Two Ethereum block builders have handled 88% of all block-building activity on the network in the past two weeks.
Beaverbuild and Titan Builder, two Ethereum block builders, akin to Bitcoin’s miners, fashioned 88% of the network’s blocks in October, sparking centralization concerns in the community. As only two of the builders from a growing list of active ones received the opportunity to confirm transactions, Ethereum participants and users feel it sets a precedent for transaction censorship.
Toni Wahrstätter, a researcher at the Ethereum Foundation, took to X to speak his mind about the state of things on Ethereum. “This trend is primarily driven by the rise of private order flow (XOF), sold exclusively by certain apps,” adding, “XOF reduces genuine competition among builders in the block auction, leading to a smaller pool of shared transactions.”
He added that censorship resistance measures could ensure builders, despite building most of the blocks, will not be able to indulge in transaction censoring. However, he feels that “centralization through XOF could still emerge” despite there being tremendous research into bringing censorship resistance to Ethereum.
“I believe that restricted public access to order flow might encourage colluding builders to take greater risks, potentially resulting in issues with multi-slot MEV,” he concluded.
However, it may not be as dreadful as it seems. Ethereum’s robust consensus mechanism accounts for such occurrences with its Proposer Builder Separation design. Essentially, builders add transactions into Ethereum blocks, with proposers scanning multiple blocks and broadcasting the most profitable ones. Proposers are unable to see the contents of blocks. This model, included after Ethereum moved to the Proof-of-Stake (PoS) consensus, prevents transaction censorship, among other issues like maximum extractable value (MEV) attacks.
Moreover, the Ethereum network has witnessed an increasing validator count, growing over 30% this past year. The number even exceeded a million in June 2024. That increase comes from the institutional adoption of crypto, and especially Ether, after its ETFs launched earlier this year. Beyond that, Ethereum-related narratives like liquid staking and restaking have exploded to become some of the most used use cases in DeFi. In fact, liquid staking has become the largest DeFi use case at the moment.
Ethereum Validator Base Is Continuously Expanding
These reasons, pushing participation in the Ethereum network, ensure its decentralization. Alongside that, its well-designed consensus mechanism keeps centralization issues at bay despite situations like a few builders building all its blocks.
