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Flashbots has launched BuilderNet, a decentralized block-building network that aims to revolutionize Ethereum and combat the risks of censorship.
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With Beaverbuild and Titan Builder currently constructing around 88% of Ethereum’s blocks, BuilderNet introduces a much-needed solution to enhance decentralization.
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According to Flashbots’ product manager Shea Ketsdever, “It is abundantly clear that the future of block building will be centralized, unless we act now.”
Flashbots introduces BuilderNet, a decentralized block-building network aimed at enhancing Ethereum’s decentralization and combating censorship risks.
BuilderNet Launches to Disrupt Ethereum’s Block Building Landscape
Ethereum’s block-building ecosystem faces significant challenges as centralization has become a pressing concern. With nearly 88% of blocks generated by Beaverbuild and Titan Builder, the risks of censorship and centralized control have prompted Flashbots to launch BuilderNet on November 26. This initiative aims to distribute block construction responsibilities across various participants, effectively disrupting the existing power dynamics.
Addressing Centralization in Ethereum
Ethereum employs a proposer-builder separation model wherein builders create blocks that proposers evaluate for profitability. However, this specialization has inadvertently led to centralization challenges. Vitalik Buterin, co-founder of Ethereum, previously highlighted that unless corrective measures are implemented, the future of block building remains at risk of further centralization. BuilderNet’s introduction seeks to mitigate these risks by fostering collaborative block construction among multiple stakeholders.
The Mechanism Behind BuilderNet
BuilderNet operates using a multioperator system, designed to enable various parties to contribute to the block-building process within a “Trusted Execution Environment.” This collaborative approach facilitates the verification of transactions by all participating protocols. Unlike traditional methods where Maximal Extractable Value (MEV) benefits only a select few, BuilderNet aims to redistribute this value back to users through an innovative “refund rule.” This shift is poised to redefine the financial incentives within the Ethereum network.
Implications for Existing Block Builders
The inception of BuilderNet could significantly alter the operating dynamics for Titan Builder, which has accrued over $40 million in “hidden profit” from MEV-Boost strategies, as noted by Austin King, a founder of Omni Network. By enabling a decentralized approach, BuilderNet could not only increase competition in block building but also diminish the financial advantages currently enjoyed by centralized builders.
Future Developments and Goals
As it currently stands, the first release of BuilderNet is managed collaboratively by Flashbots, Beaverbuild, and Nethermind. However, Flashbots intends to enhance BuilderNet’s permissionless features in subsequent iterations, furthering its goals of censorship resistance and decentralization. This approach marks a significant departure from earlier efforts, such as the unsuccessful launch of the SUAVE initiative in 2022.
Addressing Censorship Risks and Economic Value
Recent data from MEV Watch indicates that approximately 45% of Ethereum blocks have enforced censorship in accordance with U.S. Office of Foreign Assets Control (OFAC) guidelines over the past five months. Flashbots argues that by diversifying block-building processes, BuilderNet can alleviate systemic chokepoints, reducing opportunities for censorship and extraction that harm network participants.
Conclusion
In essence, BuilderNet represents a pivotal step toward decentralizing Ethereum’s block construction framework. By fostering a more open and collaborative environment for block building, Flashbots aims to combat the centralization trends that threaten the integrity of the Ethereum network. As the landscape evolves, stakeholders will need to navigate these changes carefully, seeking opportunities that align with the shifting paradigms in blockchain infrastructure.
