Ethereum’s Glamsterdam Upgrade: How Will It Improve MEV Fairness?
Ethereum’s upcoming Glamsterdam upgrade aims to make the way transactions are handled fairer by reducing opportunities for certain users to gain an advantage. This change is expected to affect how secure and smooth the network is, as well as how decentralized finance services operate.
What happened
The Glamsterdam upgrade, scheduled for implementation in the second quarter of 2026, introduces a protocol-level mechanism known as Proposer-Builder Separation (PBS). This design separates the roles of block proposers—validators who assemble and finalize blocks—from block builders, entities responsible for ordering transactions within those blocks. By decoupling these functions, the upgrade aims to reduce Miner Extractable Value (MEV), a source of transaction manipulation where certain participants extract profits by reordering, including, or censoring transactions.
A key component of Glamsterdam is the introduction of a fair ordering mechanism within the block building process. This mechanism targets common MEV extraction strategies such as front-running and sandwich attacks, which exploit transaction ordering for financial gain. The upgrade also establishes an on-chain auction system where block builders compete by submitting bids to proposers. Proposers then select blocks based on these bids, creating a transparent marketplace for block inclusion priority.
These innovations build upon previous Ethereum protocol improvements, including EIP-4844 and EIP-1559, which aimed to improve scalability and fee mechanisms. Independent analysis by Paradigm Research confirms that PBS effectively limits proposers' ability to reorder transactions arbitrarily, thereby reducing MEV extraction opportunities. Flashbots, a leading MEV research organization, supports Glamsterdam’s approach but emphasizes that MEV is an inherent characteristic of blockchains that order transactions and that the upgrade shifts MEV capture dynamics rather than eliminating MEV entirely.
Why this matters
MEV has long been recognized as a challenge to fairness and decentralization on Ethereum and other smart contract platforms. By enabling certain participants to profit from transaction ordering, MEV can undermine trust in network integrity, increase transaction costs for users, and distort the competitive landscape for decentralized finance (DeFi) applications.
Glamsterdam’s separation of proposers and builders represents a structural attempt to decentralize control over transaction ordering, which is widely interpreted by the Ethereum Foundation and Paradigm Research as an improvement in fairness. The on-chain auction system further introduces transparency by making the process of block selection and MEV capture visible to all network participants, potentially reducing opaque or secretive practices.
From a network security perspective, reducing the power of single entities to reorder transactions arbitrarily may bolster Ethereum’s resilience against manipulation. For DeFi protocols that rely on predictable transaction ordering, the fair ordering mechanism could alter how transactions are prioritized, though the full implications remain to be understood. The upgrade also reflects ongoing efforts within the Ethereum community to balance efficiency, fairness, and decentralization as the network scales.
What remains unclear
Despite the detailed design of Glamsterdam, several important questions remain unanswered in current disclosures. The impact of the auction system on smaller validators and block builders is not fully addressed; specifically, whether it will favor larger, resource-rich entities capable of winning bids consistently. This raises concerns about potential centralization risks that could counteract some fairness gains.
Details on the economic incentives for proposers under the new system are limited, leaving open how these incentives might influence proposer behavior in the presence of MEV opportunities. Additionally, the effect of the new mechanisms on user experience—including transaction latency and fee dynamics—has not been clearly explained or empirically tested.
The long-term implications for DeFi protocols that depend on transaction ordering predictability are also not comprehensively analyzed. Furthermore, no quantitative data yet exists on the extent to which MEV revenue might be reduced or redistributed following the upgrade. Finally, potential new attack vectors or unintended consequences introduced by the PBS and auction mechanisms have not been thoroughly explored in public research.
What to watch next
- Implementation progress and detailed technical disclosures from the Ethereum Foundation as Glamsterdam approaches its Q2 2026 deployment.
- Empirical performance data and independent studies measuring the upgrade’s actual impact on MEV extraction, transaction ordering fairness, and network security.
- Analysis of the auction system’s effects on validator and block builder decentralization, including whether it advantages larger players disproportionately.
- Updates on how proposers’ economic incentives are structured post-upgrade and any resulting changes in proposer behavior or block selection dynamics.
- Research on the upgrade’s influence on transaction latency, fee structure, and user experience, particularly for DeFi applications sensitive to ordering.
Glamsterdam represents a significant evolution in Ethereum’s approach to MEV fairness, introducing structural changes designed to increase transparency and reduce extraction opportunities. However, key questions about its economic impacts, decentralization effects, and user experience remain open. As the upgrade nears deployment, close attention to empirical outcomes and ongoing analysis will be essential to assess whether Glamsterdam achieves its goals without introducing new challenges.
Source: https://www.coindesk.com/tech/2025/12/20/ethereum-s-glamsterdam-upgrade-aims-to-fix-mev-fairness. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.