MEV Supply Chain Explained: Searchers to Validators
The MEV supply chain connects users, searchers, builders, relays, and validators into one pipeline. Learn how each role works and what's changing.
Key takeaways
- The MEV supply chain is the structured pipeline through which value is extracted from transaction ordering, divided among five specialized roles: users, searchers, builders, relays, and validators.
- Proposer-Builder Separation (PBS) is the architectural principle that created the supply chain, separating block construction from block proposal and enabling a competitive market for each.
- MEV-Boost is the off-chain implementation of PBS that currently handles the majority of Ethereum block production, operating through trust-based relay infrastructure rather than protocol-level guarantees.
The MEV supply chain is the end-to-end pipeline through which Maximal Extractable Value is identified, captured, and settled on a blockchain. It spans five specialized roles, including users, searchers, block builders, relays, and validators – each with a distinct function in determining how transactions are ordered and who profits from that ordering.
What makes this pipeline worth understanding is the economic reality it creates. Every DEX trade, every liquidation, every token swap passes through this infrastructure. Most users never see it.
What Is the MEV Supply Chain?
| In short: The MEV supply chain is the structured set of roles and processes that together extract value from transaction ordering on a blockchain. Rather than a single actor capturing MEV, the process is divided among specialized participants, each handling a part of the pipeline, from identifying opportunities to producing and publishing the final block. |
On Ethereum today, this pipeline operates largely through MEV-Boost, a middleware tool built by Flashbots that connects validators to a competitive market of block builders via relays.
As of 2025, roughly 90% of Ethereum blocks are built through this system, according to data cited by Plisio Research, meaning the vast majority of the network's block production runs through an off-chain, trust-based infrastructure rather than natively within the protocol.
How the MEV Supply Chain Evolved
| In short: The MEV supply chain evolved in two distinct phases: a chaotic pre-Merge era where miners extracted value directly, and a post-Merge era where Proposer-Builder Separation formalized extraction into a structured, multi-role pipeline. |
The shift did not happen overnight. It emerged as Ethereum's consensus mechanism changed and economic competition for block space intensified.
MEV Before Ethereum’s Merge
Before September 2022, Ethereum used proof-of-work. Miners were responsible for both building and proposing blocks. That gave them direct control over transaction ordering and, therefore, direct access to MEV.
Early MEV extraction was chaotic. Miners and bots competed in the public mempool through priority gas auctions: bots would front-run profitable transactions by submitting the same trade with a higher gas fee, triggering bidding wars that congested the network and extracted value from ordinary users.
Flashbots emerged in early 2021 to address this by creating a private communication channel between searchers and miners, reducing mempool spam and organizing MEV extraction into a more structured, if still off-chain, system.
The Rise of Proposer-Builder Separation (PBS)
After The Merge, Ethereum transitioned to proof-of-stake. Validators replaced miners, but the incentive to profit from transaction ordering remained unchanged.
Proposer-Builder Separation (PBS) formalized what had been an informal practice. It separated the role of building a block (selecting and ordering transactions for maximum value) from the role of proposing it (publishing the block to the network). Validators no longer needed to be expert block builders. They could outsource that task to a competitive market.
Flashbots released MEV-Boost as the practical implementation of off-chain PBS. Validators register with MEV-Boost, connect to one or more relays, and simply accept the highest-paying block they receive.
The result: a more organized supply chain with clearly defined roles, but also new points of centralization.
Why the MEV Supply Chain Matters for Ethereum
| In short: The MEV supply chain matters because it directly shapes validator economics, user transaction outcomes, and network-level centralization. Thus, it is one of the most consequential layers of Ethereum's infrastructure, even though most users never interact with it directly. |
For validators, MEV-Boost adds roughly 10–30% on top of base staking rewards, equivalent to an additional 0.28–0.83% APR at current network parameters, according to KuCoin's 2026 Ethereum staking analysis. Running MEV-Boost is essentially the default rational choice for any validator optimizing yield.
For users, the supply chain is what makes sandwich attacks and front-running structurally possible. The public mempool, where transactions sit before confirmation, is visible to every searcher bot running on the network. The supply chain determines who sees your transaction, when, and what they can do with it.
For Ethereum as a system, the supply chain represents a concentration risk. Block building has consolidated among a small number of specialized builders with access to private order flow, and relay infrastructure runs on trust rather than cryptographic guarantees.
The European Securities and Markets Authority (ESMA) flagged centralization at the relay and builder levels as an observed drawback of MEV-Boost in its 2025 risk analysis of DeFi markets.
Key Participants in the MEV Supply Chain
| In short: The MEV supply chain is made up of five distinct roles: users, searchers, block builders, relays, and validators. Each operates at a different stage of block production, and each has a different economic incentive. |
Users and wallets
Users are the starting point. Every transaction a user submits, like a token swap, a loan liquidation trigger, or an NFT purchase, enters the pipeline and becomes potential input for MEV extraction.
The key decision at this stage is where to send the transaction. Submitting to the public mempool makes it visible to every searcher scanning the network. Submitting through a private RPC (such as Flashbots Protect or MEV Blocker) routes the transaction directly to builders, bypassing the public mempool and reducing exposure to sandwich attacks.
Flashbots also developed MEV-Share, a protocol that lets wallets selectively disclose transaction data to searchers. In exchange for including the transaction, searchers bid, and a portion of that bid can be rebated back to the user. It reframes MEV from pure extraction to partial redistribution.
Searchers
MEV searchers are the opportunity hunters of the supply chain. They run automated bots that continuously scan the mempool and on-chain state for profitable actions.
Common strategies include:
- DEX arbitrage: Exploiting price differences between liquidity pools
- Liquidations: Executing undercollateralized loan closures on lending protocols
- Sandwich attacks: Inserting transactions before and after a large trade to profit from the price impact
- Backrunning: Placing a transaction immediately after a target trade to capture residual price movement
Once a searcher identifies an opportunity, they assemble a bundle – an ordered set of transactions designed to capture the profit reliably. Bundles are submitted to builders, often with a bid specifying how much the searcher is willing to pay for inclusion.
Competition among searchers is intense. The winning bundle is typically the one that offers the highest payment and has the highest probability of executing without reverting.
Block builders
Block builders are the assembly specialists. They receive transactions from multiple sources and construct a candidate block optimized for maximum revenue.
BytebyByte's note: The block builder is arguably the most consequential and least visible role in the MEV supply chain. Builders don't just slot transactions together. They run continuous simulations to find the ordering that extracts the most value without causing reverts. What makes their position structurally powerful is private order flow: transaction streams that never touch the public mempool. Builders who receive exclusive or preferential order flow from large wallets or apps have a structural edge in every auction. This is the primary driver of builder concentration. When people debate centralization in the MEV supply chain, private order flow is almost always at the core of it.
Builders increasingly rely on private order flow – transaction data sent directly to them by wallets, apps, or order flow auctions, never appearing in the public mempool. Builders with more private flow have richer input and can bid more aggressively in relay auctions.
As of late 2025, relay data showed a small number of builders, including Titan Builder, Beaver Build, and Rsync, accounting for a disproportionate share of winning blocks.
Relays
Relays sit between builders and validators. Their core function is to coordinate the handoff. Builders submit candidate blocks to relays, and relays forward the best bids to proposers.
Flashbots describes relays as a "doubly-trusted" layer, trusted by builders to route their payloads fairly, and trusted by validators to deliver valid blocks. Relays operate on reputation and operational commitment, not protocol-level guarantees.
Relay market share shifted notably by late 2025. Data from relayscan.io showed Ultra Sound relay handling approximately 32.3% of MEV-Boost payloads, Titan Relay at 24.75%, two bloXroute relays combining for roughly 26%, and Flashbots' own relay at just 3.44% of the 7-day window.
The relay layer also carries censorship risk. If a relay applies transaction filters, whether for sanctions compliance, legal caution, or business policy, it can prevent certain transactions from being included in blocks, without any on-chain accountability or transparency.
Validators (proposers)
Validators are the final step. With MEV-Boost active, a validator connects to one or more relays and, when it is its turn to propose a block, selects the highest-paying valid block from the bids it has received.
In practice, validators have become largely passive participants in block production. They simply accept the best offer from a competitive market of builders. The proposer's role is reduced to selecting and signing.
The economic incentive is direct. For large staking operators managing thousands of validators, this yield uplift is significant.
MEV-Boost lifts validator APY from roughly 2.78% (base rate as of mid-2026) to approximately 3.3–3.8% for well-operated nodes, according to KuCoin's staking yield analysis.
How a Transaction Moves Through the MEV Supply Chain
| In short: From submission to finalization, a transaction passes through five sequential stages. Each represents a handoff between roles in the supply chain and each carrying a different risk of value extraction. |
Below is a concrete walkthrough, using a DEX token swap as the example.
Step 1: A user submits a transaction
A user initiates a token swap on a DEX like Uniswap. Depending on their wallet configuration, the transaction either enters the public mempool (visible to all bots) or is routed through a private channel (visible only to selected builders or relays).
Public submission is still the default for most users. At this point, the transaction is live, pending, and readable by every searcher monitoring the network.
Step 2: Searchers identify opportunities
Searcher bots scan the mempool in real time. If a swap is large enough to move the price of a token, a bot may identify a sandwich opportunity or a back-run arbitrage if another pool is now mispriced relative to the swap's expected outcome.
The searcher simulates whether the opportunity is profitable after gas costs and potential reverts, then assembles a bundle specifying the exact transaction order needed to capture the value.
Step 3: Builders create candidate blocks
The searcher's bundle arrives at one or more builders. Builders also receive other transactions, from the public mempool and private channels, and run optimizations to find the block ordering that maximizes total revenue.
The builder then calculates the maximum bid it can pay to the relay (and ultimately to the validator) while still earning a profit from the block's combined MEV and fees. This bid is the builder's offer for blockspace.
Step 4: Relays forward bids
Builders submit their candidate blocks to relays. Relays verify the blocks are valid and confirm the payment is genuine and the transactions won't fail, then forward the best bids to validators running MEV-Boost.
Validators do not see the block's contents at this stage, only the bid amount. This protects builders from having their bundle strategies copied before the block is proposed.
Step 5: Validators propose the winning block
The validator selects the highest valid bid and proposes that block to the Ethereum network. The block is then attested by other validators and finalized.
The user's original swap is included in the block – possibly sandwiched, possibly backrun, possibly protected, depending on where it was submitted and how the builder assembled the block.
Where the Supply Chain Breaks: Key Risks
| In short: The MEV supply chain's three primary failure points are relay centralization, builder concentration driven by private order flow, and censorship risk – all of which stem from the same root cause: critical infrastructure operating outside the protocol on trust rather than cryptographic guarantees. |
Relay centralization
Relays are operational bottlenecks. If a major relay experiences downtime, validators may miss block proposals or be unable to receive competitive bids. If a relay applies censorship filters, those filters propagate across every block produced through that relay.
ESMA's 2025 report on MEV explicitly named centralization at the relay and builder levels as a primary observed drawback of MEV-Boost, noting that it creates both censorship risk and systemic operational exposure.
The relay layer has no on-chain identity. Relays cannot be held accountable by the protocol – only by reputation and market pressure.
Builder concentration and private order flow
The builder market, while competitive in theory, has consolidated around a small number of dominant participants in practice. The driver is a private order flow.
Builders who control exclusive transaction streams from large wallets, apps, or OFA (order flow auction) systems can construct more profitable blocks than competitors relying solely on public mempool data. Higher profits mean higher bids, which means more winning blocks, which attracts more private flow.
When a handful of builders win the majority of auctions, the competitive dynamic that PBS was designed to create breaks down. Block ordering decisions become concentrated, and the transparency of the auction becomes harder to verify.
Censorship risk
Even in a technically competitive builder market, censorship can enter through compliance pressure. Builders or relays operating in regulated jurisdictions may apply transaction filters to avoid including addresses flagged under sanctions programs or anti-money-laundering rules.
In the current supply chain, the censoring entity could be a builder, a relay, or a proposer, and there is no on-chain mechanism to detect or attribute the omission. As ESMA noted, this makes accountability messy and the risk difficult to quantify.
MEV Supply Chain on Solana: How Jito Compares
| In short: Solana runs its own MEV supply chain through Jito, which replicates the core MEV-Boost model – a bundle auction system where searchers pay validators for transaction inclusion priority, but operates within Solana's architecture rather than Ethereum's. |
The parallels are close enough to be instructive, and the differences reveal how chain architecture shapes MEV dynamics.
Jito replicates the MEV-Boost model on Solana. Searchers submit transaction bundles through Jito's Block Engine, which auctions bundle inclusion to validators running the Jito-Solana client – a modified validator software with MEV infrastructure built in. Validators receive tips from searchers in exchange for including bundles alongside target transactions.
As of late 2025, approximately 72% of staked SOL was held by validators running the Jito-Solana client, according to Datawallet's 2026 Solana staking analysis. Jito's reach across the validator set is substantially wider than MEV-Boost's penetration on Ethereum.
For validators, the incentive mirrors Ethereum. Jito MEV tips supplement base staking rewards, which are themselves declining due to Solana's disinflation schedule. As inflation rewards shrink over time, MEV tips become a structurally more important share of validator income.
The key architectural difference is that Solana does not have a traditional public mempool in the same sense as Ethereum. Jito effectively creates a parallel auction layer – a controlled environment where bundles are submitted privately and processed by validators with MEV infrastructure.
→ The result is a more contained version of MEV extraction, though sandwich attacks and front-running still occur within the system.
What's Changing: The Road to Enshrined PBS
| In short: The Ethereum ecosystem's long-term response to the risks above is Enshrined Proposer-Builder Separation (ePBS) – a structural change that would move the PBS auction from off-chain relay infrastructure into the protocol itself. |
EIP-7732, the formal specification for ePBS, has been selected as the consensus layer headliner for Ethereum's upcoming Glamsterdam hard fork, now targeting Q3 2026 after being confirmed in All Core Developers Consensus Call #162. The original H1 target shifted following the Soldøgn interop in May 2026, with the end of August 2026 now cited as the most realistic activation window, according to Everstake's Glamsterdam upgrade overview.
Under EIP-7732, the proposer-builder deal moves on-chain. Builders submit bids and cryptographically commit to block contents. Proposers select the highest bid without seeing what's inside. The payload is revealed only after the block is finalized, reducing the ability to manipulate or front-run builder strategies.
Critically, relays are removed as a trust dependency. The protocol itself handles the auction and payment settlement, eliminating the need for a third-party coordinator that operates on reputation rather than cryptographic guarantees.
Currently, over 88% of Ethereum blocks are constructed through MEV-Boost relays operating outside the protocol, according to Cryptotimes' June 2026 Glamsterdam analysis.
Alongside ePBS, two other developments are shifting supply chain dynamics:
- BuilderNet (Flashbots, December 2024): A decentralized block-building network running in trusted execution environments, built with Beaverbuild and Nethermind. It represents a move away from centralized builder infrastructure, though adoption and its impact on block market concentration are still being evaluated.
- MEV-Share maturation: Flashbots' order flow auction protocol has become a practical mechanism for users and wallets to selectively disclose transaction data and receive a share of the MEV their transactions generate. It does not eliminate MEV, but it begins to shift the narrative from "extraction from users" toward "partial redistribution to users."
MEV is a structural property of any system where transaction ordering has economic value. It cannot be legislated or coded away entirely. The goal is to make it less toxic, less centralized, and less dependent on trust relationships that have no on-chain accountability.
Sources and Further Reading
- Ethereum.org – "MEV and Maximal Extractable Value" https://ethereum.org/en/developers/docs/mev/
- Flashbots – "MEV-Boost: Proposer-Builder Separation for Ethereum" https://boost.flashbots.net/
- Ethereum EIPs – "EIP-7732: Enshrined Proposer-Builder Separation" https://eips.ethereum.org/EIPS/eip-7732
- Flashbots – "MEV-Share Protocol Documentation" https://docs.flashbots.net/flashbots-mev-share/overview
- ESMA – "Second Report on Decentralised Finance" https://www.esma.europa.eu/press-news/esma-news/esma-publishes-second-report-decentralised-finance
- Everstake – "Ethereum Glamsterdam Upgrade Explained" https://everstake.one/resources/blog/ethereum-glamsterdam-upgrade-explained
- Etherworld – "EIP-7732 (ePBS) Selected as Glamsterdam Headliner" https://etherworld.co/eip-7732-epbs-selected-as-glamsterdam-headliner/
- Jito Labs – "Jito-Solana Validator Client" https://www.jito.wtf/validators/
- Flashbots GitHub – "MEV-Boost Repository" https://github.com/flashbots/mev-boost
FAQs About MEV Supply Chain
Not currently by design, but in practice, concentration is a real concern. A single actor controlling a major relay, a dominant builder, and a large validator stake would have significant influence over block production. This is precisely why enshrined PBS is a priority. It removes the relay layer as a controllable chokepoint.
