Ethereum Overhaul Could Create Crypto Kingpins

The much-anticipated Ethereum upgrade will create new blockchain participants called builders, which could alter the power structure of the most commercially important cryptocurrency network.

Networks of computers called miners pull transactions from a data pool and add them to the blockchain.

Eliminating the miners reduces energy consumption.

After the September Merge upgrade, builders will compile transactions into blocks for validators.

Validators will approve the upgraded blockchain's block order.

This geeky change, part of MEV-Boost, could initially centralize Ethereum.

There are more than 416,000 validators ready to order transactions, but few builders.

Flashbots makes trading bots' open-source software.

Flashbots are the dominant way for miners to collect fees from traders by front-running their transactions.

Others are considering becoming builders because of Flashbots' dominance.

"It kills decentralization," said BloXroute Labs CEO Uri Klarman, whose servers help traders send transactions to miners faster.

About 40% of decentralized finance app trading volume goes through the network, he said.

Klarman said a powerful cryptocurrency wallet like MetaMask could become a "kingmaker."

MetaMask has 30 million non-custodial users.

Klarman said a wallet service could favor one builder or act as a builder to control transaction flow.

ConsenSys, founded by Ethereum co-founder Joseph Lubin, owns MetaMask. Software company dismisses concern.

MetaMask's global product lead, Taylor Monahan, said they won't send all transactions to one builder or provider.

MetaMask's value is as a gateway to a vibrant, diverse, fair ecosystem.

MetaMask will always promote a healthy, decentralized Ethereum.

The builder-validator role split was created to increase Ethereum's decentralization and remove validators' power.

Too few builders on Ethereum's upgraded chain could cause problems.

They could censor block transactions.

Flashbots blacklisted Tornado Cash wallets after the Treasury Department sanctioned the mixer protocol.