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Research · Ethereum

MEV and block building

Whoever orders a block can profit from the order. On Ethereum that has produced a market with distinct roles — searchers, builders and proposers — and a relay that sits between the builder and the proposer.

Last reviewed 2026-09-21Source: Flashbots documentation and ethereum.org block-building documentationMechanism descriptions only; no MEV volume, revenue or share figures are claimed.

Where the value comes from

A block is an ordered list of transactions, and the order changes what each transaction does. The clearest case is a trade: if a large swap is going to move a price, a transaction placed immediately before it can buy at the old price and sell at the new one, and the profit comes from the ordering rather than from any productive activity. That is the pattern usually called a sandwich, and it is the most familiar form of extractable value.

The same principle applies wherever a transaction's outcome depends on what else is in the block. Liquidations are profitable to trigger and the first transaction to do so wins; arbitrage between two venues is profitable to the transaction that closes the gap; a transaction that reveals a favourable price can be front-run by one that takes it first. In each case the value exists because the block producer chooses an order, and the producer can capture it by choosing the order that maximises it.

The term itself is a recognition that the value is not always extractable in a harmful way. Some ordering decisions are benign or even beneficial: an arbitrage that closes a price gap improves the market, and a liquidation that keeps a lending protocol solvent is part of how the protocol is meant to work. The problem is not that ordering has value; it is that the value accrues to whoever controls ordering, and that the same power can be used to the detriment of ordinary users.

The roles in the block-building market

The participants in Ethereum's block-building market and what each one contributes.
RoleWhat it doesWhat it earns
UserSubmits a transaction to the public mempool or a private channelNothing from ordering; may pay for protection from it
SearcherFinds profitable orderings and submits bundlesThe difference between the bundle's value and what it pays the builder
BuilderAssembles bundles and transactions into a complete blockThe difference between the block's value and the bid it pays the proposer
RelayPasses a block header to the proposer and the body to the network after the block is signedA fee, and the role of preventing the proposer from stealing the block
ProposerSelects the highest bid and signs the blockThe bid, which is the block's value minus the builder's margin

Last reviewed 2026-09-21Source: Flashbots documentationThe roles are described as they are implemented in the current market; individual designs vary.

The market exists because a validator's job is not to build the most profitable block; it is to propose a valid one. Building a block well requires specialised software, a view of the mempool, and the ability to simulate many candidate orderings quickly. Most validators do not do that work, so a division of labour emerged: builders compete to produce the most valuable block, and proposers choose among the blocks they are offered.

The relay exists to solve a specific problem in that arrangement. If a builder sends a complete block to a proposer before the proposer has signed it, the proposer can take the block's contents and sign its own version, capturing the value without paying the builder. If the proposer signs before seeing the block, the builder can send an empty block. The relay breaks the deadlock by showing the proposer only the block header and the bid, and releasing the body to the network once the proposer has signed. Neither side can cheat the other without the relay's cooperation.

The arrangement is a trust-minimised one rather than a trustless one. The relay is a party that both sides rely on, and a relay that colluded with a proposer could in principle leak a block's contents. The design reduces the trust required compared with a direct builder-to-proposer handshake, but it does not eliminate it, and the concentration of the relay market is a live concern in the ecosystem's own discussion of the mechanism.

Proposer-builder separation

Proposer-builder separation is the name for the arrangement just described, and it is worth being precise about what it does and does not do. It separates the role of choosing a block from the role of building one, so that a validator does not need to be a sophisticated block builder in order to earn the value its slot is worth. That lowers the barrier to being a validator and makes the value of ordering available to every validator rather than only to those with the software to capture it.

What it does not do is remove the incentive to order transactions profitably. The value still exists, it is still captured by someone, and the market that captures it is still concentrated in a small number of builders. The separation changes who receives the value and how much specialised infrastructure a validator needs; it does not change the underlying fact that ordering is valuable. That is why the discussion of MEV continues after PBS became the norm rather than concluding with it.

The proposals that go further aim to change the incentive rather than the market structure. Encrypted mempools would hide transaction contents until they are ordered, removing the information a front-runner needs. Fair-ordering protocols would constrain the orderings a builder may produce, so that a transaction's position cannot be manipulated in the ways that are profitable. Both are active research directions rather than deployed mechanisms, and both face the same difficulty: any constraint on ordering must be enforceable by the protocol, and the protocol currently enforces only that a block is valid, not that its ordering is fair.

Sources and references

The sources of extractable value, the roles in the block-building market and the relay mechanism described above are taken from the ecosystem's own documentation.

  • MEV explained. ethereum.org, Maximal extractable value (MEV): where the value comes from and how it is captured.
  • The block-building market and the relay. Flashbots, Flashbots documentation: the searcher, builder, relay and proposer roles, and how a block reaches a proposer.
  • Block building and the proposer's choice. ethereum.org, Block proposal: how a proposer obtains a block and what it signs.
  • The consensus-layer view of the proposer role. Ethereum Consensus Specs, Phase 0 — Honest Validator: the duties of the validator selected to propose a block.

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