Research indicates growing centralization within Ethereum’s Maximal Extractable Value (MEV) arbitrage sector, posing a threat to the network’s decentralization ethos.
A few dominant players now control the majority of MEV arbitrage activity. This form of MEV involves profiting from price discrepancies between centralized exchanges and their decentralized counterparts.
This concentration of power undermines Ethereum’s commitment to decentralization by creating gatekeepers. These entities exert significant influence over transaction prioritization through their role in the block building process introduced after the network’s migration to proof-of-stake (The Merge).
Block building on Ethereum has become highly centralized. Consequently, a small number of entities essentially control the ordering of transactions, impacting the neutrality of the network and challenging its position as a decentralized public financial platform.
Proposed solutions under consideration include protocol upgrades such as enshrined proposer-builder separation (ePBS), MEV-burn strategies, and initiatives designed to foster a more diverse and competitive ecosystem of block builders to mitigate the associated risks.