Geographical Centralization Resilience in Ethereum's Block-Building Paradigms

Decentralization has an important geographic dimension that conventional metrics, such as stake distribution, often overlook. Validator location affects resilience to regional shocks and fairness in reward access, yet in major blockchains, geographical locations are not encoded in the rules but arise from economic incentives. When some regions offer systematic advantages, validators may strategically co-locate, as seen in Ethereum. In this paper, we study validators' geographic positioning incentives under Ethereum's protocol design by modeling how its two block-building paradigms, local and external block building, interact with the geographic distribution of validators and information sources. We analyze the model under a mean-field approximation and complement it with agent-based simulations calibrated using real-world latency data. Our results show that Ethereum's block-building architecture is not geographically neutral: both paradigms generate location-dependent payoffs and incentives to relocate closer to payoff-relevant parties in order to reduce propagation delays, although through different underlying mechanisms. Asymmetric access to information sources further amplifies geographical centralization. We also demonstrate that consensus parameters, such as attestation thresholds and slot times, modulate latency sensitivity and can amplify these effects, acting as protocol-level levers. Finally, we discuss the implications of our findings for protocol design and outline potential mitigation directions informed by our analysis.