As a seasoned researcher with a keen interest in blockchain technology, I find the launch of Flashbots’ BuilderNet quite intriguing. Having observed the centralization issues plaguing Ethereum for some time now, it’s refreshing to see a solution that aims to address one of its biggest chokepoints: the monopoly of block builders.
Flashbots, a company specializing in blockchain infrastructure, has unveiled BuilderNet – a decentralized network for constructing blocks within the Ethereum system. The goal is to combat censorship and address one of the network’s major bottlenecks.
As a researcher, I’m excited to share that BuilderNet was unveiled on November 26th, with the aim of fostering collaboration among multiple parties in the construction of blockchain components. This initiative is particularly timely, given that approximately 88% of all Ethereum blocks have been constructed by Beaverbuild and Titan Builder in recent weeks.
According to Coinbase’s protocol expert, Viktor Bunin, this development is “extremely significant” because it has the potential to “eliminate censorship” and end exclusive order flow agreements on Ethereum. (X refers to the source or context where the statement was made.)
As a crypto investor, I’m excited to announce that Shea Ketsdever, the product manager at Flashbots, has just revealed that BuilderNet’s initial release is now live on Ethereum’s mainnet! This means it’s readily accessible for improving decentralized sequencing on layer 2 networks. While we don’t have an exact timeline yet, we can expect this solution to be available as a seamless integration “later on.
In Ethereum, a system known as the Proposer-Builder Separation is employed for block creation. Builders generate the blocks, which are then examined by proposers. Often, these proposers select the block that appears to be the most financially beneficial.
Instead of delegating specialized roles, Vitalik Buterin highlighted towards the end of last month that this approach can create issues with centralization.
Flashbots expressed that spreading out the “single-block construction task” among many networks could eliminate potential bottlenecks susceptible to censorship and exploitation for extra fees.
“It is abundantly clear that the future of block building will be centralized, unless we act now.”
Over the past five months, approximately 45% of all Ethereum blocks have been enforced to follow the guidelines set by the U.S. Office of Foreign Assets Control (OFAC), according to data from MEV Watch. This means that these blocks have censored certain transactions in compliance with OFAC regulations.
Fundamentally, every transaction gets added to the subsequent block. However, due to the slower rate at which blocks are added, it provides block creators with extra time to exploit user income through a technique known as “sandwich attacks.
How BuilderNet works
BuilderNet operates with a “multi-party” system, where several entities collaborate in constructing blocks within a “Secure Processing Zone.” This setup enables every participant and user to confirm the legitimacy of transactions.
The concept known as Maximal Extractable Value (MEV), which refers to the highest possible profit gained by network validators by rearranging unconfirmed transactions, could instead be returned to the users. Meanwhile, block creators would be remunerated through a “refund rule.
The change could impact Titan Builder which has racked up over $40 million in “hidden profit” from MEV-Boost, according to one of Omni Network’s founders, Austin King.
Initially, the launch of BuilderNet was managed by three entities: Flashbots, Beaverbuild, and the Ethereum infrastructure company Nethermind.
In upcoming updates, Flashbots aims to make BuilderNet less restrictive, enhancing its resilience against censorship and promoting a more decentralized structure.
In the year 2022, Flashbots had been working on an alternative decentralized system for constructing blocks, known as Single Unifying Auctions for Value Expression (SUAVE), but a comprehensive launch didn’t take place.
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2024-11-27 03:56