Long before the Ethereum network’s transition to Proof-of-Stake (PoS), censorship concerns have been a bone of contention. To mitigate these risks, Vitalik Buterin has proposed “partial block auctions.”
In the latest blog post, the Ethereum co-founder suggested that builders should have a more limited amount of power to prevent ETH censorship post Merge. Instead of letting them have full rein to construct the entire block if they win an auction, builders would have a more limited amount of power.
Ways of Limiting Block Production Power
According to Buterin, builders will retain enough power to be able to capture almost all maximal extractable value (MEV), as well as other benefits of proposer/builder separation (PBS). But, the co-founder underscored that it should be weakened to “limit opportunities for abuse.”
As such, three potential ways of limiting block production power were presented, which entails: inclusion lists, proposer suffixes, and pre-commit proposer suffixes.
- The Inclusion list paradigm is where the proposer provides an inclusion list essentially consisting of a list of transactions that they demand must be included in the block – unless the builder fills a block completely with other transactions. Despite the simplicity of the design, the builder can still engage in some abuse other drawbacks such as incentive compatibility issues and extra burdens on proposers also exist.
- Proposer suffixes are an alternative construction to enable the proposer to create a suffix for the block. The proposer’s intentions will not be visible to the builder when they build a block, and the proposer would be able to add to the end any transactions that the builder missed. This mechanism also has similar weaknesses.
- In Pre-commit proposer suffixes, the proposer pre-commits to a Merkle tree or KZG on the set of transactions they want to include in the block. The block is created by the builder while the proposer adds the suffix, thereby eliminating the latter’s MEV opportunities but fixing other drawbacks as well.
According to Buterin, both the proposer as well as the builder’s role should be ideally minimal. However, this leaves many other important tasks unallocated, meaning the introduction of a “third actor” in the block production pipeline is inevitable.
Despite the debate surrounding centralization in the wider community, Ethereum’s core developers are not worried. In a pre-Merge developer call in August, the issue was scrutinized at length, and a majority reportedly agreed on the improvement of the current MEV designs to enhance PBS.
After the completion of the Merge, mining data highlighted Ethereum’s significant reliance on Flashbots, which happens to be a single server for building blocks. This was enough to spark centralization concerns over a single point of failure for the ecosystem. Data suggest that 83.5% of all relay blocks have been found to be built by Flashbots alone.