Blockspace as a Commodity: Who Really Owns It?

Posted on by uplatzblog

1. The Ontology of Blockspace: Defining the Digital Commodity

The emergence of blockspace represents a fundamental shift in the global economic landscape, introducing a novel asset class that defies convenient categorization within traditional frameworks. Ideally understood as the finite, time-bound capacity of a decentralized ledger to process state transitions and record data, blockspace has evolved from a technical byproduct of consensus mechanisms into the foundational substrate of the Web3 economy. It is the “digital land” upon which the decentralized internet is built, yet its ownership structure remains opaque, contested, and fluid. To answer the question of who really owns blockspace, one must first deconstruct its ontological properties: is it a commodity like oil, a public utility like bandwidth, or a sovereign territory like real estate?

1.1 The Scarcity Paradigm and Rivalrous Consumption

At its core, blockspace is a rivalrous good. Unlike digital information, which can be copied infinitely at near-zero marginal cost, blockspace is strictly finite. A transaction included in a block consumes specific resources—computational gas, storage slots, and bandwidth—that cannot be simultaneously used by another transaction.1 This inherent scarcity is not a result of physical limitations but is artificially enforced by consensus protocols to ensure that the network remains verifiable by consumer-grade hardware, thereby preserving decentralization. Consequently, while the network itself is often described as a “public good” accessible to all, the actual consumption of its resources operates as a “private good” subject to exclusion based on price.2

The economic implications of this scarcity are profound. As demand for inclusion outstrips supply, the market for blockspace transforms into a high-stakes auction. Users bid against one another for the “right to write” to the ledger, creating a dynamic where ownership of the immediate next block is allocated to the highest bidder. This market mechanism suggests that, in the short term, blockspace is owned by capital—those with the willingness and ability to pay for priority.1 However, this transactional view obscures the deeper layers of control exerted by the entities that produce, order, and validate these blocks.

1.2 The Metaphors of Value: Oil, Real Estate, and Bandwidth

The crypto-economic discourse relies heavily on metaphors to conceptualize blockspace, each implying a different ownership model:

  • Digital Oil: This perspective views blockspace as a consumable fuel required to power the “world computer.” Just as oil powers the industrial economy, “gas” (ETH) powers the decentralized economy. In this model, ownership is transient; users purchase fuel from producers (miners/validators) to execute operations. The focus here is on the flow of transactions and the extraction of fees.1
  • Digital Real Estate: Proponents of this view argue that blockspace is akin to land in a prime metropolis. Securing blockspace allows one to build economic structures—smart contracts, liquidity pools, and decentralized applications (dApps)—that generate ongoing utility. This implies that long-term “landlords” (validators and protocol token holders) have the right to extract rent from the economic activity occurring on their property.5 The “state” of the blockchain is the developed land, while the blockspace is the construction zone where new value is added.
  • Commodity Bandwidth: Similar to fiber-optic capacity, blockspace is a throughput constraint. This framing emphasizes the role of validators as “neutral carriers” who should convey data packets without discrimination. If blockspace is merely bandwidth, then “ownership” should be regulatory in nature, ensuring fair access rather than maximizing profit.1

1.3 The Temporal Dimension: Spot vs. Future Markets

A critical, often overlooked dimension of blockspace ownership is its time-value. Blockspace in the immediate next block (t+1) is exponentially more valuable than blockspace in the distant future (t+100), particularly for financial applications dependent on arbitrage and liquidation. This “time-value” creates a bifurcated market: a “spot market” for immediate inclusion, dominated by automated bots and high-frequency traders, and a nascent “futures market” for guaranteed capacity.1

The entity that controls the timing of inclusion effectively owns the value contained within the transaction. For example, if a validator can delay a user’s transaction to insert their own, they have expropriated the arbitrage value. Thus, ownership of blockspace is not merely about inclusion but about ordering and timing. The recent rise of specialized markets for “pre-confirmations” and blockspace futures attempts to financialize this temporal dimension, allowing users to hedge against congestion and volatility.5

2. The Supply Chain of Blockspace: The Industrialization of Consensus

The romantic vision of the “solo miner” protecting the network with a home computer has largely been supplanted by a sophisticated, industrialized supply chain. On Ethereum, the transition to Proof-of-Stake (PoS) and the adoption of Proposer-Builder Separation (PBS) have fundamentally fractured the monolithic ownership of block production, creating a vertical stack of specialized actors, each claiming a slice of sovereignty.8

2.1 The Separation of Powers: Proposers vs. Builders

Under the PBS paradigm, the role of the validator has been split into two distinct functions, divorcing the authority to propose a block from the ability to construct it.

  • The Proposer (Validator): This entity holds the staked capital (32 ETH) and the cryptographic right to propose a block to the network. However, in practice, the Proposer acts merely as an auctioneer. They sell their “right to propose” to the highest bidder, abdicating any editorial control over the block’s content.8
  • The Builder: These are specialized, highly capitalized entities that aggregate transactions from the mempool and private order flow. They run sophisticated algorithms to construct the block body, optimizing the ordering of transactions to extract maximum profit (Maximal Extractable Value or MEV). Builders effectively “rent” the blockspace from Proposers for a 12-second window.9

Insight: This separation implies that validators no longer “own” the content of the blocks they propose. They have become rent-seeking landlords who lease their property rights to industrial tenants (Builders). The true “ownership” of the block’s content—and the power to censor or prioritize specific transactions—has shifted to the Builders. Currently, the builder market is highly centralized, with a handful of entities (e.g., Beaverbuild, Titan) constructing the vast majority of Ethereum blocks, creating a centralized choke point where ownership of transaction ordering is concentrated.8

2.2 The Role of Relays: The Trusted Middlemen

Sitting between Builders and Proposers are Relays. These trusted intermediaries verify that a Builder’s block is valid and holds the promised value before the Proposer signs it. Relays essentially act as escrow agents for blockspace, holding the block content secret until the Proposer commits to it.9

While ostensibly technical in nature, Relays hold significant political power. If a Relay chooses to censor transactions (e.g., to comply with OFAC sanctions), they can effectively block certain users from accessing the blockspace, regardless of the Proposer’s intent. This introduces a “gatekeeper” layer of ownership that is neither the producer nor the consumer. The dependence on Relays creates a vulnerability where regulatory pressure can be applied to a small number of entities to effectively control the “free market” of blockspace.11

2.3 MEV: The Shadow Price of Ownership

Maximal Extractable Value (MEV) is the profit a block producer can extract by reordering, inserting, or censoring transactions within a block.10 MEV reveals that ownership of blockspace is not just about inclusion (getting in the block) but about position (where in the block).

  • Front-running and Sandwiching: High-frequency traders (Searchers) identify profitable transactions in the mempool and bribe Builders to place their own transactions immediately before or after the victim’s transaction.
  • The Ownership Transfer: In a PBS world, the user ostensibly “owns” their transaction, but the value inherent in that transaction (e.g., the slippage on a large trade) is often captured by the Searcher/Builder complex. The user pays a fee for settlement, but the “surplus value” of the blockspace is expropriated by the supply chain. This dynamic suggests that ownership of the economic utility of a transaction is partitioned between the user and the network intermediaries.12

Table 1: The Hierarchy of Blockspace Control in PBS

Actor Function “Ownership” Claim Power Dynamics
Searcher Finds MEV opportunities Owns the “alpha” / strategy Extracts value from user intent; highly competitive.
Builder Aggregates bundles Owns the block construction Centralization Risk: Controls inclusion and ordering; determines history.
Relay Escrows block data Owns the data availability channel Censorship Point: Can filter blocks based on regulatory lists (e.g., OFAC).
Proposer Signs the block Owns the slot authority Rent Seeker: Passive beneficiary of the auction; ultimately responsible for consensus.

2.4 Staking Pools and the Financialization of Validators

The ownership of the underlying capital—the staked ETH that grants the right to propose blocks—is also abstracted. Liquid Staking Protocols (LSPs) like Lido control over 30% of the total stake, creating a layer of “meta-governance” over the network.14

  • Lido’s Governance Risk: While Lido is a Decentralized Autonomous Organization (DAO), its dominance means that LDO token holders theoretically hold a veto power over Ethereum’s consensus. If Lido were to gain >33% of the stake, it could halt finality; at >50%, it could censor blocks or rewrite short-term history.15
  • Who owns the Validator? A user holding stETH “owns” the economic claim to the stake, but the voting rights and operational control of the validator keys are delegated to a permissioned set of Node Operators selected by the Lido DAO.16 This separates economic ownership (the right to yield) from political ownership (the right to validate), creating a principal-agent problem where the interests of the node operators may diverge from the wider community.

3. The Demand Side: Economic Value Capture and the Protocol State

If the supply side manufactures blockspace, who pays for it, and where does the money go? The flow of value defines the economic ownership of the network. Recent protocol upgrades, specifically EIP-1559, have fundamentally altered this equation, shifting value capture from the “workers” (miners) to the “state” (the protocol and its token holders).

3.1 EIP-1559: The Protocol as Shareholder

Before EIP-1559, all transaction fees went to miners via a first-price auction. This model treated blockspace purely as a service sold by miners to users. EIP-1559 revolutionized this by introducing a Base Fee that is burned (permanently destroyed) rather than paid to the miner.17

  • The Burn as Buyback: By burning ETH, the protocol effectively distributes the revenue of blockspace to all ETH holders via deflation. This is economically analogous to a stock buyback, where a corporation uses revenue to reduce outstanding shares, increasing the value of remaining shares.
  • The Shift in Ownership: This mechanism shifts economic ownership from the producers (miners/validators) to the asset holders (ETH owners). The validator is reduced to a service provider receiving only a nominal “Priority Fee” (tip) for their work, while the bulk of the “congestion rent” is captured by the collective.19

3.2 MEV-Burn and Future Value Capture

Current research into “MEV Burn” proposes to take this a step further by capturing the excess profits generated by builders (MEV) and burning that as well.21

Insight: If implemented, MEV Burn would complete the transition of blockspace from a “miner-owned” resource to a “protocol-owned” resource. The protocol would capture both the congestion rent (Base Fee) and the arbitrage rent (MEV), leaving validators with only a minimal fee for their hardware services. This represents a form of “nationalization” of blockspace value, where the network itself acts as the ultimate beneficiary of all economic activity occurring within its borders.21

3.3 The Pricing of Censorship Resistance

Users pay premiums not just for space, but for censorship resistance. The ability to force a transaction onto the ledger despite opposition is the core value proposition of blockchains like Bitcoin and Ethereum. When users pay high fees during congestion, they are essentially outbidding others for a scarce “right to write” to the immutable history.

This market mechanism implies that blockspace ownership is ultimately allocated by capital—the wealthy can always outbid the poor for inclusion. This reality challenges the narrative of “open access.” While the protocol is permissionless in theory, in practice, high fees act as an economic barrier, creating a form of “gentrification” of the blockspace where only high-value transactions (DeFi, NFTs) can afford to settle.1 This has driven the migration of retail users to Layer 2 solutions, fundamentally altering the structure of ownership.

4. Layer 2 and the Abstraction of Ownership: The Franchise Model

Layer 2 (L2) solutions, specifically Rollups, were designed to scale Ethereum by executing transactions off-chain and posting data on-chain. However, this architectural shift has profound implications for blockspace ownership, moving it from a decentralized consensus to a centralized “franchise” model.

4.1 The Sequencer Monopoly

In most current Rollups (e.g., Optimism, Arbitrum, Base), a single entity called the Sequencer is responsible for receiving, ordering, and executing transactions.22

  • Centralized Control: The Sequencer has total control over the L2 blockspace. They can reorder transactions (extracting MEV for themselves), censor users (temporarily), and act as the sole gatekeeper. While “escape hatches” exist to force transactions back to L1, they are often complex and costly, leaving the Sequencer with effective operational sovereignty.23
  • The Rent Extraction: Sequencers operate on a simple business model: they collect fees from users (L2 gas) and pay a much smaller fee to Ethereum for data storage (L1 calldata). The difference is profit. This model resembles a franchise: The Rollup “rents” security from Ethereum (the franchisor) and sells premium blockspace to users, keeping the margin.
  • Trust Assumptions: Users of L2s do not “own” their blockspace in the same trustless way they do on L1. They rely on the Sequencer’s honesty regarding transaction ordering and pre-confirmations. This reintroduces the trust assumptions that blockchains were designed to eliminate, albeit with the safety net of L1 settlement.22

4.2 Shared Sequencing: The Middle Layer

To address the centralization risk of single Sequencers, protocols like Espresso and Astria are building Shared Sequencers.24

  • Unbundling Execution: Shared sequencers decouple the ordering of transactions from the execution. A network of decentralized nodes orders transactions for multiple Rollups simultaneously.
  • New Ownership Class: This creates a new layer of “blockspace owners”—the stakers in the Shared Sequencer network. These entities will capture the MEV and fees from multiple L2s, potentially competing with L1 validators for value. By aggregating order flow from many chains, Shared Sequencers could become powerful “kingmakers” in the modular ecosystem, dictating the flow of cross-chain commerce.24

4.3 Based Rollups: Returning Ownership to L1

An alternative model proposed by Justin Drake is the Based Rollup (or L1-sequenced rollup).26

  • L1 Sequencing: In a Based Rollup, the sequencing is done by the L1 validators (proposers) themselves. There is no separate L2 sequencer. The L1 proposer simply includes the L2 block as part of the L1 block.
  • Alignment: This returns “ownership” of the L2 blockspace to the Ethereum L1 validators. The MEV from the L2 flows directly to the L1, strengthening the economic security of the base layer.
  • Sovereignty: Based Rollups represent a “re-centralization” of ownership back to the L1 consensus set, countering the fragmentation caused by sovereign L2 sequencers. It reinforces the thesis that L1 blockspace is the ultimate “root of title” for all derived layers. By surrendering sequencing rights, Based Rollups inherit the full liveness and censorship resistance of Ethereum, effectively arguing that the best way to “own” blockspace is to rely on the most decentralized foundation available.26

Table 2: Comparative Ownership Models in Layer 2

Feature Centralized Sequencer (Optimism/Base) Shared Sequencer (Espresso/Astria) Based Rollup (Taiko)
Transaction Ordering Single Operator (Foundation/Corp) Decentralized Committee L1 Proposers (Ethereum Validators)
MEV Capture Captured by L2 Operator Shared between L2 and Sequencer Stakers Flows to L1 Validators/Burn
Liveness Dependent on Operator Uptime Dependent on Sequencer Network Inherited from L1 (Highest)
Censorship Resistance Low (Trust Me) Medium (Committee) High (L1 Consensus)
“Owner” The Rollup Operator The Sequencer Network The L1 Protocol

5. The Infrastructure War: Data Availability & Client Monocultures

Blockspace is composed of two fundamental resources: Execution (computing changes) and Data Availability (storing the record). These are being unbundled, creating new ownership battlegrounds where distinct protocols compete for dominance.

5.1 The DA Wars: Celestia vs. Ethereum

Data Availability (DA) layers like Celestia argue that blockspace should be specialized. Ethereum attempts to do both execution and DA, making its blockspace expensive. Celestia focuses solely on ordering and publishing data, stripping away execution entirely.28

  • Commoditization of Data: By flooding the market with cheap DA blockspace, Celestia challenges Ethereum’s monopoly. If data becomes abundant and cheap, the “rent” that Ethereum can charge for storage drops. This commoditization benefits L2s but threatens the revenue model of the L1.
  • Sovereign Rollups: Celestia enables “Sovereign Rollups” that use Celestia for data but handle their own settlement. This breaks the dependency on Ethereum, suggesting that blockspace ownership can be modularized—you can “rent” storage from one landlord and “execution” from another. This “multi-cloud” approach to blockchains reduces the lock-in effect of any single L1.30

5.2 Client Diversity and the “Geth” Risk

Ownership of the network is also defined by the software that runs it. For a long period, the Geth execution client was used by over 80% of Ethereum validators, creating a “supermajority” risk.31

  • Code as Governance: If a supermajority client has a bug, it becomes the de facto canonical chain, even if it violates the protocol rules. This implies that the developers of the dominant client (in this case, the Geth team) hold an implicit, catastrophic power over blockspace ownership. If Geth forks, the network forks.
  • The Diversity Mandate: The community push to adopt minority clients (Nethermind, Besu, Erigon) is a struggle to reclaim ownership from a single software implementation and return it to the abstract “protocol specification.” By diversifying the client set, the network ensures that “ownership” resides in the consensus of rules, not the dictates of code.33

6. Legal and Regulatory Ownership: The State’s Claim

Perhaps the most significant existential threat to crypto-native ownership of blockspace is the assertion of legal sovereignty by nation-states. As blockchains grow in value, they inevitably collide with traditional legal frameworks governing property, finance, and liability.

6.1 OFAC and the “Neutral Carrier” Defense

Following the sanctioning of Tornado Cash by the US Treasury’s Office of Foreign Assets Control (OFAC), a significant percentage of Ethereum Relays began censoring transactions that interacted with sanctioned addresses.11

  • The Conflict: If validators censor transactions based on OFAC lists, they are effectively ceding ownership of the blockspace to the US government. The state decides who can write to the ledger, overriding the protocol’s permissionless nature.
  • Common Carrier Theory: Legal scholars and crypto-advocates argue that validators should be treated as “Common Carriers” (like ISPs or telephone companies) or “neutral conveyors” of data. Under this theory, they act as passive infrastructure providers and should be exempt from liability for the content they process.34
  • Money Transmitter Risk: Conversely, if regulators classify validators as “Money Transmitters” under FinCEN guidance, they would be required to perform Know Your Customer (KYC) checks on every transaction. This would destroy the concept of permissionless blockspace, converting it into a regulated banking network owned by the state.36 The Financial Crimes Enforcement Network (FinCEN) has issued nuanced guidance suggesting that “anonymizing software providers” are not money transmitters, but the application to decentralized validators remains a gray area fraught with legal peril.38

6.2 Property Rights in a Stateless System

Legal theorists debate whether blockspace constitutes “property” in the Lockean sense (labor mixed with resources) or a “public good”.2

  • Public Utility: If blockspace is deemed essential infrastructure (like roads or electricity), states may argue for its regulation as a public utility. This would allow the government to impose “fair access” rules, price controls, and service mandates, effectively nationalizing the blockspace. The “Rule of Law” (state enforcement) competes directly with the “Rule of Code” (cryptographic enforcement) for ultimate sovereignty.40
  • Sovereign Clouds: The rise of “Sovereign Clouds” in the EU and “Government Clouds” suggests a counter-movement where states build their own enclosed, compliant blockspace. These “permissioned” ledgers reject the stateless nature of public chains, asserting that true ownership requires legal jurisdiction and data residency within national borders.42

7. Governance as Ownership: Who Decides the Rules?

Ownership implies the right to modify. In blockchains, this is the power of governance. The ability to upgrade the protocol, change parameters, or fork the chain represents the ultimate form of control.

7.1 Social Consensus vs. On-Chain Governance

Ethereum relies on “Social Consensus” (off-chain agreement by developers, users, and node operators) rather than formal on-chain voting.44

  • The User Activated Soft Fork (UASF): The ultimate check on validator power is the UASF. As demonstrated in the Bitcoin Block Size Wars (and potentially applicable to future Ethereum conflicts), users running full nodes can reject blocks that don’t follow their preferred rules, even if 90% of miners/validators support them.
  • The Economic Majority: This mechanism suggests that ultimately, blockspace is owned by the economic majority of users who verify the chain. Validators are merely employees who can be fired (via a PoW change or UASF) if they deviate from the users’ will. The “sovereign” is the collective of node operators who define the consensus rules.45

7.2 The Gas Limit Debate (“Pump the Gas”)

The recent conflict over raising the Ethereum gas limit highlights the tension between scale (desired by L2s and users) and decentralization (desired by solo stakers and core devs).47

  • Client Devs as Gatekeepers: While a grassroots movement (“Pump the Gas”) clamored for a gas limit increase to reduce fees, client developers pushed back, citing technical risks such as state bloat and sync times. This incident revealed that the core developers hold a soft veto power over blockspace expansion. Their control over the default settings in client software allows them to influence the supply curve more than the “market” demand.49
  • Technocratic Ownership: This dynamic points to a “Technocratic” ownership model, where a small elite of experts stewards the resource, protecting the network from the potentially dangerous short-term desires of the mob (users) and the rent-seekers (validators).

8. Conclusion: The Fragmented Sovereign

Who really owns blockspace? The answer is not a single entity but a dynamic equilibrium between competing forces, each holding a different form of claim.

  1. Economic Ownership lies with the Protocol/Token Holders (via the Burn) and the MEV Supply Chain (via arbitrage extraction). They capture the financial surplus generated by the network.
  2. Operational Ownership is currently held by Builders (on L1) and Sequencers (on L2), who control the transaction ordering and immediate history. They are the gatekeepers of the “now.”
  3. Sovereign Ownership resides with the Users running full nodes, who retain the nuclear option to reject the chain if it violates their social contract (UASF). They define the “truth.”
  4. Legal Ownership is the contested frontier, where the State attempts to impose “common carrier” or “money transmitter” obligations, seeking to bring the digital commons under the umbrella of traditional jurisdiction.

Blockspace is not a simple commodity like oil; it is a political economy. It is a digital territory where the rights to write history are auctioned every 12 seconds. As the stack evolves—with Shared Sequencing, Based Rollups, and MEV-Burn—the pendulum of ownership will continue to swing between centralization (efficiency) and decentralization (sovereignty).

The “owner” is ultimately whoever can successfully enforce their claim—whether through capital, code, or social consensus—in the next block. In this adversarial environment, ownership is not a static right but a continuous exertion of power.

Detailed Analysis of Ownership Vectors

Vector 1: The Producer (Validator/Miner)

  • Claim: “We invest hardware and capital; we produce the blocks.”
  • Reality: In PoS + PBS, validators are increasingly rent-seekers. They have outsourced production to Builders and ordering to Relays. Their “ownership” is reduced to a yield-bearing instrument (staking), similar to a bondholder rather than a CEO.
  • Trend: Commoditization. Margins are compressing, and value is moving to the “ordering” layer (MEV) or the “protocol” layer (Burn).

Vector 2: The Architect (Builder/Sequencer)

  • Claim: “We construct the valuable payload.”
  • Reality: This is where the tactical power lies today. Builders on L1 and Sequencers on L2 determine the contents of history.
  • Risk: Centralization. Economies of scale favor large Builders, leading to a potential oligopoly that “owns” the transaction order flow.

Vector 3: The Protocol (Token Holders/DAO)

  • Claim: “We govern the rules and capture the fees.”
  • Reality: Through EIP-1559 and potential MEV-Burn, the protocol is asserting itself as the ultimate beneficiary. The network “buys back” its own stock, enriching all holders.
  • Trend: Nationalization. The protocol is absorbing revenue streams that used to go to service providers, centralizing economic value.

Vector 4: The State (Regulators)

  • Claim: “We have jurisdiction over the actors.”
  • Reality: The state cannot stop the code, but it can coerce the actors. By regulating stablecoins (USDC) and centralized relays, the state can exert “soft” ownership over significant portions of the blockspace.

Vector 5: The User (Node Operators)

  • Claim: “We verify the chain; it has no value without us.”
  • Reality: The “nuclear option” of UASF proves that users hold the ultimate sovereignty. If the chain becomes captured or censored, users can fork.
  • Constraint: Coordination costs are high. It is difficult to mobilize a UASF except in existential crises, meaning this power is rarely exercised.