Enshrined Proposer Builder Separation in the presence of Maximal Extractable Value

TL;DR

This paper analyzes enshrined Proposer Builder Separation (ePBS) in Ethereum, revealing that while it aims to improve decentralization, it unintentionally increases profit centralization and MEV-driven inequality among block builders.

Contribution

The paper develops a formal framework combining mathematical analysis and agent-based simulations to evaluate ePBS's impact on MEV dynamics and decentralization.

Findings

ePBS significantly increases profit centralization among builders.

95.4% of block value is awarded to proposers under ePBS.

ePBS amplifies incentives for aggressive MEV strategies.

Abstract

In blockchain systems operating under the Proof-of-Stake (PoS) consensus mechanism, fairness in transaction processing is essential to preserving decentralization and maintaining user trust. However, with the emergence of Maximal Extractable Value (MEV), concerns about economic centralization and content manipulation have intensified. To address these vulnerabilities, the Ethereum community has introduced Proposer Builder Separation (PBS), which separates block construction from block proposal. Later, enshrined Proposer Builder Separation (ePBS) was also proposed in EIP-7732, which embeds PBS directly into the Ethereum consensus layer. Our work identifies key limitations of ePBS by developing a formal framework that combines mathematical analysis and agent-based simulations to evaluate its auction-based block-building mechanism, with particular emphasis on MEV dynamics. Our results reveal that, although ePBS redistributes responsibilities between builders and proposers, it significantly amplifies profit and content centralization: the Gini coefficient for profits rises from 0.1749 under standard PoS without ePBS to 0.8358 under ePBS. This sharp increase indicates that a small number of efficient builders capture most value via MEV-driven auctions. Moreover, 95.4% of the block value is rewarded to proposers in ePBS, revealing a strong economic bias despite their limited role in block assembly. These findings highlight that ePBS exacerbates incentives for builders to adopt aggressive MEV strategies, suggesting the need for future research into mechanism designs that better balance decentralization, fairness, and MEV mitigation.