This blog series explores the evolution of Proposer-Builder Separation (PBS) within Ethereum and how Radius brings a new perspective to PBS in the Layer 2 (L2) ecosystem through its Blockspace Network. PBS has become a key concept for improving block production efficiency and decentralization in Ethereum. The article first looks at PBS’s development in Layer 1 (L1) Ethereum, then shifts focus to how Radius aims to optimize L2 revenue through the Blockspace Network, contributing to the broader ecosystem.

Blockspace refers to the space within a block that can include transactions on Ethereum and various other blockchain networks, and it can be seen as an asset with intrinsic value. This blockspace is a limited resource, and its efficient use significantly impacts the profitability, efficiency, and user experience of a network. When blockspace is treated as an asset, users can reserve or trade this space according to their needs. This approach helps minimize resource waste in block production and optimizes resource usage across the entire network. As a result, users can secure the required blockspace while allowing any excess space to be transferred to others, balancing the supply and demand for blockspace. This process greatly contributes to the efficient operation of the network.

This approach is closely aligned with Ethereum's PBS research, which separates the roles of Proposer and Builder, not only stabilizing and decentralizing the network but also enabling efficient use of blockspace while maximizing the revenue of each entity. Radius is currently developing the Blockspace Network to maximize the value of blockspace and enhance the efficiency of blockchain networks, thereby creating new revenue opportunities and expanding network capabilities.

In Ethereum, a specialized entity known as the Builder optimally arranges transactions within a block to maximize revenue. This process generates approximately $400 million in annual revenue for Ethereum, indicating the high level of optimization in block production that enables the network to achieve maximum profitability.

While the efficient use of blockspace and the pursuit of optimal revenue are essential in both L1 and L2 networks, most prior research and development have focused on L1. As a result, rollups and other L2s have yet to reach optimal efficiency. Typically, L2 rollups use their own Sequencers to build blocks and rely solely on transaction fees, which means the potential value of blockspace is not fully utilized and has not achieved the same optimized structure as Ethereum.

The Blockspace Network is designed to address the inefficiency of blockspace in L2 networks and maximize its value. This network connects entities that wish to sell blockspace with those looking to buy it, increasing the liquidity of blockspace transactions and aiming to enhance the overall profitability of the network through efficient resource allocation.

Moreover, the Blockspace Network allows blockspace across multiple chains to be managed within a unified market. This streamlines resource usage not only on the Ethereum mainnet but also across various L2 networks and other chains. Through this integrated market, blockspace fragmentation between chains is reduced, liquidity is improved, and user experience and network scalability across the Ethereum ecosystem are expected to be enhanced.

Radius Blockspace Network provides an integrated platform that allows various participants to effectively trade and use blockspace. This network connects L2 rollups (Sellers) with block builders (Buyers), enabling builders to compose blocks with the optimal order of transactions based on the blockspace owned by rollups. This approach helps to maximize the value and profitability of blockspace while simultaneously improving L2 network efficiency and resource utilization.

Key Features of the Radius Blockspace Network:

• Auction Mechanism for Optimal Profit:

  The Blockspace Network allows builders to create blocks based on the latest state of multiple rollups and participate in an auction. During this process, the network helps select the builder's block that will bring the highest revenue to the rollup. The auction mechanism promotes transparent pricing of blockspace and efficient resource allocation, supporting market participants in placing optimal bids to maximize rollup revenue.

• Balancing Blockspace Supply and Demand:

  By effectively connecting rollups looking to sell blockspace with builders aiming to buy it, the Blockspace Network maintains a balance between supply and demand, facilitating transactions at optimal prices. This balance enables efficient trading of blockspace across different chains and protocols, ensuring the network maintains an optimal distribution of resources. Additionally, such balance reduces the volatility of blockspace prices, helping to establish a stable revenue structure in the long term.

• Providing Additional Revenue Opportunities:

  The Blockspace Network goes beyond existing revenue models by helping rollups generate additional income. This enhances the utilization of blockspace and increases the liquidity of the network. Rollups can manage their blockspace flexibly, and as builders construct highly profitable transactions, the demand for blockspace increases. Consequently, rollups can create additional revenue through the auction mechanism beyond simple transaction fees.

• Improving Composability and Block Production Efficiency:

  The Blockspace Network contributes to solving composability issues by facilitating transaction compatibility and integration across multiple L2 networks. It consolidates transactions from different chains to create the optimal block, improving block production efficiency. This not only enhances resource usage efficiency across chains but also ensures smoother interactions between rollups, thereby improving scalability and stability within the Ethereum ecosystem.

• Enhancing Transparency and Fairness of Blockspace:

  The Blockspace Network provides mechanisms to ensure the transparency and fairness of blockspace transactions, allowing all participants to have access to the same information and opportunities. This prevents inefficient use of blockspace caused by elements like MEV and helps foster a fair competitive environment among network participants. As a result, blockspace serves not only as an asset for generating revenue but also plays a crucial role in ensuring the stability and decentralization of the network.

Through these key features, Radius’ Blockspace Network will enhance the utilization and liquidity of blockspace within the L2 ecosystem, creating an optimal revenue model through efficient resource distribution.

The Blockspace Network is expected to work synergistically with the existing Proposer-Builder Separation (PBS) model, maximizing the efficiency of blockspace transactions within L2 networks and building a decentralized ecosystem. Radius is actively conducting research to realize the concept of the Blockspace Network, developing new technologies and systems to provide an infrastructure that enables the stable trading of blockspace. This research focuses on enhancing the stability and flexibility of blockspace transactions and finding ways for various users and protocols to efficiently use and share blockspace.

In particular, since the Blockspace Network creates an integrated market where multiple blockspace sellers can gather and trade, it can also resolve existing composability issues within L2. With blockspace from various chains being managed in one place, efficient handling of transactions between different L2s or chains becomes possible. This provides an environment where multiple rollups and chains can interact seamlessly, alleviating transaction compatibility issues across L2 networks and strengthening chain connectivity.

By addressing blockspace fragmentation and providing an integrated market, the Blockspace Network improves resource usage efficiency and liquidity across various chains and L2 networks. This unified market improves user experience, enhances network scalability, and positively impacts the entire Ethereum ecosystem.

Ultimately, by establishing this integrated blockspace market through the Blockspace Network, Radius aims to accelerate L2 ecosystem activation, efficiency improvements, and decentralization. This will enable efficient and stable network construction by meeting diverse user needs and supporting chain integration, contributing to the development of a stronger and more robust Ethereum ecosystem and its surrounding chains