Validator<>Relay Integration

Introduction

When Eth 2.0 came to full life after the merge, it allowed the seperation of concerns of block building and block validating i.e PBS. This resulted in the development of complex MEV supply chains in the Ethereum eco-system. Below, we can have a high level look at the MEV supply chain today:

On a high level, users use a wallet of their choice to send their txs which land in either the public mempool or private order flows. Searchers pick these txs and create profitable bundles which they send to builders to bid for bundle inclusion. Builders then aggregate bundles from various searchers to create a highly profitable block which they send to MEV relays to bid for block inclusion.

The key observation is that, there are two main auctions in the MEV supply chain.

1. The Searcher<>Builder auction where searchers bid to get their bundle included in a builder block. Builders are incentivized to attract more searchers as this can increases the chances of them building a profitable block. To furthur maximize their profits, builders are now integrating with searchers.
2. The Builder<>Validator auction(with relays as intermediaries) where builders bid to get their block included by a validator. Validators propose the highest value block they receive amongst all the relays.

It is interesting to note that validators receive most of the value in all of these auctions.

Problems with current day MEV Auction

The current MEV supply chain is mainly geared towards optimising extracted MEV. With MEV relays now supporting optimistic relaying

How Relays/Builders integrating with validator seems to allow innovation in the block building front

Examples of products which requires Relay/Builder integration with validators

Explain MEV.io and redacted cartel.

Conclusion