Searcher, Builder and Validator, who is the final winner of MEV?
Original Author: EIGENPHI
Compilation of the original text: Deep Tide TechFlow
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Figure: MEV accounts for 51.6% of the revenue of builders, and validators are the biggest beneficiaries.
The above Sankey Diagram illustrates the flow of benefits of the MEV supply chain to different participants, especially builders and verifiers under the current PBS scheme.
This chart shows data from January 1, 2023 to February 28, 2023. During the two months, EigenPhi identified 975,290 transactions involving MEV payments. EigenPhi's algorithm categorized 64% of these transactions as MEV bots of the three main types. Together, the bots generated $7.3 million in profit and contributed $18.9 million to MEV payments. Among them, MEV accounted for 51.6% of the revenue of builders, while validators became the biggest beneficiaries.
Undefined transaction types accounted for the remaining 36%, accounting for $15.8 million in MEV payments. These not-yet-strictly-defined categories include just-in-time transactions (JIT), statistical arbitrage, DEX-CEX arbitrage, and private orders, among others.
Among them, 23.1 million US dollars are directly transferred to the builder's address through coinbase.transfer(), and the remaining 11.6 million US dollars are paid to the builder as a priority fee.
MEV accounts for 51.6% of the revenue of builders, and the remaining 48.4% comes from priority fees paid by ordinary transactions.
It is worth noting that part of the gas fees paid by searchers and other users will be burned in the form of base fees, while the base fee paid by ordinary transactions ($2.272 million) is not listed in the chart.
However, while builders earned a staggering $67.3 million, 93% of that was spent bidding on relay auctions to compensate validators, ensuring that validators eventually propose blocks. Therefore, the builder's explicit income for those two months was only $4.4 million. Validators ended up earning $62.6 million in the first two months of 2023.
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Oligarchies take the lion's share, both for builders and validators
The market competition between builders and verifiers presents an obvious oligopoly effect, with Lido occupying 30% of the market share.
The market competition between builders and validators shows a clear oligopoly effect, with the top three competitors accounting for about 50% of the total profits. By taking on the dual roles of builders and validators at the same time, industry leaders have managed to dominate the market. Lido, currently number one, has amassed around $21 million in profits in two months and captured a 30% market share. Meanwhile, in second place is Coinbase, marked by Mevboost.pics, with around 15 percent of the market.
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mev cake
Finally, as the Sankey diagram demonstrates, the MEV marketplace offers builders and validators a piece of the pie with multiple layers of revenue. Most of these profits are taken by market leaders such as Lido, who manage to carve out the biggest slice for themselves. While the MEV "pie" is large, it is worth noting that this "pie" is not evenly distributed, with a considerable portion going to relay auctions.
As the market presents a clear oligopolistic effect and MEV revenues play a crucial role in the profits of the builders, the future landscape of this space is likely to be influenced by the strategies adopted by these leading entities to maintain their position on the MEV cake continue to gain a large share.
