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The Local Block Building Paradox: Validators Leaving ETH on the Table

The Setup: Local vs Relay

When it's a validator's turn to propose a block, they have two options:

1. Use an MEV relay: Outsource block building to professional searchers who compete to deliver the highest-value block
2. Build locally: Use their own execution client to construct a block from the mempool

The choice seems obvious: relays consistently deliver higher-value blocks. So why would anyone build locally? Privacy, censorship resistance, and solo staker ethos are common reasons. But what's the actual cost?

The Numbers

Value Distribution: A Tale of Two Strategies

Comprehensive comparison of local block building vs MEV relay strategies across value distribution, client performance, and normalized metrics.

The distribution tells the story:

Local Blocks

• 54.2% have zero MEV value — pure mempool blocks with no arbitrage, sandwiching, or liquidation opportunities captured
• 36.0% have small MEV (0.001-0.01 ETH) — minor opportunities the validator happened to catch
• 6.4% have micro MEV (<0.001 ETH)
• Only 3.4% have meaningful MEV (>0.01 ETH)

Relay-Delivered Blocks

• 0% have zero value — every single relay block has some extractable MEV
• 33.8% have small MEV (0.001-0.01 ETH)
• 61.6% have medium MEV (0.01-0.1 ETH) — this is where most value lives
• 4.4% have large MEV (>0.1 ETH) — the whale blocks

Client Patterns: Who Builds Best Locally?

Not all clients are equal when it comes to local block building. Some appear to have smarter algorithms or attract more sophisticated operators:

Prysm and Nimbus validators who build locally are capturing significantly more value — though still far below relay levels. This could indicate:

• More sophisticated local building algorithms in these clients
• Different operator demographics (more professional stakers)
• Selective local building — only building locally when mempool conditions are favorable

The Opportunity Cost

If all 150,075 local blocks had used relays and achieved similar value to actual relay blocks, the network would have captured approximately 7,500+ additional ETH in value over 24 hours.

That's roughly 2,700 ETH per year being left on the table by local builders.

Who Benefits?

The beneficiaries of this inefficiency are clear:

1. Other validators: When one validator leaves MEV uncaptured, it often flows to the next block via the mempool, slightly increasing the next proposer's yield
2. Searchers: Missed opportunities in block N become fresh opportunities in block N+1
3. Users: Less MEV extraction can mean slightly better execution prices for traders (though this is debated)

Data & Methodology

Sources:

• mainnet.fct_prepared_block — Local block building data (xatu-cbt)
• mainnet.fct_block_mev_head — Relay-delivered block values (xatu-cbt)

Date range: February 1, 2026 06:00 UTC — February 2, 2026 06:00 UTC (24 hours)

Query: Local Block Value Distribution

SELECT
  CASE 
    WHEN execution_payload_value = 0 THEN 'zero_value'
    WHEN execution_payload_value < 0.001 * 1e18 THEN 'micro_mev'
    WHEN execution_payload_value < 0.01 * 1e18 THEN 'small_mev'
    WHEN execution_payload_value < 0.1 * 1e18 THEN 'medium_mev'
    ELSE 'large_mev'
  END AS value_bucket,
  COUNT() AS block_count,
  COUNT() * 100.0 / SUM(COUNT()) OVER () AS percentage
FROM mainnet.fct_prepared_block FINAL
WHERE slot_start_date_time >= now() - INTERVAL 24 HOUR
GROUP BY value_bucket

Conclusions

What We Learned

• The MEV relay ecosystem is extracting 1,600x more value per block than local builders on average
• Over half of all locally-built blocks capture zero MEV — pure mempool ordering with no optimization
• Prysm and Nimbus local builders perform significantly better than other clients
• The "local builder penalty" is roughly 0.053 ETH per block in opportunity cost

Implications

This data validates the economic rationale behind MEV relays. The specialization of block building — separating proposers (validators) from builders (searchers) — creates significant value for the network. Validators who forego relays are making a deliberate tradeoff: accepting lower yields for other benefits like privacy or censorship resistance.

The question isn't whether relays are more profitable — they clearly are. The question is whether the non-economic benefits of local building justify the cost. For solo stakers with strong principles, the answer may be yes. For yield-maximizing operators, the data speaks for itself.

Limitations

• 24-hour window may not capture all market conditions
• Local block values reflect the xatu node's view — other nodes may build differently
• Some "local" blocks may actually be from private relays not captured in the MEV data
• Value calculations don't account for priority fees that may flow to validators separately