Ethereum News Today: Ethereum MEV Arbitrage Exacerbates Centralization as 80% of Blocks Controlled by Two Entities

New research highlights growing concerns that Ethereum’s Maximal Extractable Value (MEV) arbitrage mechanisms are exacerbating network centralization. The study, published on July 24, 2025, reveals that arbitrageurs exploiting price discrepancies between centralized and decentralized exchanges are forming exclusive contracts with block builders, creating monopolistic tendencies that undermine Ethereum’s decentralized ethos [1]. These arrangements, which concentrate power among a small group of entities, raise alarms about the long-term security and fairness of the network.

The research points to a market dominated by three block builders—beaverbuild, Titan, and rsync—which collectively control the majority of Ethereum’s block-building activity. Two of these builders have integrated their own arbitrageurs, enabling them to capitalize on latency and information asymmetry to front-run smaller participants. This vertical integration fosters monopoly pricing and increases vulnerabilities to censorship and commitment attacks, according to the analysis [1]. The study underscores that such practices create economies of scale, effectively sidelining smaller searchers and validators, further entrenching centralization.

Ethereum’s Proposer-Builder Separation (PBS) model, introduced to enhance censorship resistance by decoupling block proposal and construction, has instead inadvertently concentrated power. Approximately 80% of blocks are now proposed by just two entities, skewing the playing field and disadvantaging smaller participants [1]. This dynamic contradicts PBS’s intended goal of decentralization, prompting calls for systemic reforms. Pseudonymous researcher Malik672 advocates for democratizing block building by allowing thousands of participants to contribute, while Ethereum co-founder Vitalik Buterin suggests technical solutions, such as limiting access to on-chain data used for complex trades [1].

The centralization of MEV arbitrage poses significant risks to Ethereum’s foundational principles. Exclusive agreements between searchers and builders could lead to transaction exclusion or reordering, undermining fairness and network resilience. The research emphasizes that unaddressed centralization may erode trust in Ethereum’s security and governance. Proposals to mitigate these risks include broader participation in block building, protocol upgrades, and technical interventions to curb MEV exploitation.

Stakeholders, including developers and validators, are urged to prioritize decentralization in upcoming governance decisions. Balancing MEV profitability with equitable access to block-building opportunities will be critical to maintaining Ethereum’s integrity. Without proactive measures, the network risks ceding its decentralized advantages to a handful of dominant players, jeopardizing its long-term sustainability.

Source: [1] [Research Suggests Ethereum MEV Arbitrage May Contribute to Network Centralization Concerns July 24, 2025] [https://en.coinotag.com/research-suggests-ethereum-mev-arbitrage-may-contribute-to-network-centralization-concerns/]