that they become another asset controlled by large staking pools and sophisticated builders. A validator with 10,000 ETH behind it can make commitments that a solo staker can’t match. The market for commitments itself could consolidate, with major players becoming gatekeepers to inclusion.

Several projects are actively developing commitment infrastructure, though exact timelines remain fluid. EigenLayer and other restaking protocols have explored how staked ETH can be used to secure these commitments. The technical details vary, but the directional concern is consistent: every new layer of financialization around block production creates new opportunities for centralization and capture.

Inclusion Lists and the Fight for Censorship Resistance

Against this backdrop, a counter-movement has emerged around “inclusion lists” and other mechanisms designed to preserve validator autonomy and resist censorship. The core problem is straightforward: if builders construct almost all blocks, and builders can choose which transactions to include, then builders become censors. This isn’t hypothetical. Following the Tornado Cash sanctions in August 2022, Flashbots’ own relay began excluding transactions associated with the sanctioned mixer. Other relays followed to varying degrees. The result was that Tornado Cash transactions faced significant inclusion delays, sometimes requiring much higher fees or specialized intervention.

Inclusion lists are Ethereum protocol researcher Mike Neuder’s proposed solution, subsequently refined by others. The basic mechanism: the block proposer (the validator) publishes a list of transactions that must be included in the next block, regardless of what the builder wants. The builder can add other transactions around these, but cannot exclude the listed ones. This restores a veto power to validators over the most sensitive inclusion decisions.

The concept has gained significant traction in Ethereum research circles and is being actively considered for inclusion in future upgrades, though no firm schedule exists. Variants include “forward inclusion lists” where the list applies to the next block but not the current one, reducing timing constraints, and “committee-based” approaches where a group of validators collectively determines what must be included.

Decentralized Relay Networks: The Infrastructure Response

Parallel to protocol-level solutions, infrastructure projects are attempting to decentralize the relay layer itself. The original Flashbots relay was a single point of failure and, as the Tornado Cash episode showed, a single point of censorship. Newer efforts aim to distribute relay functions across multiple operators.

The MEV-Boost ecosystem has gradually incorporated more relay diversity, with projects like the Ultra Sound Relay, Agnostic Relay, and others offering alternatives. More ambitiously, some researchers are exploring “suave” architectures, where the block building and relay functions themselves are distributed across many participants rather than concentrated in a few data centers.

These efforts face genuine technical challenges. Relaying requires extremely low latency, because blocks must be propagated and verified within the 12-second Ethereum slot time. Distributed systems inherently add latency. There’s also a verification problem: how do you trustlessly confirm that a block is valid without someone running the full simulation? Current solutions involve various cryptographic and economic techniques, but none fully resolve the tension between speed, trustlessness, and decentralization.

Real-World Impact: Who Gets Hurt and How

The consolidation of block building isn’t an abstract concern. It has concrete, measurable effects on different participants in the ecosystem.

Retail traders and DeFi users face higher effective costs. When significant orderflow is routed through private channels, the public mempool becomes a residual market. Transactions sent through standard wallets may wait longer, pay more in priority fees, or get executed at worse prices because sandwich bots still patrol the public mempool while protective bundling is reserved for private channels. Estimates of the “MEV tax” on retail trades vary widely, from basis points to significant percentages on large, volatile transactions, but the direction is clear: less transparent markets extract more rent.

Small searchers and MEV strategists face barriers to entry that didn’t exist three years ago. Building profitable strategies requires not just smart code but relationships with builders who will include your bundles. The largest builders increasingly operate their own searcher operations or have preferred partners. The open, competitive searching environment of 2020-2021 has given way to something more like a guild system.

Solo validators and small staking operations face a subtle but important degradation of their role. Under the original Ethereum vision, validators were supposed to be active participants in block construction, choosing transactions and ordering them according to their own preferences. Today, most are passive recipients of blocks from a small menu of builders. They retain the formal right to reject any block, but in practice, the economic pressure to accept the most profitable one is overwhelming. The validator becomes a rubber stamp, and the meaningful decisions migrate upward.

The network as a whole faces resilience risks. A block builder market with three major players is vulnerable to common-mode failures, coordinated attacks, or regulatory pressure. If all major builders simultaneously exclude certain transactions, whether due to government pressure, technical failure, or collective decision, the network’s censorship resistance is compromised in practice even if the protocol remains formally open.

Risks, Limitations, and Trade-Offs

No solution to these problems is free of drawbacks. Understanding the trade-offs is essential for anyone engaging with this space, whether as user, builder, investor, or policymaker.

Technical trade-offs. Inclusion lists add complexity to an already complex protocol. They require careful handling of edge cases: what if the listed transactions are invalid by the time the block is built? What if they conflict with each other? What if the proposer’s list is itself an attack vector, designed to force inclusion of state-bloating or otherwise harmful transactions? Each variant has been scrutinized, but the history of Ethereum upgrades suggests that edge cases in production often differ from testnet expectations.

Decentralized relay networks face the latency-verification trade-off mentioned above. But they also face a bootstrapping problem: relays need validators to use them, but validators need reliable, profitable blocks. A new, more decentralized relay that occasionally misses profitable opportunities or delivers blocks slightly slower will struggle to gain adoption against established competitors.

Economic trade-offs. Proposer commitment markets could improve efficiency by making preferences explicit and tradeable. But they also create new financial instruments that can be speculated upon, leveraged, and potentially manipulated. The history of financial innovation suggests that instruments designed for one purpose often develop secondary markets with their own dynamics. Commitment markets could become a new venue for the kinds of complexity and systemic risk that have characterized other derivatives markets.

There’s also a genuine question about whether some centralization is simply efficient. Block building has economies of scale. Forcing it to be more decentralized might mean higher costs, worse execution, and a less competitive Ethereum relative to other chains. The ideological commitment to decentralization may conflict with practical user demands for cheap, fast, reliable transactions.

Regulatory and legal trade-offs. The Tornado Cash sanctions revealed that infrastructure providers in the MEV supply chain face genuine legal uncertainty. Relays and builders that don’t implement some form of transaction screening risk exposure to sanctions enforcement. But screening itself moves these entities toward a regulated, custodial role that conflicts with crypto’s self-image. This tension has no clean resolution. Different jurisdictions may impose different requirements, fragmenting the builder market along geographic lines and creating compliance costs that favor large, well-capitalized incumbents.

User experience trade-offs. Many proposed fixes require users to become more sophisticated. Inclusion lists work best when validators actively curate them, which requires attention and expertise that solo stakers may lack. Wallet-level protections against harmful MEV require users to choose wallets that implement them, and to understand the trade-offs involved. The history of consumer technology suggests that most users default to convenience, not security or ideology.

What You Can Actually Do: A Practical Guide

For readers who want to engage constructively with these issues, here are concrete steps organized by role.

If you’re a trader or DeFi user:

Use wallets and interfaces that offer MEV protection. Several wallets now integrate with private mempool services or protective routing that reduces exposure to sandwich attacks and other harmful extraction. The protection isn’t perfect, and you should understand what guarantees are actually being made, but it’s generally better than raw public mempool submission.
Monitor your transaction execution. Tools like EigenPhi, MEV-Explore, and various block explorers can show whether your trades suffered from MEV extraction. If you’re consistently getting worse execution than expected, consider changing your submission method.
For large or time-sensitive transactions, consider using explicit MEV-protected channels like Flashbots Protect or similar services. The inclusion may be slightly slower, but the execution quality often improves.
Be skeptical of “zero MEV” claims. Some services obscure rather than eliminate extraction, or capture it for themselves rather than third parties. Ask how protection is implemented and who profits.

If you’re a validator or staker:

If you run your own validator, configure MEV-Boost to connect to multiple relays, including those with explicit censorship-resistance commitments. Don’t default to the most profitable single relay. The difference in yield is typically small, and the contribution to network health is real.
Consider whether your staking pool’s builder preferences align with your values. If you stake through Lido, Rocket Pool, or another protocol, investigate how they select builders and whether they support diversity. This information is increasingly available in transparency reports and governance forums.
If you have the technical capacity, experiment with local block building. For some validators, especially those with unique orderflow or specialized needs, building blocks locally rather than outsourcing entirely can be viable and contributes to decentralization.

If you’re a developer or protocol designer:

Design for MEV resistance from the start. This includes batch auctions rather than continuous orderbooks where appropriate, commit-reveal schemes, and other architectural choices that make extraction harder.
Be thoughtful about orderflow arrangements. Exclusive deals with specific builders may offer short-term revenue but contribute to long-term ecosystem concentration. Consider transparent, auction-based mechanisms for selling orderflow access if you sell it at all.
Support standardization efforts around inclusion lists, relay interoperability, and other decentralizing technologies. The more these are built into the protocol and application layers, the harder they are to circumvent.

If you’re an investor or governance participant:

Evaluate MEV infrastructure projects on their genuine decentralization properties, not just their marketing. Does the protocol have meaningful participation requirements, or does it concentrate power in token holders or large operators? Are there credible paths to progressive decentralization?
In protocol governance, treat MEV supply chain issues as first-class concerns. Proposals that affect transaction ordering, builder selection, or validator economics should be scrutinized for centralization effects.
Consider the regulatory exposure of investments in centralized builder or relay operations. These entities may face enforcement actions or compliance requirements that affect their viability and your returns.

The Next 12-24 Months: Scenarios and Signals

Looking ahead, several developments will shape the MEV supply chain landscape. None are certain, but together they suggest the contours of likely evolution.

The inclusion list debate will likely resolve in some form of protocol adoption, though the exact mechanism and timing remain unclear. If implemented well, this could meaningfully restore validator autonomy and resist builder capture. If implemented poorly, or if builders find ways to work around it, the centralization trend will continue.

Regulatory pressure on infrastructure providers will intensify, particularly in the US and EU. How builders and relays respond, whether through geographic segmentation, technical screening, or legal challenges, will significantly affect Ethereum’s character as permissionless infrastructure. The outcome of ongoing litigation around Tornado Cash and similar cases will set important precedents.

The proposer commitment market will emerge in some form, likely through restaking protocols. Whether this becomes a genuinely competitive market or another concentrated layer will depend heavily on design choices made in the next year. Watch for whether commitment mechanisms require significant capital, create lock-in effects, or are interoperable across platforms.

Competition from other blockchains will pressure Ethereum’s MEV architecture. Solana’s continuous block production, various app-chain designs, and newer architectures like those being explored by Celestia or EigenLayer all handle transaction ordering differently. Some may offer credible alternatives for applications that find Ethereum’s MEV environment too extractive. Ethereum’s response, whether through protocol evolution or layer-2 innovations, will be telling.

The most important signal to watch is the builder market concentration itself. If the top three builders’ share of blocks drops sustainably below 50%, that suggests decentralization efforts are working. If it rises above 80%, or if one builder achieves dominant position, the cartelization feared by critics will have arrived in practice.

What hangs in the balance is whether Ethereum can maintain its founding proposition: a platform where transactions are processed according to transparent, neutral rules rather than the preferences of powerful intermediaries. The MEV supply chain wars are, at their core, a test of whether that vision can survive the pressures of scale, efficiency, and profit. The next two years will tell us much about the answer.

What to Do Next

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Sources and Further Reading

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MEV Supply Chain: How Block Builder Cartels Centralize Ethereum