Ethereum News Today: Ethereum MEV Arbitrage Sparks Centralization Fears as Three Builders Control 80% of Block Construction

A recent study has raised concerns that Ethereum's Maximal Extractable Value (MEV) arbitrage practices are exacerbating centralization risks within the network. The research, conducted by COINOTAG and released on July 24, 2025, reveals that arbitrageurs exploiting price discrepancies between centralized and decentralized crypto exchanges are forming exclusive agreements with block builders. These partnerships, the study argues, concentrate power among a small group of entities, undermining Ethereum’s foundational principles of decentralization and fairness [1].

The Proposer-Builder Separation (PBS) model, introduced to enhance censorship resistance by decoupling block proposal and construction, has instead led to a monopolistic landscape. Three block builders—beaverbuild, Titan, and rsync—now dominate over 80% of Ethereum’s block construction. Two of these builders have integrated arbitrageurs who front-run smaller users, leveraging latency and information asymmetry to secure MEV profits [1]. This vertical integration creates economies of scale that marginalize smaller participants and heighten vulnerabilities to censorship and commitment attacks, according to the research.

The study highlights how exclusive contracts between searchers and builders amplify these risks. By prioritizing transactions that maximize their own profits, dominant builders can selectively exclude or reorder transactions, eroding the network’s fairness. This dynamic not only harms smaller players but also weakens Ethereum’s overall security, as a concentrated power structure increases the potential for coordinated attacks or manipulation [1].

Ethereum co-founder Vitalik Buterin has proposed mitigating strategies, including the development of new infrastructure and restrictions on onchain data access to curb exploitative MEV practices. Pseudonymous researcher Malik672 has advocated for democratizing block building by enabling broader participation, arguing that thousands of contributors could restore decentralization. These proposals aim to address the unintended centralization effects of PBS while preserving the network’s security [1].

The centralization of MEV arbitrage poses a critical challenge for Ethereum’s future. As the network grows, balancing MEV profitability with decentralization will require careful governance. Researchers urge stakeholders to consider protocol upgrades that discourage exclusive builder-searcher agreements and promote equitable access to MEV opportunities. Without intervention, the concentration of power among a few builders could further entrench inequalities, undermining trust in the network’s neutrality [1].

The findings underscore the urgency of reevaluating block-building practices. By fostering a more inclusive and transparent system, Ethereum can mitigate the risks of censorship, monopoly pricing, and commitment attacks. Developers, validators, and the broader community are being called upon to prioritize solutions that align with Ethereum’s decentralized ethos.

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