Ethereum Arbitrage Yields $5 in Builder Receipts for Every $1 Burned
Recent data from blockchain provider Bitquery has revealed an interesting dynamic in Ethereum's arbitrage landscape. According to their findings, for every dollar burned on the network over a 30-day period, approximately $5.24 was generated in builder receipts. This allocation breaks down into 49.3% going towards block assembly, 9.4% towards burned fees, and 41.3% with trading operators.
The investigation highlights the distinction between trading activity and holding ETH as an investment. Payments reward participants for executing trades, while fee burning affects the token's supply. Furthermore, builders pay validators to propose blocks, so the largest receipt bucket does not necessarily indicate the highest final profit.
Arbitrage software searches for tokens available at different prices, buys at the cheaper price, and sells at the higher one. In Ethereum's MEV documentation, specialized participants called searchers pursue these opportunities. When multiple searchers compete for a single trade, getting the transaction included in the right position has economic value.
The block-building arrangement documented by Flashbots shows builders gathering transactions, constructing blocks, and bidding on validators' blockspace through relays. Builders set their own address as the block's fee recipient, then include a transaction paying ETH to the proposer's designated recipient. To accurately compare participants, it is essential to count only the incoming payment and consider business costs.
New York Fed Staff Report 1102 uses this distinction in its historical research, measuring retained block revenue rather than complete business profit after operating costs. The report highlights that builder profit is direct payments plus priority fees minus the payment to the proposer.