Ethereum's Proposer-Builder Separation: Promises and Realities (2305.19037v2)

Abstract: With Ethereum's transition from Proof-of-Work to Proof-of-Stake in September 2022 came another paradigm shift, the Proposer-Builder Separation (PBS) scheme. PBS was introduced to decouple the roles of selecting and ordering transactions in a block (i.e., the builder), from those validating its contents and proposing the block to the network as the new head of the blockchain (i.e., the proposer). In this landscape, proposers are the validators in the Proof-of-Stake consensus protocol, while now relying on specialized block builders for creating blocks with the highest value for the proposer. Additionally, relays act as mediators between builders and proposers. We study PBS adoption and show that the current landscape exhibits significant centralization amongst the builders and relays. Further, we explore whether PBS effectively achieves its intended objectives of enabling hobbyist validators to maximize block profitability and preventing censorship. Our findings reveal that although PBS grants validators the opportunity to access optimized and competitive blocks, it tends to stimulate censorship rather than reduce it. Additionally, we demonstrate that relays do not consistently uphold their commitments and may prove unreliable. Specifically, proposers do not always receive the complete promised value, and the censorship or filtering capabilities pledged by relays exhibit significant gaps.

• The paper analyzes Ethereum's Proposer-Builder Separation (PBS), finding centralization and censorship issues despite block value gains.
• The study reveals substantial centralization among builders and relays, contradicting PBS's goal of decentralizing transaction validation within Ethereum.
• Analysis shows PBS may inadvertently promote transaction filtering, particularly for sanctioned addresses, highlighting a deficiency in censorship resistance.

Overview of "Ethereum's Proposer-Builder Separation: Promises and Realities"

The paper "Ethereum's Proposer-Builder Separation: Promises and Realities" presents a comprehensive paper on the performance and implications of the Proposer-Builder Separation (PBS) scheme implemented in Ethereum following its transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) in September 2022. The paper is conducted by researchers from ETH Zurich, and it explores various facets of PBS, including its adoption, impact on decentralization, censorship resistance, and economic outcomes within the Ethereum ecosystem.

Key Findings

The paper reveals several significant insights:

1. Centralization Trends: The authors investigate the landscape of PBS and find substantial centralization among builders and relays, contradicting one of PBS's primary objectives to decentralize transaction validation. Specifically, a few key players dominate the builder and relay ecosystems, raising concerns about the inherent centralization risks.
2. Block Value and Profitability: The analysis indicates that PBS blocks generally attain higher values than non-PBS blocks. The paper attributes this to the professionalized approach of builders in efficiently optimizing block profitability. Moreover, PBS appears to democratize access to profit-optimized blocks, allowing validators of various scales to compete without significant disadvantages.
3. Censorship Implications: The examination of censorship resistance in PBS demonstrates that the mechanism, contrary to its intended purpose, may actually promote filtering of transactions, particularly those associated with sanctioned addresses. This finding highlights a deficiency in PBS's ability to ensure censorship resistance, implying that the current framework inadvertently facilitates censorship.
4. Relay Reliability: The role of relays as intermediaries in the PBS scheme emerges as a point of vulnerability. The paper finds instances where relays fail to deliver the full promised value to proposers, and some relays do not consistently adhere to their claimed censorship policies. This unreliability presents a significant trust issue within the PBS design.

Implications and Future Directions

The research underscores several implications for the future of decentralized blockchains and Ethereum's development. The observed centralization trends suggest a need for mechanisms that can distribute control more evenly among builders and relays to uphold the decentralized ethos of blockchain technology. Furthermore, the challenges in censorship resistance highlight the necessity for enhanced privacy-preserving techniques and robust policies to prevent undue transaction filtering.

Potential future developments could include protocol-level changes that diminish relay trust requirements and enhance transparency in builder operations. Integrating more stringent measures for enforcing decentralized control and leveraging cryptographic techniques to obfuscate sensitive transaction data could mitigate censorship concerns.

Conclusion

This paper provides an illuminating examination of the PBS implementation in Ethereum, identifying both achievements and shortcomings against its initial objectives. While PBS offers avenues for profitability and competition among a diverse validator base, its contributions to decentralization and censorship resistance remain equivocal. The findings call for continued innovation and rigorous scrutiny as Ethereum evolves with PoS and PBS, ensuring that its decentralized ambitions align with the practical execution of its protocols.