How Proposer-Builder Separation Could Reshape Ethereum's Future Architecture

Proposer-Builder Separation (PBS) represents a fundamental shift in how Ethereum processes transactions and builds blocks. Rather than having validators handle both roles simultaneously, PBS divides block creation into two specialized functions: builders that assemble transactions and proposers that validate and finalize blocks. This architectural innovation emerged as part of Ethereum’s roadmap toward greater scalability and security, with implementation anticipated around 2024 or beyond.

The Core Problem PBS Solves

In traditional Ethereum under Proof of Stake, validators wear multiple hats—they order transactions, select which ones get included, and propose complete blocks. This concentration of power creates opportunities for value extraction through strategic transaction ordering. Proposer-builder separation decouples these responsibilities, introducing competitive dynamics where specialized actors excel at their specific tasks rather than trying to optimize everything at once.

How Proposer-Builder Separation Actually Works

Under the PBS model, the workflow becomes distinctly segmented. Block builders monitor the mempool, validate transactions against protocol requirements (gas limits, nonce sequence, execution), and arrange them in an optimized order. They construct a complete block body containing transaction data and sequence logic, then present this body to block proposers as a finished product.

Block proposers receive these pre-built block bodies and wrap them with necessary metadata—parent block hash, timestamp, and other header information. They verify the integrity of what builders created, ensuring nothing malicious slipped through. This separation means proposers can focus purely on validation while builders compete on efficiency and fairness.

PBS and the MEV Challenge

Maximal Extractable Value (MEV) has become increasingly controversial in Ethereum’s ecosystem, particularly within DeFi protocols. Validators can profit by controlling transaction order—frontrunning trades, sandwiching transactions, or excluding certain orders. Proposer-builder separation doesn’t eliminate MEV but redistributes it between the two roles.

Since builders now control transaction ordering, they become the primary MEV extractors. This creates interesting dynamics: builders must compete with each other to offer proposers attractive block opportunities, potentially leading to fairer MEV distribution. Competition among builders could suppress the most predatory practices while new equilibrium points emerge. However, PBS alone won’t solve MEV entirely—it transforms the problem rather than erasing it.

Complementary Scaling: PBS Meets Danksharding

Proposer-builder separation works best alongside other scaling innovations. Danksharding, Vitalik Buterin’s approach to sharding in Ethereum 2.0, splits the blockchain into multiple parallel chains processing transactions simultaneously. Each shard contributes to total throughput while remaining independent.

Together, PBS and Danksharding create a powerful combination: Danksharding multiplies raw capacity through parallelization, while proposer-builder separation optimizes how that capacity gets utilized and who benefits from transaction ordering. One scales through volume; the other through efficiency and fairness.

What Proposer-Builder Separation Promises

The theoretical benefits are substantial. Specialization enables optimization—builders focus entirely on constructing the best possible blocks; proposers focus purely on validation. This division of labor should improve overall network performance.

Decentralization expands because the barrier to entry drops. You don’t need to be a skilled validator to participate in block creation; you could be a builder optimizing transactions or a proposer evaluating their quality. MEV dynamics improve through builder competition, potentially yielding fairer rewards and fewer frontrunning attacks. Network efficiency gains follow naturally as competition drives resource optimization.

The Real Challenges Ahead

Despite the promise, significant obstacles remain. Adding complexity introduces new attack vectors and coordination challenges. Builders and proposers must communicate reliably without creating latency bottlenecks or opportunities for collusion.

Centralization risks emerge if high barriers to entry—computational costs, technical expertise, economies of scale—create situations where only large, sophisticated builders dominate block creation. The network could fragment into powerful builders controlling supply and proposers with limited choices.

MEV redistribution, not elimination, means new extraction strategies will emerge under PBS. While frontrunning might decrease, builders could develop novel mechanisms to capture value in different ways. Solving these issues requires ongoing research and sophisticated incentive design.

Incentive alignment poses perhaps the toughest challenge. How do you fairly compensate both builders and proposers? The payment mechanisms must reflect actual value contribution while preventing strategic manipulation. As MEV dynamics shift, these incentives require constant recalibration.

Proposer-builder separation stands as a crucial piece in Ethereum’s evolution—not a complete solution, but a meaningful architectural improvement addressing both scalability and MEV concerns through creative role separation.