Builders & The Structured Evolution of Ordering Markets

Why PBS? The Key Mechanism Solving Centralization vs Efficiency

PBS aims to make ordering rights transparent and competitive—instead of controlled by single validators.

Past architectures suffered several key issues:

• Centralized ordering power: Large validators or mining pools had stronger MEV extraction abilities—creating unfair advantages.
• Huge technical barriers: Regular validators couldn’t build complex blocks—letting resource-rich actors monopolize MEV.
• Higher user costs: Most front-running or sandwich attacks stemmed from lack of transparent ordering.

PBS outsources block construction to professionals—moving ordering into a fairer bidding environment.

Builder’s Role: The “Order Engineer” On Chain

Builders are core to PBS—they receive, analyze, and assemble transactions from all parties to maximize total block value.

Builders play three key roles:

1. Receive Bundles Submitted by Searchers

Builders accept transaction bundles containing arbitrage or liquidation strategies from searchers—and verify their legality/profitability.

2. Simulate & Evaluate Profitability of Different Orders

Builders run multiple rounds of simulation on all transaction combinations—creating profit models that include:

• Multiple arbitrage paths
• Liquidation rewards
• Sandwich or frontrunning opportunities
• Maximizing intra-block gas profits

3. Construct Optimal Bid Blocks & Submit to Validators

Finally, builders package optimized blocks and bid them to validators—the highest bid wins.

This shifts ordering power from “who produces blocks” to “who offers the highest-value block.”

PBS Market Structure: Division of Labor & Value Flow On Chain

PBS turns on-chain ordering into multi-layer collaboration.

The complete system includes four roles:

• Searcher: Discovers MEV profits & submits bundles
• Builder: Assembles transactions & builds optimal blocks
• Relayer: Transmits blocks between builder & validator (partly responsible for verification)
• Validator/Proposer: Ultimately selects which block gets executed

Structure:

Searcher → Builder → Relayer → Validator

This setup makes ordering a public competition—while reducing validator burden around complex MEV algorithms.

Economics of Ordering: How Is Value Distributed?

PBS redefines not only processes but also value distribution on-chain.

1. How Is Value Shared?

MEV profits are usually split among:

• Searchers (strategy executors)
• Builders (integrators/optimizers)
• Validators (block proposers)

Different chains have varied mechanisms—but most follow winner-takes-all pricing or competitive bidding models.

2. How Do Builders Maximize Extraction?

Builders typically increase revenue by:

• Combining multiple MEV types (arbitrage + liquidation + sandwich)
• Optimizing gas fee ordering
• Integrating mempool data with private order flow
• Using reinforcement learning models for optimal sequencing logic

3. How Do Validators Choose Blocks?

Validators typically select:

• The highest-profit block (highest bid)
• Blocks verified by trusted relayers

This lets validators benefit from MEV without understanding its complexities.

PBS Governance & Risks: Balancing Decentralization with Efficiency

While PBS solves many problems—it introduces new challenges too.

Common risks include:

1. Builder Centralization

Block construction demands heavy compute/data/MEV modeling—potentially leading to a few builder oligopolies.

2. Relayer Monopoly

Some ecosystems see just a handful of relayers controlling the market—hurting overall transparency.

3. Insufficient Ordering Transparency

Private mempools/hiding bundles make it hard for regular users to know how their trades are ordered.

These challenges spur development of:

• Decentralized builder networks
• Open ordering protocols
• Auditing tools enhancing transparency

Why Will PBS Become Fundamental Blockchain Infrastructure?

PBS isn’t just technical optimization—it’s foundational for future blockchain economies.

Reasons include:

• As MEV grows, ordering complexity exceeds what typical validators can handle
• Specialization in block construction reduces centralization risk
• Fair ordering cuts user costs & attack surfaces
• It lays groundwork for advanced protocols (user protection, private transactions, intent models)

The future on-chain economy won’t rely on single-validator ordering—but will be built on builder-driven competitive ordering markets.