MEV-Boost

After Ethereum moved to Proof of Stake, there was a fear that large staking pools would have a massive advantage because they could hire teams of experts to squeeze every penny of MEV (Maximal Extractable Value) out of their blocks. MEV-Boost was created by the Flashbots team to level the playing field. It is an implementation of "Proposer-Builder Separation" (PBS) that any validator can run alongside their standard Ethereum software.

When a validator uses MEV-Boost, they don't build their own blocks. Instead, they connect to "relays" that sit between them and "builders." Builders are high-performance actors who spend their time searching for the most profitable combination of transactions. The builders submit their completed blocks to the relays, and the relays show the validator only the "bid" (the profit) for each block. The validator simply signs the block with the highest bid. This ensures that a single person running a validator on a laptop at home gets the exact same "MEV reward" as a billion-dollar institutional staking provider.

For investors, MEV-Boost is the reason why Ethereum's "staking yield" is often higher than the base issuance rate. The "Real APY" of staking includes both the protocol rewards and the "MEV tips" from builders. Currently, over 90% of Ethereum validators run MEV-Boost. However, it is a controversial topic because it creates "relay" and "builder" bottlenecks. If most validators use the same few relays, those relays have a lot of power to censor transactions (e.g., to comply with OFAC sanctions). Investors should monitor the "relay diversity" and the progress toward "Enshrined PBS," which would move this logic directly into the Ethereum protocol to reduce reliance on third-party software like MEV-Boost.