Ethereum Node Operation: What is MEV-Boost, which maximizes operation rewards?
Introduction
Among the many blockchain networks, Ethereum has the largest Total Value Locked (TVL). Since the Merge, Ethereum has transitioned to a Proof of Stake (PoS) consensus mechanism. In PoS, validators must stake ETH to operate a node. Before the Shanghai update, staked ETH could not be withdrawn, but the Shanghai update enabled validators to withdraw their staked ETH at any time.
While this change has lowered the barrier to operating an Ethereum node, it has also increased competition and made it harder for validators to earn substantial revenue. As a result, many validators are turning to MEV-Boost as a way to maximize their earnings. Below is an overview of MEV (Maximal Extractable Value) and MEV-Boost.
What is MEV?
Definition and Examples
MEV (Maximal Extractable Value) is the additional profit that a Proposer (Validator) can earn by including, excluding, or reordering transactions within a block. Specific examples include:
Arbitrage: Taking advantage of price differences across markets within the same block.
Liquidation Clearing: Executing liquidations on DeFi protocols ahead of other participants.
Positive and Negative Aspects
Positive: MEV can improve market efficiency and stabilize on-chain markets by ensuring that opportunities like arbitrage are quickly exploited.
Negative: It can create an environment where transaction originators face “front-running”—an illegal practice in traditional finance—leading to concerns over fairness and user protection.
Introducing MEV-Boost
Purpose
While MEV represents the maximum potential value extractable from a block, MEV-Boost is a tool for validators to capture that value more effectively. It was developed by Flashbots, an R&D organization focused on MEV. MEV-Boost aligns with the Proposer-Builder Separation (PBS) concept, aiming to increase transparency and democratize MEV.
How it Works
MEV-Boost functions like an auction mechanism:
Searchers discover revenue opportunities (e.g., arbitrage) by monitoring the mempool.
Builders create profitable blocks by incorporating transactions from Searchers (and from the mempool) in an optimal order.
Relays receive these potential blocks from Builders, verify their validity, and forward the most profitable bids to the Validator.
Validators (Proposers) select the highest-paying block proposal from among all the Relays connected via MEV-Boost.
Benefits
Transparency & Decentralization: Having multiple Builders compete in an open market can reduce the concentration of power in a single entity.
Higher Profits: Since approximately 90% of Ethereum validators currently use MEV-Boost, it has become almost an essential component for maximizing staking returns.
Relay Characteristics
Relays differ in policies and the Builders they accept:
Public Relays: Open to any Builder.
Private/Internal Relays (e.g., Blocknative): Only allow blocks from certain approved Builders.
Some relays also impose additional rules:
Regulatory Censorship (e.g., Flashbots): May refuse to include certain transactions that violate OFAC regulations.
Ethical Censorship (e.g., bloXroute [ethical]): May exclude what they consider malicious MEV transactions.
When censorship is applied, fewer profitable blocks may be proposed, potentially reducing overall profits.
Current Concerns Around MEV-Boost
Although MEV-Boost brings economic benefits, it also raises several concerns:
Builder Centralization
The primary worry is that if a small number of Builders control block production, they could censor transactions.
This concentration arises because block-building strategies and knowledge are often kept secret, posing a high barrier to entry for new Builders.
Proposed solutions include improving block-construction tooling, MEV burning, MEV smoothing, collaborative block-building, CRLists, and EigenLayer.
While MEV-Boost mitigates some concentration by introducing Relays, Builder decentralization remains a challenge.
Relay Centralization
Relays are also points of potential centralization. Reduced transparency or censorship by a major Relay can undermine the system’s integrity.
Currently, around 33% of all Ethereum blocks pass through relays that engage in some level of censorship.
Validator Centralization
If large Builders vertically integrate with Validators, the market share of these combined entities could become too large, threatening network decentralization.
Ethereum aims to address this by implementing proposer-builder separation (PBS) at the protocol level.
Despite these concerns, active work is ongoing to find solutions that will maintain both economic incentives and the blockchain’s robustness.
How to Use MEV-Boost
While the theoretical foundation is important, practical steps to run MEV-Boost are straightforward thanks to available software:
Install MEV-Boost
Obtain the software from a reputable source like Flashbots.
Connect MEV-Boost to Relays
You can connect to multiple Relays to receive block proposals from different Builders.
In practice, not all validators connect to every Relay because they may not trust some minor Relays, and the extra potential reward may be marginal compared to the risks.
Run the Client and Verify
Ensure everything is running correctly by checking logs or monitoring tools provided by MEV-Boost or your Ethereum client.
Benefits & Trade-offs
Low Implementation Cost: Setting up MEV-Boost is relatively simple and integrates seamlessly with existing validator clients.
Potentially Higher Yield: Validators can significantly increase their block rewards by outsourcing block construction to specialist Builders.
Trust in Relays: The primary downside is that validators must trust Relays to provide valid blocks and honest bids.
Conclusion
MEV-Boost has emerged as a key method for Ethereum validators to maximize their staking returns. By separating the roles of Builder and Validator, it creates a more open, competitive environment for block construction. While challenges related to centralization and censorship persist, many solutions and improvements are under active development. As Ethereum continues to evolve post-Shanghai, MEV-Boost is expected to remain an important tool for validators seeking to optimize their yields in a rapidly expanding ecosystem.
