Thinking about the monopoly of Ethereum block builders Titan and Flashbots: How does chain abstraction unlock development opportunities?

Author: Austin King, Co-founder and CEO of Omni Network

Compiled by: Felix, PANews

Few people know that just 2 companies create 90% of Ethereum blocks. However, even fewer are aware of the backstory behind this monopoly.

Here is the untold story of Titan, the hidden profits of over $40 million, and how chain abstraction will bring greater opportunities.

The Beginning

It all started at the end of 2022 when Flashbots created MEV-Boost, software that allowed Ethereum L1 validators to obtain transaction blocks from third parties (known as Builders, specializing in MEV extraction), enabling validators to earn more money. After this, almost all Ethereum L1 validators quickly began running this software:

As shown in the figure, initially (#1) Flashbots (in pink) was the only "Builder" operating, but fierce competition emerged six months later (#2). Now, there are only 2 major builders (#3): Beaver and Titan.

Clearly, many things happened during this period, but one of the most influential events was in April 2023 when Titan reached an exclusive order flow (EOF) agreement with Banana Gun—who later became a top Telegram trading bot. After this EOF deal, Titan had the opportunity to build blocks for L1 validators that were more profitable than any other builder because they had exclusive access to transactions that offered higher rewards.

After that, over 90% of Ethereum L1 transactions came from two companies (Beaver and Titan).

Interestingly, the profit statistics as of August this year are as follows:

Flashbots

• Created approximately 550,000 blocks
• Profited 16.7 ETH

Titan

• Created approximately 600,000 blocks
• Profited 13,151 ETH

At today's prices, the difference amounts to $44 million.

While this data is public, some intriguing questions remain a mystery:

• Why did Banana Gun choose to route almost all of its bundled services to Titan with less than 1% market share?
• Did Titan strike a multi-million dollar deal with the Banana Gun team from the start to boost market share?
• Did Titan promise to provide kickbacks to the Banana Gun team, thereby harming its users' interests?

The specifics are unknown, and few may be aware of this information.

As the co-founder and CEO of Omni Network, why would Austin King take the time to delve into such deals?

Because chain abstraction will unlock greater profit opportunities. The current market is rapidly shifting towards focusing on the crypto user experience (users won't consider Gas, transaction submissions, which chain transactions are on, etc.), and the next wave of users will be far less "complex" than today's crypto users. New users simply won't care how all of this happens, and this downstream abstraction will present more such opportunities, allowing networks to generate significant revenue streams.

Currently, the 2 core primitives of OMNI (EVM + Interop) are destroyed when used. However, what few understand is that there are business opportunities when the revenue opportunities of the order flow supply chain are directly integrated into the core model of the token.