Dissecting MEV: The Problem of Relays

Are relays destined to remain as a necessary evil?

article-image

mezzotint/Shutterstock modified by Blockworks

share

Ethereum is built on the principles of decentralization, trustlessness and free market competition. So it might be surprising to learn that an important mechanism in the protocol’s ecosystem is centralized, must be trusted and offers no economic incentive.

Relays perform a key role in the infrastructure that supports MEV — or maximum extractable value — on Ethereum. Existing between builders and validators as middlemen, relays absorb large amounts of traffic from builders by only sending select blocks to validators.

The problem, as Matt Cutler, CEO and co-founder of Blocknative, explained on the Bell Curve podcast, is threefold: Few relays exist, they must be trusted, and they do not currently offer profitability to relay providers.

“At the moment, there are 11 relays that power the Ethereum network,” Cutler says. “But only seven of them have more than 1% share [of the market].” 

“It’s pretty centralized, more centralized than any of us would like.”

On top of that, the MEV-Boost network is highly dependent on these few relays. “Without the relays, the network doesn’t operate, meaning that the MEV-Boost network is entirely dependent on them. They require 100% uptime because if they don’t do their job, you have missed slots.”

Cutler points out one crucial problem: “There’s absolutely no economic incentives for operating the relays.” Although the role carries costs and risk, it offers nothing in return. 

“And in fact, if your relay doesn’t do its job or there’s some misconfiguration and you miss slots, the validators often expect reimbursement. So they have negative economics.”

“The economics of it kind of suck today,” host Michael Ippolito agrees.

Read more: MEV: Who Should Profit From a Protocol’s Economic Activity?

Boosting relay participation

“One of the things we’re trying to do,” says Cutler, “is encourage more teams to participate as relays and to develop their own relays to encourage relay diversity.”

Cutler argues that relays offer “tremendous value to the entire network.” MEV-Boost uses block space more efficiently, increases the base fee burn, and pays validators significantly more, boosting the security budget.

“And so there’s a huge amount of benefit that is driven specifically by the work of the relays and the rest of the supply chain and yet none of that value is today shared with those infrastructure operators.”

This leads to an interesting conundrum: is there a way to pay relay providers without breaking the system?

Bell Curve podcast co-host Hasu, strategy lead at Flashbots, points out that relays are not actually necessary for all parties because “only untrusted parties would be excluded from the MEV supply chain if relays didn’t exist.” 

Monetizing relays, Hasu argues, could inadvertently increase fragility in the system. Some participants might choose to circumvent relays to save on costs. In the current design, he says, “We have a social consensus — the social norm that everybody goes through a relay. And that’s really important because we want everybody to operate on the same footing.”

“But once we start monetizing relays,” he says, it may drive away certain parties because that would “increase their bottom line.”

Cutler counters Hasu’s argument, explaining, “We want lots of relays. We want a lot of people going, ‘Look, the economics here is amazing. This is a great business to get in, and we can add value here.’”

“Today,” Cutler adds, “there’s a small set of private entities who are using venture capital money to support the network and a couple of public goods that have passed the hat.” 

“And that strikes me as — at the core of the network — not sustainable and not ideal for a network that basically is trying to be able to fund its own operations overall.”

“It’s not a free service. It’s, in fact, a very expensive service — and a high risk service.”

“Ultimately,” Cutler says, “on a long enough timeline, these things are not sustainable.” 

Relays as a public good

In response, Hasu argues that one should instead look at the relay system as a “public good.” 

“We pay the same cost as you guys do at Blocknative for running the Flashbots relay. And we do that because we think it’s essential to uphold this market structure.”

“We have to talk about it,” Hasu says, “from a funding public goods angle, more so than from an angle of how we can turn this into a market that can be monetized successfully.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Maple Finance has successfully navigated significant market challenges through its strategic pivot to secured lending (Maple v2) and the launch of its Syrup product. Syrup has become a primary growth driver, delivering sustainable, outperforming stablecoin yields and rapidly increasing TVL. The upcoming custody-first Bitcoin staking product (istBTC) presents another significant avenue for expansion. Crucially, Maple has achieved operational profitability, a key inflection point that, combined with a fully vested token and active buyback mechanism, strengthens its investment case. While valuation metrics suggest potential undervaluation relative to peers and growth, the primary forward-looking risk identified is the long-term sustainability of its current high-take-rate collateral staking revenue model.

article-image

In 2014, Microsoft virus scanners were detecting viruses in Bitcoin software

article-image

Ledn’s Mauricio Di Bartolomeo explained how this cycle’s been different for the lender

article-image

The shorts looking for funding range from charming animated series to gritty live-action dramas

article-image

Money, it turns out, is emergent, like consciousness

article-image

Bridge flows churn in both directions as risk appetite returns