New paper finds 2x efficiency loss from decentralized block building

Decentralized block building aims to replace a single proposer with multiple builders to improve censorship resistance and fair access. But its benefits depend on where builders are located geographically, as latency determines which transactions they can include. A new preprint by Öz, Wu, Correia, Yang, Mazorra, and Leonardos formalizes this as a stochastic coverage game: builders choose regions, information sources emit transactions, and latency decides whether those transactions arrive before the deadline. The authors prove the game is an exact potential game with a pure Nash equilibrium, and crucially derive an asymptotically tight factor-2 Price of Anarchy—meaning selfish builder placement can at most double the welfare loss compared to a centrally planned outcome.

The paper also establishes strong fairness bounds: the lowest-utility builder earns at least half of the highest-utility builder's payoff, and the Herfindahl–Hirschman Index (HHI) of utility shares is at most 12.5% above the egalitarian benchmark. Simulations extend the theory to richer latency and source environments, showing that welfare losses are most acute in intermediate regimes—where peripheral sources are reachable and valuable, but selfish incentives still favor high-value regions. Notably, geographic concentration and utility concentration do not always align; a planner can improve coverage by assigning builders to lower-payoff peripheral regions, while equilibrium outcomes may be more geographically concentrated yet more utility-balanced. These findings have direct implications for protocol design, reward-sharing rules, and future location-market modeling in decentralized block building.