From theblock by Vishal Chawla

Blockchain research and infrastructure provider Flashbots has introduced BuilderNet, claiming to address the apparent centralization issues plaguing the Ethereum network's block-building process.

Flashbots noted that block builders — those who compile transaction bundles into blocks and submit them to validators for maximal extractable value — are experiencing centralization issues, with a couple of operators currently building over 90% of Ethereum’s blocks.

In other words, the firm explained that a few block builders currently dominate the Ethereum process, compiling transaction bundles and submitting them for MEV, leading to centralization concerns.

MEV refers to the maximum potential value that can be extracted from a blockchain transaction, including arbitrage and front-running of user transactions. Usually, the profits from MEV are captured by block builders on Ethereum, who determine the order of transactions and relay it to Ethereum validators.

To address this, Flashbots wants a collaborative block-building approach that claims to encourage multiple operators to work together to securely share and process order flow. The initiative, known as BuilderNet, launches with Flashbots, block builder Beaverbuild, and Ethereum client provider Nethermind as its initial partners.

“BuilderNet is a decentralized path forward. It aims to neutralize exclusive MEV order flow deals, enhance Ethereum’s censorship resistance, and accelerate decentralization across rollups and apps,” the firm stated.

BuilderNet's strategy features a multi-operator system that allows various parties to manage the same block builder, a major step towards fully decentralizing Ethereum’s block-building process and improving the decentralization of Ethereum-based rollups and applications.

This system will use trusted execution environments to bolster security and performance. According to Flashbots, this arrangement will create a fair environment for MEV searchers and solvers by providing encrypted order flows and enhanced privacy, ultimately leading to a more equitable distribution of MEV over time.

Flashbots clarified that BuilderNet's initial deployment will collaborate with the existing centralized builders from its founding partners, facilitating a step-by-step shift towards a more decentralized structure.