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docs(developers): payment methods rewrite #14

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61 changes: 33 additions & 28 deletions docs/Developers/payment-methods.md
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---
title: Builder and Searcher payment methods
description: Classification of variouus payment methods

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tags: ["primary market", "validators", "builders", "searchers", "payment"]
---

To further classify the payment methods, we can consider the broader context of Ethereum block building, including both
traditional and MEV-Auction scenarios as it relates to payment mechanisms.
# Classification of Payment Methods in Ethereum Block Building

> This classification covers a range of payment methods from the simplest direct payments to more complex arrangements
> involving smart contracts and off-chain agreements.
To further classify the payment methods, we can consider the broader context of Ethereum block building, including both traditional and MEV-Auction scenarios as it relates to payment mechanisms.

1. Direct Payment Method
> This classification covers a range of payment methods from the simplest direct payments to more complex arrangements involving smart contracts and off-chain agreements.

- **Description**: The most straightforward method where the block proposer (validator) receives the transaction fees
directly from the transactions included in the block.
- **Use Case**: Commonly used in standard Ethereum block building.

2. Coinbase Transfer Payment Method
| **Payment Method** | **Use Case** | **Traditional Scenario** | **MEV Auction Scenario** |
|-----------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------|--------------------------|
| Direct Payment Method | Commonly used in standard Ethereum block building. | Yes | No |
| Coinbase Transfer Payment Method | Utilized in both traditional and MEV-Auction scenarios. | Yes | Yes |
| Indirect Address Payment (IAP) Method | Specific to MEV-Auction, where builders and proposers are distinct entities. | No | Yes |
| Intermediate Transfer Payment (ITP) Methods | Specific to MEV-Auction, particularly when involving smart contracts or third-party addresses. | No | Yes |
| Smart Contract-Based Payment Method | Useful in decentralized block building scenarios or when complex payment distributions are required. | Yes | Yes |
| Off-Chain Payment Method | Might be used in private agreements between parties involved in block building. | Yes | Yes |

- **Description**: In this method, the transaction fees and MEV rewards are transferred directly to the block
proposer's address via the coinbase transaction.
- **Use Case**: Utilized in both traditional and MEV-Auction scenarios.
### Direct Payment Method

3. Indirect Address Payment (IAP) Method
- **Description**: The most straightforward method where the block proposer (validator) receives the transaction fees directly from the transactions included in the block.
- **Use Case**: Commonly used in standard Ethereum block building.

- **Description**: The builder uses a different address to pay the proposer through an end-of-block transaction,
separate from the address receiving the block’s transaction fees.
- **Use Case**: Specific to MEV-Auction, where builders and proposers are distinct entities.
### Coinbase Transfer Payment Method

4. Intermediate Transfer Payment (ITP) Methods
- **Description**: In this method, the transaction fees and MEV rewards are transferred directly to the block proposer's address via the coinbase transaction.
- **Use Case**: Utilized in both traditional and MEV-Auction scenarios.

- **Description**: Involves a two-step process where the builder first transfers the payment to an intermediary
address, which then sends it to the proposer.
- **Use Case**: Also specific to MEV-Auction, particularly when involving smart contracts or third-party addresses.
### Indirect Address Payment (IAP) Method

- **Description**: The builder uses a different address to pay the proposer through an end-of-block transaction, separate from the address receiving the block’s transaction fees.
- **Use Case**: Specific to MEV-Auction, where builders and proposers are distinct entities.

### Intermediate Transfer Payment (ITP) Methods

- **Description**: Involves a two-step process where the builder first transfers the payment to an intermediary address, which then sends it to the proposer.
- **Use Case**: Also specific to MEV-Auction, particularly when involving smart contracts or third-party addresses.

### Smart Contract-Based Payment Method

5. Smart Contract-Based Payment Method
- **Description**: Payments are handled through a smart contract, which can programmatically distribute rewards based on predefined rules.
- **Use Case**: Useful in decentralized block building scenarios or when complex payment distributions are required.

- **Description**: Payments are handled through a smart contract, which can programmatically distribute rewards based
on predefined rules.
- **Use Case**: Useful in decentralized block building scenarios or when complex payment distributions are required.
### Off-Chain Payment Method

6. Off-Chain Payment Method
- **Description**: Payment occurs outside the Ethereum blockchain, possibly through other cryptocurrencies or traditional banking systems.
- **Use Case**: Might be used in private agreements between parties involved in block building.

- **Description**: Payment occurs outside the Ethereum blockchain, possibly through other cryptocurrencies or
traditional banking systems.
- **Use Case**: Might be used in private agreements between parties involved in block building.

## Builder Payment Methods

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