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Paper 2023/760

Time to Bribe: Measuring Block Construction Market

Anton Wahrstätter, Vienna University of Economics and Business
Liyi Zhou, Imperial College London
Kaihua Qin, Imperial College London
Davor Svetinovic, Vienna University of Economics and Business
Arthur Gervais, University College London
Abstract

With the emergence of Miner Extractable Value (MEV), block construction markets on blockchains have evolved into a competitive arena. Following Ethereum's transition from Proof of Work (PoW) to Proof of Stake (PoS), the Proposer Builder Separation (PBS) mechanism has emerged as the dominant force in the Ethereum block construction market. This paper presents an in-depth longitudinal study of the Ethereum block construction market, spanning from the introduction of PoS and PBS in September 2022 to May 2023. We analyze the market shares of builders and relays, their temporal changes, and the financial dynamics within the PBS system, including payments among builders and block proposers---commonly referred to as bribes. We introduce an MEV-time law quantifying the expected MEV revenue wrt. the time elapsed since the last proposed block. We provide empirical evidence that moments of crisis (e.g. the FTX collapse, USDC stablecoin de-peg) coincide with significant spikes in MEV payments compared to the baseline. Despite the intention of the PBS architecture to enhance decentralization by separating actor roles, it remains unclear whether its design is optimal. Implicit trust assumptions and conflicts of interest may benefit particular parties and foster the need for vertical integration. MEV-Boost was explicitly designed to foster decentralization, causing the side effect of enabling risk-free sandwich extraction from unsuspecting users, potentially raising concerns for regulators.

Metadata
Available format(s)
PDF
Category
Applications
Publication info
Preprint.
Contact author(s)
liyi zhou @ imperial ac uk
History
2023-05-30: approved
2023-05-25: received
See all versions
Short URL
https://ia.cr/2023/760
License
Creative Commons Attribution-NonCommercial-NoDerivs
CC BY-NC-ND

BibTeX

@misc{cryptoeprint:2023/760,
      author = {Anton Wahrstätter and Liyi Zhou and Kaihua Qin and Davor Svetinovic and Arthur Gervais},
      title = {Time to Bribe: Measuring Block Construction Market},
      howpublished = {Cryptology ePrint Archive, Paper 2023/760},
      year = {2023},
      note = {\url{https://eprint.iacr.org/2023/760}},
      url = {https://eprint.iacr.org/2023/760}
}
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