Co-Evolutionary Framework Models Proposer-Builder Separation Dynamic Equilibrium → Research

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Briefing

The core research problem addressed is the centralization risk inherent in the Proposer-Builder Separation (PBS) framework, which compromises censorship resistance and creates entry barriers for new block builders. The paper proposes a foundational breakthrough by modeling the block production process as a complex adaptive system within a co-evolutionary framework , leveraging agent-based simulation to analyze the strategic interaction of profit-seeking searchers and builders in a two-sided market. The most important implication is the formal identification of a dynamic equilibrium in agent strategies, which is critically dependent on the probability of conflict between transaction bundles, thereby providing a quantifiable metric for assessing the system’s decentralization and incentive stability under varying market conditions.

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Context

Before this research, the prevailing challenge in the PBS ecosystem was the empirical observation that the MEV supply chain was centralizing, exemplified by a small number of integrated builders dominating block creation. This centralization, often facilitated by out-of-protocol auction mechanisms, posed a long-term threat to the fundamental principles of decentralization and censorship resistance. The field lacked a rigorous, dynamic model to predict the strategic choices (builder versus searcher) of rational, profit-maximizing agents under different market pressures.

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Analysis

The core mechanism is the co-evolutionary framework , which treats the PBS market as a Role-Selection Game. Agents in the simulation continuously optimize their strategy → either acting as a builder (bidding in the auction) or a searcher (sharing bundles for collaborative construction) → using a genetic algorithm based on reinforcement learning. This fundamentally differs from previous static or game-theoretic models by allowing strategies to dynamically evolve based on market outcomes. The model demonstrates how the system’s equilibrium point shifts from a searcher-dominant state to a builder-dominant state as the probability of conflicting transaction bundles increases, providing a clear causal link between market friction and centralization.

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Parameters

Top Two Builder Control → 50% – The approximate percentage of Ethereum block creation controlled by the two largest integrated builders.

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Outlook

This theoretical framework opens new avenues for mechanism design, enabling the simulation and pre-testing of proposed decentralized block-building solutions against realistic agent behavior. In the next 3-5 years, this research will inform the development of more robust, incentive-compatible PBS designs by providing a tool to model the critical conflict probability threshold. The ultimate goal is to design a decentralized block-building market that maintains a searcher-dominant equilibrium, thereby mitigating the centralizing forces currently observed in the MEV supply chain.

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Verdict

The co-evolutionary modeling of the PBS market provides a foundational, dynamic framework for designing and validating future decentralized block production mechanisms.

Proposer Builder Separation, PBS mechanism design, Decentralized block building, MEV supply chain, Transaction ordering game, Agent-based simulation, Co-evolutionary framework, Dynamic equilibrium solution, Searcher builder strategy, Block production game, Two-sided market model, Incentive compatibility analysis, On-chain centralization risk Signal Acquired from → arXiv.org