# Does Ethereum Really Need PBS? Solving MEV at the app vs the infrastructure layer | Devcon SEA - Channel: [Devcon](https://streameth.org/devcon) - Date: 2025-10-09 - Duration: 08:19 - Topics: Science & Technology - Watch: https://streameth.org/watch/yt-4-QVxNAeIsw - YouTube: https://www.youtube.com/watch?v=4-QVxNAeIsw ## Description In this talk, we will give a brief history of MEV (Maximal Extractable Value) and its influence on enshrining PBS (Proposer Builder Separation) into Ethereum. We will explore the Ethereum community’s evolving perspectives on PBS while looking at successful outcomes, unexpected consequences, and alternate solutions. Ultimately, the talk will provocatively ask: does Ethereum really need PBS at all? Speaker(s): Felix Leupold Skill level: Intermediate Track: Cryptoeconomics Keywords: redistribution Follow us: https://twitter.com/efdevcon, https://twitter.com/ethereum, https://warpcast.com/devcon Learn more about devcon: https://www.devcon.org/ Learn more about ethereum: https://ethereum.org/ Visit the https://archive.devcon.org/ to gain access to the entire library of Devcon talks with the ease of filtering, playlists, personalized suggestions, decentralized access on Swarm, IPFS and more. Devcon is the Ethereum conference for developers, researchers, thinkers, and makers. Devcon SEA was held in Bangkok, Thailand on Nov 12 - Nov 15, 2024. Devcon is organized and presented by the Ethereum Foundation. To find out more, please visit https://ethereum.foundation/ ## Transcript [Music] hi I will have to speedrun this talk so if you want a more relaxed version of it you can scan the QR code or go to Tiny url.com stepcon uh where I gave this talk in a 25 minute version let's start with the problem that I have with proposer Builder separation why I think it's not a good idea there are three main arguments in my point of view first the trust and centralization um problems that it brings onto the E theorum base layer for all types of transactions not even the ones that actually contain me ethereum today is proud to have more than 1 million validators um proposing and validating the chain and you know we are one of the most decentralized chains or the most decentralized chains in the world but at the end of the day if you look at it there's only two very well-known entities beaver and Titan that propose more than 90% of the block contents and how valuable is it really to have a vast validator Network when the most important part the content of the block is decided by two entities moreover PBS adds this trusted component to the supply chain the Mev relay that Builders have to put their faith in and even if we trust the research that's ongoing that's trying to propose ways to enshrine the Mev relay into the base layer and get rid of that trusted component I think there is a couple of issues with that first it adds complexity to the core protocol one thing thing that we're trying to avoid and second of all it's not even clear that if implemented it will find adoption because me is a very latency intense game and any decentralized peer-to-peer gossip based solution is always going to have latency disadvantages and also feature disparity um Builders today want to have bid cancellation as an example they want to make a bid and then cancel it if they if they change their mind and such a feature is simply not possible in an enshrined PBS version because once you gossip the message you cannot take it back and let's not forget that PBS actually maximizes the harm that is inflicted on users in order to win the PBS auction you have to create the block that is extracting the most values value via sandwiching or other types of me attack and thus we've created a system that really favors the worst possible outcome for the user okay enough of a rant what do we do about it first let's maybe St take a step back and try to find out why does me exist in the first place and here really the fundamental reason is that in today's system every token trades at many different prices within the same block here I brought you an example block from a couple of days ago in which ethusd trades at least seven different times with seven different prices and so you'll see sexex arbitragers that are able to access for instance the Unis swap pool at the previous Block's outdated price and then the rest of the block will trade at the new kind of fair equilibrium price you will see Liquidators that are able to get um bad collateral at a fixed liquidation penalty 15 20% below low fair market Price and the rest of the block trading at a different price and last but not least you have sandwiches that front runner user to buy a token at Price a the user then prize it at Price B and the sandwichera C all of these strategies have one thing in common the same asset trades in the same block at different prices and the reason for this is that we basically took our well very well best known standard first come first served mechanisms that work in traditional continuous time markets and deployed on blockchain and this was the key mistake ethereum doesn't have continuous time there's only new information being released every 12 seconds and then it's released in one go and The Ordering of the information within the block is up to a unilateral party the proposer to decide how to order things there and so it's unsafe to deploy any kind of mechanism that works on continuous time on a discret time blockchain so what what's next what what how can we do to fix this well as you might guess we need to come to a point where trading the same asset in the same block should lead to the same execution regardless of trade ordering or put differently we need to get to one price per token per block this design requires to be able to batch trades together so it doesn't work on Raw ethereum transactions instead we need trade intents or just signed limit orders and batch those together in a multi-dimensional auction which can later be cleared at a single price for details on how this looks I encourage you to look look at cow protocol the trading mechanism that powers cow swap which pioneered and implements this mechanism it's processing many billions of dollars in transaction volume every month and is basically proof that this mechanism can work on chain cow protocol provides meev protection for all the cases that I mentioned on two slides ago um we protect swappers by having buyers and sellers um that trade the same asset receive the same price regardless of their ordering and we can even match them together in what is known as Coincidence of Once by making amm part of the batch and treating them like swappers LPS no longer trade at outdated prices but instead get the fair new equilibrium clearing price and liquidations are just stop loss orders which you can also add to the total um liquidity pool and make sure that collateral recovery happens at the most efficient and fair price I want to leave you with this number which is a dune query that you can check for yourself that shows that more than 97% of me today is trading related and that is sandwiches sex sex Arbitrage back running liquidations and those can be vastly reduced if not completely eliminated at the application layer by not using pseudo continuous time mechanisms so I'd like you to join me on my mission to convince this space that we should fix the mechanism rather than making the chain more complex and with that thank you very [Applause] much thanks for that great talk um if any of if you have questions you need to scan the QR code and uh ask the remotely uh I'm going to read out the question for those joining virtually do you have an estimation of reduction in me if only Dex used is cow yeah so right now cow SW focuses on on Swap me protection um I didn't break the number 97% into swap amm resistance and liquidations um so right now it would probably be you know less than 97% but the mechanism itself not the product as it exists today but the mechanism itself would be able to reduce meev by that number that I that I showed um the second the other question is do you think PBS causes centralization or is it correlation I think PBS uh causes centralization um mainly because it's a winner takes all latency game um I wouldn't say it's correlation there's also a reason I couldn't get to that slide because I didn't have enough time for why I think cow protocol or an application specific um auction is not going to cause the same centralization or even if it would not affect kind of all types of transaction so if I want to make a transfer I'm not kind of subject to the censoring that happens today in the in the Builder Market um but yeah for this I would refer to the longer talk yeah um How would do you compare cow with what sella is doing to fix meev on the application layer via Unis swap hooks yeah I would I mean cow is working and out there and live um I think the mechanism is relatively similar um and uh yeah I think that's the the just you can deal with the last question how does cow deal with multiblock me um it it doesn't uh because basically the batch itself has its own um has its own kind of heartbeat its own time and so if you were to try to do multi batch m I think you're running the risk that the whoever solver will win the batch is going to um execute the trade before you so so there's no real incentive for you to to to censor or try to delay execution to another batch thank you so much thank you very much [Applause]