Proposer-Builder Separation and Relays

After Ethereum moved to proof-of-stake, a small validator chosen at random gets to propose the next block — but building the most profitable block requires scanning the mempool for arbitrage and liquidation opportunities, a specialised job most validators can't do well. Proposer-builder separation (PBS) splits the two roles: specialist builders compete to assemble the highest-value block, and the proposer just picks the best bid and signs it, without ever seeing its contents in advance.

The connective tissue is a relay: a trusted intermediary that receives full blocks from builders, verifies they're valid and pay what they claim, and forwards only a blinded version to the proposer. The proposer commits to the block sight-unseen, trusting the relay's honesty, then the relay reveals the full contents once the signed header is public. This prevents the proposer from stealing the builder's ideas after seeing them.

Worked example. A builder assembles a block containing a large arbitrage trade worth 2 ETH in profit and bids 1.8 ETH to the proposer to win the auction. The relay checks the bid is real, forwards a blinded header, the proposer signs blind, and only then does the block's contents become public — the proposer collects 1.8 ETH for a block it never inspected.

In practice, most Ethereum validators today run software like MEV-Boost, which automates this whole auction: it queries multiple relays simultaneously, compares bids, and passes the highest one along, so an ordinary home validator earns roughly the same block value as a large professional operator would. The tradeoff is that this concentrates trust in a handful of relay operators, which is why some relays additionally promise not to censor transactions and publish their filtering policies openly.