Blockchains protect an ecosystem worth more than $500bn with strong security properties derived from the principle of decentralization. Is today’s blockchain decentralized? In this paper, we empirically studied one of the least decentralized parts of Ethereum, its builder market.

The builder market was introduced to fairly distribute Maximal Extractable Values (MEV) among validators and avoid validator centralization. As of the time of writing, three builders produced the vast majority (more than 80%) of blocks in Ethereum, creating a concerning centralization factor. However, the community believes that such centralization is okay, arguing that builder centralization will not lead to validator centralization. In this empirical study, we interrogate the causes and implications of builder centralization and challenge this belief that it is acceptable.

Our main finding is that builder centralization has led to a significant loss by validators and, if left uncontrolled, could lead to validator centralization. Moreover, MEV mitigation solutions slated for adoption are affected too because they rely on the builder market as an MEV oracle, which is made inaccurate by centralization.

Our investigation revealed two reasons behind builder centralization. We propose a structural change to the existing MEV supply chain and a solution based on the new supply chain structure. However, future work is required to analyze if the new supply chain structure is sustainable in the long term, which we leave open.