Enshrined Proposer Builder Separation in the presence of Maximal Extractable Value

2026-01-19

AI Summary

This study addresses the risks of economic centralization and block content manipulation arising from Maximal Extractable Value (MEV) under Ethereum’s Proof-of-Stake mechanism. It presents the first formal framework to systematically evaluate the fairness and decentralization impacts of the auction-based block-building mechanism in enshrined Proposer-Builder Separation (ePBS) within MEV-rich environments, integrating mathematical modeling, game theory, and multi-agent simulation. The analysis reveals that while ePBS decouples the builder and proposer roles, it significantly exacerbates centralization: the profit Gini coefficient surges from 0.1749 to 0.8358, and 95.4% of block value accrues to nodes performing only the proposer role. This highlights a pronounced economic incentive bias favoring proposers, offering critical empirical insights for protocol design.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Philosophy and Ethics of AI: Bias, Fairness & Equity

Application Category

• Economics, Online Markets and Human Computation: Fairness, privacy, and diversity in economic environments
• Security and Privacy: Blockchains and distributed ledgers
• User Modeling, Personalization and Recommendation: Accountability, Transparency, and Ethics for personalization

Abstract

In blockchain systems operating under the Proof-of-Stake (PoS) consensus mechanism, fairness in transaction processing is essential to preserving decentralization and maintaining user trust. However, with the emergence of Maximal Extractable Value (MEV), concerns about economic centralization and content manipulation have intensified. To address these vulnerabilities, the Ethereum community has introduced Proposer Builder Separation (PBS), which separates block construction from block proposal. Later, enshrined Proposer Builder Separation (ePBS) was also proposed in EIP-7732, which embeds PBS directly into the Ethereum consensus layer. Our work identifies key limitations of ePBS by developing a formal framework that combines mathematical analysis and agent-based simulations to evaluate its auction-based block-building mechanism, with particular emphasis on MEV dynamics. Our results reveal that, although ePBS redistributes responsibilities between builders and proposers, it significantly amplifies profit and content centralization: the Gini coefficient for profits rises from 0.1749 under standard PoS without ePBS to 0.8358 under ePBS. This sharp increase indicates that a small number of efficient builders capture most value via MEV-driven auctions. Moreover, 95.4% of the block value is rewarded to proposers in ePBS, revealing a strong economic bias despite their limited role in block assembly. These findings highlight that ePBS exacerbates incentives for builders to adopt aggressive MEV strategies, suggesting the need for future research into mechanism designs that better balance decentralization, fairness, and MEV mitigation.

Problem

• Maximal Extractable Value
• Proposer Builder Separation
• decentralization
• economic centralization
• blockchain fairness

Innovation

• enshrined Proposer Builder Separation
• Maximal Extractable Value
• agent-based simulation
• profit centralization
• blockchain fairness