MEV Builders in Ethereum

Updated 8 August 2025

MEV Builders are specialized agents in Ethereum's Proposer-Builder Separation system that use both public and private order flows to maximize extractable value.
They deploy advanced auction strategies and bid dynamically by leveraging latency and exclusive data signals to influence block ordering and profitability.
Their concentrated market presence and integration with searchers raise centralization risks, impacting fairness, censorship resistance, and the network's long-term security.

MEV builders are specialized entities in Ethereum’s Proposer-Builder Separation (PBS) system responsible for constructing and bidding on blocks with the aim of maximizing Maximal Extractable Value (MEV). They use private and public order flows to optimize block contents and employ advanced auction strategies, with actions that have significant implications for decentralization, fairness, and protocol security.

1. Proposer-Builder Separation and the Role of Builders

The PBS model separates the duties of proposing a block (performed by validators/proposers) from constructing the executable block payload (performed by builders). Builders aggregate transactions from public mempools and private order flow channels and produce assembled blocks, which they then submit as bids to proposers via relays within a high-frequency auction—typically referred to as the MEV-Boost auction (Jensen et al., 2023, Wang et al., 16 Oct 2024).

This separation is motivated by the intent to democratize access to block building, mitigate centralized MEV extraction, and allow sophisticated block construction techniques to be used by specialized agents without requiring validators to perform these tasks. However, this architecture creates an environment in which builders have substantial influence over transaction ordering, inclusion, and MEV extraction. This paradigm is now dominant in Ethereum, with more than 90% of blocks being built via MEV-Boost (Yang et al., 2 May 2024, Öz et al., 18 Jul 2024, Wu et al., 24 Dec 2024).

2. MEV-Boost Auction Structure and Builder Market Dynamics

The MEV-Boost auction is an English-style dynamic auction, where builders submit their blocks, each accompanied by a bid reflecting the net value extractable from including or ordering specific transactions (Wu et al., 2023). This structure creates a rich strategic landscape:

Bid Composition: Each builder's bid is determined by combining a public MEV signal $P(t)$ from observable mempool activity and a private/exclusive order flow signal $E_i(t)$ sourced through private RPCs, searchers, and exclusive relationships (Öz et al., 18 Jul 2024, Janicot et al., 26 May 2025). The general bid function is:

$s_i(x_{i,t}, m) = P(t) + \lambda_i(m) \cdot E_i(t)$

where $\lambda_i(m)$ is a meta-strategy parameter determining aggressiveness.

Strategic Timing: Builders deploy multiple bidding strategies, including so-called naive (true-valuation), adaptive (incremental), last-minute (sniping), and bluff (bait-and-switch) approaches. Latency plays a pivotal role; lower-latency builders can react to the latest MEV opportunities and edge out competitors, leading to a measurable win-rate advantage (Wu et al., 2023).
Auction Outcomes and Profit Margins: Empirical data show a small set of dominant builders consistently produce the majority of blocks, with profitability tightly linked to exclusive order flow and advanced block-packing strategies (such as top-of-block packing for exclusive opportunities) (Öz et al., 18 Jul 2024). Profit margins and win rates correlate strongly with both order flow diversity and exclusivity.

3. Order Flow, Private RPCs, and Centralization

Order flow is the single greatest determinant of builder competitiveness:

Public vs. Private Order Flow: While all builders have access to public order flow, exclusive and high-value opportunities increasingly originate via private RPCs and direct searcher relationships. The majority of block value (up to 54.59%) is attributed to private order flows, even though these constitute a minority of transactions by count (Wang et al., 16 Oct 2024, Yang et al., 2 May 2024).
Exclusive Channels and Diversity: Builders with access to a diversified and exclusive set of order flows—measured via Shannon entropy and exclusivity indices—enjoy a substantial edge. Diversity insulates against the volatility of any one signal; exclusivity increases the average value per transaction (Öz et al., 18 Jul 2024).
Order Flow Auctions and Private RPCs: As public mempool usage has plummeted (down to 20% for DeFi), Order Flow Auctions (OFAs) managed via private RPCs have become central. OFA design (fee structure, permissioned vs. permissionless searcher access, per-block vs. per-transaction fees) directly shapes which builders win blocks and at what cost (Janicot et al., 26 May 2025). Non-distortionary fee structures and efficient rebate mechanisms (e.g., MEV Blocker) are empirically superior for inclusion speed and builder profitability.

4. Builder Strategies and Multi-Block MEV

Builders pursue both single-block and multi-block MEV strategies:

Single-Block MEV: This includes classic arbitrage, liquidation, and sandwich attacks whereby builders insert, optimize, or reorder transactions for maximum profit within one block (Wu et al., 24 Dec 2024, Mizrach et al., 6 Aug 2025). The probability of achieving a favorable block position (e.g., first quartile) is influenced by gas fees, order type, and presence of MEV characteristics.
Multi-Block MEV (MMEV): Builders may aim to secure consecutive block space to execute more advanced strategies, such as creating artificial momentum in AMM pools. Empirical evidence suggests "super-linear" bidding—where average per-slot payments increase with sequence length—is present, but sustained sequences are rarer than predicted under random assignment, and systematic pursuit of multi-block MEV is not consistently observed (Jensen et al., 2023, Stichler, 22 Jan 2025).

For example:

$\text{Average Payment}_\text{seq} \approx 0.05\text{ETH} + k \cdot (\text{seq length})$

where the per-slot payment increases modestly with longer sequences.

Integration and Latency Advantages: Integrated builders (operating trading firms with direct order flow exposure) have a dominant-strategy equilibrium closer to a second-price auction, conferring lasting structural advantages over neutral (non-integrated) builders who operate in a first-price environment. Latency benefits allow fast builders to avoid the winner’s curse and further distort competitive outcomes (Pai et al., 2023).

5. Centralization Pressures, Market Structure, and Systemic Risks

The Ethereum builder market is empirically oligopolistic:

Market Share Concentration: Across recent months/years, two to three builders are responsible for the vast majority (80–95%) of blocks (Yang et al., 2 May 2024, Wu et al., 24 Dec 2024, Mizrach et al., 6 Aug 2025). This centralization is sustained by feedback between exclusive order flow capture and block win rates, creating a chicken-and-egg dynamic.
Barriers to Entry and Subsidization: Access to private order flow is gated by reputation and market share thresholds (often ≥1%). New entrants face costly subsidy requirements (e.g., 1.4 ETH or more) simply to establish sufficient credibility and access, reinforcing incumbent builder dominance (Yang et al., 2 May 2024, Öz et al., 18 Jul 2024).
Vertical Integration and CEX–DEX Arbitrages: The integration of searchers and builders (e.g., Wintermute–rsync, SCP–beaverbuild) leads to a strategic equilibrium where searchers accept lower profit margins to secure prioritization, builders gain competitive block-winning edge, and overall MEV extraction becomes concentrated in a few hands (Wu et al., 17 Jul 2025). Exclusive partnerships have a direct and statistically robust effect on builder market share and profitability (Öz et al., 18 Jul 2024).
Implications for Decentralization and Censorship Resistance: The sustained centralization poses risks to Ethereum's core ethos; it increases the probability of censorship and collusion and reduces revenue for proposers (validators) due to noncompetitive bidding practices. High centralization also undermines the credibility of the builder market as an "MEV oracle," reducing the effectiveness of protocol-level MEV mitigation schemes (Yang et al., 2 May 2024, Wang et al., 16 Oct 2024).

6. Adverse Network Effects: Transaction Reordering, Sandwich Attacks, and Systemic Costs

MEV builders exert profound effects on block ordering and user experience:

Transaction Reordering: Builders routinely reorder transactions, especially prioritizing DEX and MEV-labeled orders. The marginal effect of being identified as MEV-related or as a sandwich (front-run/back-run) order is extremely high: e.g., front-run transactions are 82.3% more likely to be placed in the first block quartile (Mizrach et al., 6 Aug 2025). The result is a transaction ordering landscape heavily skewed in favor of MEV extraction.
Sandwich Attacks: With more than one sandwich attack per block on average, sandwiching has become a baseline event. Victims receive systematically worse trade outcomes and collectively pay an "insurance premium" (in excess gas) estimated at ~$14 million per month (Mizrach et al., 6 Aug 2025).
Economic Subsidization: Gas fees paid in an attempt to secure favorable block positions not only subsidize builders' profits but also form nearly 15% of the MEV payments relayed to validators. Thus, users collectively pay for the privilege of not being displaced in builders' blocks.

7. Protocol, Market, and Design Implications

Current and proposed ecosystem reforms address, but do not fully resolve, centralizing incentives:

Order Flow Auctions and Private Pools: The move towards private RPCs and OFAs seeks to reduce user exposure to front-running and to redistribute backrun value to users. Nevertheless, unequal access, permissioned per-transaction structures, and per-block vs. per-tx fees materially affect builder competitiveness and user outcomes (Janicot et al., 26 May 2025).
Auction Format and Strategy Diversity: Proposals to shift to sealed-bid or second-price-like auctions (e.g., via SUAVE, in-protocol inclusion lists) are being explored to decrease latency advantages and level barriers to entry, though trade-offs around trust, relay integrity, and market efficiency remain (Öz et al., 18 Jul 2024, Wu et al., 24 Dec 2024).
Execution Tickets and Dynamic MEV Extraction Rates: Designs such as Execution Tickets (ETs) and dynamic protocol-level MEV extraction parameters allow for partial or full protocol capture of MEV (Burian et al., 21 Aug 2024, Braga et al., 24 Feb 2024). However, in practice, advantages conferred to capital-rich large investors or skilled builders (with low capital costs) remain dominant, and risk preferences further limit decentralization.
Potential Reforms and Open Challenges: Suggested reforms include enforcing gas-fee priority, adopting private transaction pools, using Trusted Execution Environments (TEEs), and on-chain self-regulation (reputation systems, fee escalators). Each faces limitations related to operational complexity, trust requirements, scalability, and systemic risk (Ramos et al., 2023, Wu et al., 24 Dec 2024). Empirical results show that current mitigation mechanisms (e.g., MEV-Share, watermarking) are hampered by centralization of order flow and persistent trust problems.

Table: Determinants of Builder Competitiveness

Determinant	Impact on Winning Rate	Impact on Profit Margin
Exclusive Private Order Flow	High	High
Order Flow Diversity (Entropy)	High	Medium/High
Latency/Integration	High	High
Vertical Integration (Builders/Searchers)	Very High	High
Auction Fee Model	Medium	Medium/Low

Exclusive private order flow, vertical integration, and latency advantages confer consistent winning advantages and higher profit margins to dominant builders. Diversity in order flow insulates against volatility, and non-distortionary fee models further benefit builder revenues.

MEV builders have evolved into pivotal agents that shape the allocation and extraction of value in Ethereum's block production. While their optimization strategies have increased the theoretical efficiency of MEV capture, the resulting concentration of market power, increased user costs, and ongoing centralizing feedback loops present a significant challenge to network decentralization, user fairness, and long-term system security (Wu et al., 24 Dec 2024, Wang et al., 16 Oct 2024, Öz et al., 18 Jul 2024, Mizrach et al., 6 Aug 2025).