Two Ethereum block builders produced the majority of blocks during the first two weeks of October, raising concerns about centralization on the world’s second-largest blockchain network.
Ethereum block builders Beaverbuild and Titan Builder were responsible for 88.7% of all blocks produced over the past two weeks on the mainnet, according to Toni Wahrstätter, a researcher at the Ethereum Foundation.
Wahrstätter wrote in an Oct. 17 X post:
“This trend is primarily driven by the rise of private order flow (XOF), sold exclusively by certain apps. XOF reduces genuine competition among builders in the block auction, leading to a smaller pool of shared transactions.”
Ethereum Slot share since merge. Source: Toni Wahrstätter
The degree of decentralization on Ethereum is critical to maintaining the protocol’s security. Centralized entities controlling a large percentage of transactions could theoretically prioritize certain transactions, which goes against the decentralized ethos of blockchain technology.
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Not necessarily an Ethereum centralization concern — Bitget Research
Despite the dominance of the two builders, this doesn’t necessarily introduce significant centralization concerns, according to Ryan Lee, chief analyst at Bitget Research.
Lee told Cointelegraph:
“In Ethereum’s underlying design, there is a proposer-builder separation, meaning the proposer cannot see the specific contents of the block proposed by the builder. They only choose the most profitable block from the multiple blocks proposed by builders for validation and broadcasting.”
According to Lee, this means that block builders are unable to prioritize specific transactions. He added:
“Neither builders nor validators can control which transactions are included on-chain or which are excluded, alleviating concerns about centralization in Ethereum.”
Others remain concerned despite Ethereum’s robust consensus model.
Notably, powerful validators exploiting maximal extractable value (MEV) incentives could “disproportionately” influence the network, according to software engineer Kishan Kumar, who wrote in a July 23 blog post:
“For example, if a miner controls a significant percentage of the mining power, they could reorder, include, or exclude transactions within a block to maximize their MEV, undermining the premise of decentralization.”
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Does Ethereum need stronger censorship resistance?
The centralization concerns raised by the dominance of these two block builders could be mitigated through stronger censorship resistance on Ethereum. Wahrstätter added:
“This centralization would be less concerning if strong censorship-resistance guarantees were in place. While Ethereum is making progress on censorship resistance, with substantial research underway, new challenges related to centralization through XOF [private order flow] could still emerge.”
However, the Ethereum validator count rose by over 30% in the past year, driven largely by increased institutional adoption of cryptocurrency, which is seen as a positive sign for the network’s decentralization.
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