The Ethereum network is a distributed consensus platform that allows users to write and compute smart contracts in a distributed manner. Smart contracts are essentially Turing complete programs that are available at a unique address of the network. When the smart contract is run as part of a transaction, the result and the current state of the contract are stored in a verifiable consensus that is agreed upon by the entire network of nodes.
Ethereum will soon transition from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus protocol. This transition has been worked on for years and is happening in multiple steps.
Ethereum’s consensus is currently secured by miners who run hardware optimized to solve the proof of work challenge. The move from a PoW to a PoS consensus means the network becomes secured by validators, who stake security deposits of 32 ETH and vote to come to a consensus on the state of the beacon chain. Validators are economically incentivized to do this via rewards for good behavior and penalties (slashing) for downtime or malicious behavior.
Block Construction in Eth2
Manifold Finance enables and provides access to high-value transaction pools on EVM-compatible chains, through our infrastructure: SecureRPC. We aggregate multiple endpoints along with maintaining direct access to disparate mining pools/validator nodes.
In short, we believe that access to transaction sets will be the defining advantage for block builders in Ethereum2. The ultimate goal for a block builder is to build the highest-value block that it can. To do this, it needs to build from high-value transactions. The combined value of MEV opportunities at any point in time will in general outweigh any delta that could be obtained by smart block building algorithms, so access to a high-value transaction pool will be the defining advantage for block builders. The only logical choice is to send it to the single builder that already has the highest-value transaction pool. And as searchers are financially driven, they are all likely to make the same choice.
This appears to create a positive feedback situation, leading to the end result of a single large high-value transaction pool, and a single major builder. Smaller transaction pools may survive if backed by validators willing to sacrifice financial rewards for some other value, however, validators that are monetarily driven will end up taking the block from the single major builder.
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