diff --git a/proto/pob/auction/v1/genesis.proto b/proto/pob/auction/v1/genesis.proto
index 8098a88..26ddfab 100644
--- a/proto/pob/auction/v1/genesis.proto
+++ b/proto/pob/auction/v1/genesis.proto
@@ -8,7 +8,9 @@ import "amino/amino.proto";
 option go_package = "github.com/skip-mev/pob/x/auction/types";
 
 // GenesisState defines the genesis state of the x/auction module.
-message GenesisState { Params params = 1 [ (gogoproto.nullable) = false ]; }
+message GenesisState {
+  Params params = 1 [(gogoproto.nullable) = false];
+}
 
 // Params defines the parameters of the x/auction module.
 message Params {
@@ -17,29 +19,42 @@ message Params {
   // max_bundle_size is the maximum number of transactions that can be bundled
   // in a single bundle.
   uint32 max_bundle_size = 1;
-  // escrow_account_address is the address of the account that will hold the
-  // funds for the auctions.
+
+  // escrow_account_address is the address of the account that will receive a
+  // portion of the bid proceeds.
   string escrow_account_address = 2;
+
   // reserve_fee specifies the bid floor for the auction.
   repeated cosmos.base.v1beta1.Coin reserve_fee = 3 [
-    (gogoproto.nullable) = false,
-    (amino.dont_omitempty) = true,
+    (gogoproto.nullable)     = false,
+    (amino.dont_omitempty)   = true,
     (gogoproto.castrepeated) = "github.com/cosmos/cosmos-sdk/types.Coins"
   ];
-  // min_buy_in_fee specifies the fee that the bidder must pay to enter the auction.
+
+  // min_buy_in_fee specifies the fee that the bidder must pay to enter the
+  // auction.
   repeated cosmos.base.v1beta1.Coin min_buy_in_fee = 4 [
-    (gogoproto.nullable) = false,
-    (amino.dont_omitempty) = true,
+    (gogoproto.nullable)     = false,
+    (amino.dont_omitempty)   = true,
     (gogoproto.castrepeated) = "github.com/cosmos/cosmos-sdk/types.Coins"
   ];
+
   // min_bid_increment specifies the minimum amount that the next bid must be
   // greater than the previous bid.
   repeated cosmos.base.v1beta1.Coin min_bid_increment = 5 [
-    (gogoproto.nullable) = false,
-    (amino.dont_omitempty) = true,
+    (gogoproto.nullable)     = false,
+    (amino.dont_omitempty)   = true,
     (gogoproto.castrepeated) = "github.com/cosmos/cosmos-sdk/types.Coins"
   ];
-  // front_running_protection specifies whether front running and sandwich attack protection
-  // is enabled.
+
+  // front_running_protection specifies whether front running and sandwich
+  // attack protection is enabled.
   bool front_running_protection = 6;
+
+  // proposer_fee defines the portion of the winning bid that goes to the block
+  // proposer that proposed the block.
+  string proposer_fee = 7 [
+    (gogoproto.nullable)   = false,
+    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec"
+  ];
 }
diff --git a/x/auction/keeper/auction.go b/x/auction/keeper/auction.go
index ee8fcd4..6a01563 100644
--- a/x/auction/keeper/auction.go
+++ b/x/auction/keeper/auction.go
@@ -70,7 +70,7 @@ func (k Keeper) ValidateAuctionBid(ctx sdk.Context, bidder sdk.AccAddress, bid,
 
 	// Ensure the bidder has enough funds to cover all the inclusion fees.
 	minBalance := bid.Add(minBuyInFee...)
-	balances := k.bankkeeper.GetAllBalances(ctx, bidder)
+	balances := k.bankKeeper.GetAllBalances(ctx, bidder)
 	if !balances.IsAllGTE(minBalance) {
 		return fmt.Errorf("insufficient funds to bid %s (reserve fee + bid) with balance %s", minBalance, balances)
 	}
@@ -103,8 +103,8 @@ func (k Keeper) ValidateAuctionBundle(ctx sdk.Context, bidder sdk.AccAddress, tr
 	// Check that all subsequent transactions are signed by either
 	// 1. the same party as the first transaction
 	// 2. the same party for some arbitrary number of txs and then are all remaining txs are signed by the bidder.
-	for _, txbytes := range transactions[1:] {
-		txSigners, err := k.getTxSigners(txbytes)
+	for _, refTx := range transactions[1:] {
+		txSigners, err := k.getTxSigners(refTx)
 		if err != nil {
 			return err
 		}
diff --git a/x/auction/keeper/auction_test.go b/x/auction/keeper/auction_test.go
index 70d1d76..ec73b37 100644
--- a/x/auction/keeper/auction_test.go
+++ b/x/auction/keeper/auction_test.go
@@ -4,16 +4,12 @@ import (
 	"math/rand"
 	"time"
 
-	"github.com/cosmos/cosmos-sdk/client"
 	sdk "github.com/cosmos/cosmos-sdk/types"
-	"github.com/cosmos/cosmos-sdk/types/tx/signing"
-	authsigning "github.com/cosmos/cosmos-sdk/x/auth/signing"
-	banktypes "github.com/cosmos/cosmos-sdk/x/bank/types"
 	"github.com/skip-mev/pob/x/auction/keeper"
 	auctiontypes "github.com/skip-mev/pob/x/auction/types"
 )
 
-func (suite *IntegrationTestSuite) TestValidateAuctionMsg() {
+func (suite *KeeperTestSuite) TestValidateAuctionMsg() {
 	var (
 		// Tx building variables
 		accounts = []Account{} // tracks the order of signers in the bundle
@@ -161,6 +157,8 @@ func (suite *IntegrationTestSuite) TestValidateAuctionMsg() {
 				suite.key,
 				suite.accountKeeper,
 				suite.bankKeeper,
+				suite.distrKeeper,
+				suite.stakingKeeper,
 				suite.authorityAccount.String(),
 			)
 			params := auctiontypes.Params{
@@ -191,7 +189,7 @@ func (suite *IntegrationTestSuite) TestValidateAuctionMsg() {
 	}
 }
 
-func (suite *IntegrationTestSuite) TestValidateBundle() {
+func (suite *KeeperTestSuite) TestValidateBundle() {
 	// TODO: Update this to be multi-dimensional to test multi-sig
 	// https://github.com/skip-mev/pob/issues/14
 	var accounts []Account // tracks the order of signers in the bundle
@@ -301,33 +299,3 @@ func (suite *IntegrationTestSuite) TestValidateBundle() {
 		})
 	}
 }
-
-// createRandomTx creates a random transaction with a given account, nonce, and number of messages.
-func createRandomTx(txCfg client.TxConfig, account Account, nonce, numberMsgs uint64) (authsigning.Tx, error) {
-	msgs := make([]sdk.Msg, numberMsgs)
-	for i := 0; i < int(numberMsgs); i++ {
-		msgs[i] = &banktypes.MsgSend{
-			FromAddress: account.Address.String(),
-			ToAddress:   account.Address.String(),
-		}
-	}
-
-	txBuilder := txCfg.NewTxBuilder()
-	if err := txBuilder.SetMsgs(msgs...); err != nil {
-		return nil, err
-	}
-
-	sigV2 := signing.SignatureV2{
-		PubKey: account.PrivKey.PubKey(),
-		Data: &signing.SingleSignatureData{
-			SignMode:  txCfg.SignModeHandler().DefaultMode(),
-			Signature: nil,
-		},
-		Sequence: nonce,
-	}
-	if err := txBuilder.SetSignatures(sigV2); err != nil {
-		return nil, err
-	}
-
-	return txBuilder.GetTx(), nil
-}
diff --git a/x/auction/keeper/keeper.go b/x/auction/keeper/keeper.go
index 09ae15d..9cd5fca 100644
--- a/x/auction/keeper/keeper.go
+++ b/x/auction/keeper/keeper.go
@@ -15,15 +15,24 @@ type Keeper struct {
 	cdc      codec.BinaryCodec
 	storeKey storetypes.StoreKey
 
-	bankkeeper types.BankKeeper
+	bankKeeper    types.BankKeeper
+	distrKeeper   types.DistributionKeeper
+	stakingKeeper types.StakingKeeper
 
-	// The address that is capable of executing a MsgUpdateParams message. Typically this will be the
-	// governance module's address.
+	// The address that is capable of executing a MsgUpdateParams message.
+	// Typically this will be the governance module's address.
 	authority string
 }
 
-// NewKeeper creates a new keeper instance.
-func NewKeeper(cdc codec.BinaryCodec, storeKey storetypes.StoreKey, accountKeeper types.AccountKeeper, bankkeeper types.BankKeeper, authority string) Keeper {
+func NewKeeper(
+	cdc codec.BinaryCodec,
+	storeKey storetypes.StoreKey,
+	accountKeeper types.AccountKeeper,
+	bankKeeper types.BankKeeper,
+	distrKeeper types.DistributionKeeper,
+	stakingKeeper types.StakingKeeper,
+	authority string,
+) Keeper {
 	// Ensure that the authority address is valid.
 	if _, err := sdk.AccAddressFromBech32(authority); err != nil {
 		panic(err)
@@ -35,10 +44,12 @@ func NewKeeper(cdc codec.BinaryCodec, storeKey storetypes.StoreKey, accountKeepe
 	}
 
 	return Keeper{
-		cdc:        cdc,
-		storeKey:   storeKey,
-		bankkeeper: bankkeeper,
-		authority:  authority,
+		cdc:           cdc,
+		storeKey:      storeKey,
+		bankKeeper:    bankKeeper,
+		distrKeeper:   distrKeeper,
+		stakingKeeper: stakingKeeper,
+		authority:     authority,
 	}
 }
 
@@ -140,6 +151,16 @@ func (k Keeper) GetMinBidIncrement(ctx sdk.Context) (sdk.Coins, error) {
 	return params.MinBidIncrement, nil
 }
 
+// GetProposerFee returns the proposer fee for the auction module.
+func (k Keeper) GetProposerFee(ctx sdk.Context) (sdk.Dec, error) {
+	params, err := k.GetParams(ctx)
+	if err != nil {
+		return sdk.ZeroDec(), err
+	}
+
+	return params.ProposerFee, nil
+}
+
 // FrontRunningProtectionEnabled returns true if front-running protection is enabled.
 func (k Keeper) FrontRunningProtectionEnabled(ctx sdk.Context) (bool, error) {
 	params, err := k.GetParams(ctx)
diff --git a/x/auction/keeper/keeper_test.go b/x/auction/keeper/keeper_test.go
index af76edf..3508f4a 100644
--- a/x/auction/keeper/keeper_test.go
+++ b/x/auction/keeper/keeper_test.go
@@ -1,22 +1,11 @@
 package keeper_test
 
 import (
-	"math/rand"
-	"reflect"
 	"testing"
 
-	"github.com/cosmos/cosmos-sdk/client"
-	"github.com/cosmos/cosmos-sdk/codec"
-	codectypes "github.com/cosmos/cosmos-sdk/codec/types"
-	cryptocodec "github.com/cosmos/cosmos-sdk/crypto/codec"
-	"github.com/cosmos/cosmos-sdk/crypto/keys/ed25519"
-	"github.com/cosmos/cosmos-sdk/crypto/keys/secp256k1"
-	cryptotypes "github.com/cosmos/cosmos-sdk/crypto/types"
 	storetypes "github.com/cosmos/cosmos-sdk/store/types"
 	"github.com/cosmos/cosmos-sdk/testutil"
 	sdk "github.com/cosmos/cosmos-sdk/types"
-	"github.com/cosmos/cosmos-sdk/x/auth/tx"
-	banktypes "github.com/cosmos/cosmos-sdk/x/bank/types"
 	"github.com/golang/mock/gomock"
 	"github.com/skip-mev/pob/mempool"
 	"github.com/skip-mev/pob/x/auction/ante"
@@ -26,12 +15,14 @@ import (
 	"github.com/stretchr/testify/suite"
 )
 
-type IntegrationTestSuite struct {
+type KeeperTestSuite struct {
 	suite.Suite
 
 	auctionKeeper    keeper.Keeper
 	bankKeeper       *MockBankKeeper
 	accountKeeper    *MockAccountKeeper
+	distrKeeper      *MockDistributionKeeper
+	stakingKeeper    *MockStakingKeeper
 	encCfg           encodingConfig
 	AuctionDecorator sdk.AnteDecorator
 	ctx              sdk.Context
@@ -43,22 +34,33 @@ type IntegrationTestSuite struct {
 }
 
 func TestKeeperTestSuite(t *testing.T) {
-	suite.Run(t, new(IntegrationTestSuite))
+	suite.Run(t, new(KeeperTestSuite))
 }
 
-func (suite *IntegrationTestSuite) SetupTest() {
+func (suite *KeeperTestSuite) SetupTest() {
 	suite.encCfg = createTestEncodingConfig()
 	suite.key = sdk.NewKVStoreKey(types.StoreKey)
 	testCtx := testutil.DefaultContextWithDB(suite.T(), suite.key, sdk.NewTransientStoreKey("transient_test"))
 	suite.ctx = testCtx.Ctx
 
-	// Auction Keeper setup
 	ctrl := gomock.NewController(suite.T())
+
 	suite.accountKeeper = NewMockAccountKeeper(ctrl)
 	suite.accountKeeper.EXPECT().GetModuleAddress(types.ModuleName).Return(sdk.AccAddress{}).AnyTimes()
+
 	suite.bankKeeper = NewMockBankKeeper(ctrl)
+	suite.distrKeeper = NewMockDistributionKeeper(ctrl)
+	suite.stakingKeeper = NewMockStakingKeeper(ctrl)
 	suite.authorityAccount = sdk.AccAddress([]byte("authority"))
-	suite.auctionKeeper = keeper.NewKeeper(suite.encCfg.Codec, suite.key, suite.accountKeeper, suite.bankKeeper, suite.authorityAccount.String())
+	suite.auctionKeeper = keeper.NewKeeper(
+		suite.encCfg.Codec,
+		suite.key,
+		suite.accountKeeper,
+		suite.bankKeeper,
+		suite.distrKeeper,
+		suite.stakingKeeper,
+		suite.authorityAccount.String(),
+	)
 
 	err := suite.auctionKeeper.SetParams(suite.ctx, types.DefaultParams())
 	suite.Require().NoError(err)
@@ -67,157 +69,3 @@ func (suite *IntegrationTestSuite) SetupTest() {
 	suite.AuctionDecorator = ante.NewAuctionDecorator(suite.auctionKeeper, suite.encCfg.TxConfig.TxDecoder(), suite.mempool)
 	suite.msgServer = keeper.NewMsgServerImpl(suite.auctionKeeper)
 }
-
-type encodingConfig struct {
-	InterfaceRegistry codectypes.InterfaceRegistry
-	Codec             codec.Codec
-	TxConfig          client.TxConfig
-	Amino             *codec.LegacyAmino
-}
-
-func createTestEncodingConfig() encodingConfig {
-	cdc := codec.NewLegacyAmino()
-	interfaceRegistry := codectypes.NewInterfaceRegistry()
-
-	banktypes.RegisterInterfaces(interfaceRegistry)
-	cryptocodec.RegisterInterfaces(interfaceRegistry)
-
-	codec := codec.NewProtoCodec(interfaceRegistry)
-
-	return encodingConfig{
-		InterfaceRegistry: interfaceRegistry,
-		Codec:             codec,
-		TxConfig:          tx.NewTxConfig(codec, tx.DefaultSignModes),
-		Amino:             cdc,
-	}
-}
-
-type Account struct {
-	PrivKey cryptotypes.PrivKey
-	PubKey  cryptotypes.PubKey
-	Address sdk.AccAddress
-	ConsKey cryptotypes.PrivKey
-}
-
-func (acc Account) Equals(acc2 Account) bool {
-	return acc.Address.Equals(acc2.Address)
-}
-
-// RandomAccounts returns a slice of n random accounts.
-func RandomAccounts(r *rand.Rand, n int) []Account {
-	accs := make([]Account, n)
-
-	for i := 0; i < n; i++ {
-		pkSeed := make([]byte, 15)
-		r.Read(pkSeed)
-
-		accs[i].PrivKey = secp256k1.GenPrivKeyFromSecret(pkSeed)
-		accs[i].PubKey = accs[i].PrivKey.PubKey()
-		accs[i].Address = sdk.AccAddress(accs[i].PubKey.Address())
-
-		accs[i].ConsKey = ed25519.GenPrivKeyFromSecret(pkSeed)
-	}
-
-	return accs
-}
-
-// MockAccountKeeper is a mock of AccountKeeper interface.
-type MockAccountKeeper struct {
-	ctrl     *gomock.Controller
-	recorder *MockAccountKeeperMockRecorder
-}
-
-// MockAccountKeeperMockRecorder is the mock recorder for MockAccountKeeper.
-type MockAccountKeeperMockRecorder struct {
-	mock *MockAccountKeeper
-}
-
-// NewMockAccountKeeper creates a new mock instance.
-func NewMockAccountKeeper(ctrl *gomock.Controller) *MockAccountKeeper {
-	mock := &MockAccountKeeper{ctrl: ctrl}
-	mock.recorder = &MockAccountKeeperMockRecorder{mock}
-	return mock
-}
-
-// EXPECT returns an object that allows the caller to indicate expected use.
-func (m *MockAccountKeeper) EXPECT() *MockAccountKeeperMockRecorder {
-	return m.recorder
-}
-
-// GetModuleAddress mocks base method.
-func (m *MockAccountKeeper) GetModuleAddress(name string) sdk.AccAddress {
-	m.ctrl.T.Helper()
-	ret := m.ctrl.Call(m, "GetModuleAddress", name)
-	ret0, _ := ret[0].(sdk.AccAddress)
-	return ret0
-}
-
-// GetModuleAddress indicates an expected call of GetModuleAddress.
-func (mr *MockAccountKeeperMockRecorder) GetModuleAddress(name interface{}) *gomock.Call {
-	mr.mock.ctrl.T.Helper()
-	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "GetModuleAddress", reflect.TypeOf((*MockAccountKeeper)(nil).GetModuleAddress), name)
-}
-
-// MockBankKeeper is a mock of BankKeeper interface.
-type MockBankKeeper struct {
-	ctrl     *gomock.Controller
-	recorder *MockBankKeeperMockRecorder
-}
-
-// MockBankKeeperMockRecorder is the mock recorder for MockBankKeeper.
-type MockBankKeeperMockRecorder struct {
-	mock *MockBankKeeper
-}
-
-// NewMockBankKeeper creates a new mock instance.
-func NewMockBankKeeper(ctrl *gomock.Controller) *MockBankKeeper {
-	mock := &MockBankKeeper{ctrl: ctrl}
-	mock.recorder = &MockBankKeeperMockRecorder{mock}
-	return mock
-}
-
-// EXPECT returns an object that allows the caller to indicate expected use.
-func (m *MockBankKeeper) EXPECT() *MockBankKeeperMockRecorder {
-	return m.recorder
-}
-
-// GetAllBalances mocks base method.
-func (m *MockBankKeeper) GetAllBalances(ctx sdk.Context, addr sdk.AccAddress) sdk.Coins {
-	m.ctrl.T.Helper()
-	ret := m.ctrl.Call(m, "GetAllBalances", ctx, addr)
-	ret0 := ret[0].(sdk.Coins)
-	return ret0
-}
-
-// GetAllBalances indicates an expected call of GetAllBalances.
-func (mr *MockBankKeeperMockRecorder) GetAllBalances(ctx, addr interface{}) *gomock.Call {
-	mr.mock.ctrl.T.Helper()
-	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "GetAllBalances", reflect.TypeOf((*MockBankKeeper)(nil).GetAllBalances), ctx, addr)
-}
-
-// SendCoins mocks base method.
-func (m *MockBankKeeper) SendCoins(ctx sdk.Context, fromAddr sdk.AccAddress, toAddr sdk.AccAddress, amt sdk.Coins) error {
-	m.ctrl.T.Helper()
-	m.ctrl.Call(m, "SendCoins", ctx, fromAddr, toAddr, amt)
-	return nil
-}
-
-// SendCoins indicates an expected call of SendCoins.
-func (mr *MockBankKeeperMockRecorder) SendCoins(ctx, fromAddr, toAddr, amt interface{}) *gomock.Call {
-	mr.mock.ctrl.T.Helper()
-	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "SendCoins", reflect.TypeOf((*MockBankKeeper)(nil).SendCoins), ctx, fromAddr, toAddr, amt)
-}
-
-// SendCoinsFromAccountToModule mocks base method.
-func (m *MockBankKeeper) SendCoinsFromAccountToModule(ctx sdk.Context, senderAddr sdk.AccAddress, recipientModule string, amt sdk.Coins) error {
-	m.ctrl.T.Helper()
-	ret := m.ctrl.Call(m, "SendCoinsFromAccountToModule", ctx, senderAddr, recipientModule, amt)
-	ret0, _ := ret[0].(error)
-	return ret0
-}
-
-// SendCoinsFromAccountToModule indicates an expected call of SendCoinsFromAccountToModule.
-func (mr *MockBankKeeperMockRecorder) SendCoinsFromAccountToModule(ctx, senderAddr, recipientModule, amt interface{}) *gomock.Call {
-	mr.mock.ctrl.T.Helper()
-	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "SendCoinsFromAccountToModule", reflect.TypeOf((*MockBankKeeper)(nil).SendCoinsFromAccountToModule), ctx, senderAddr, recipientModule, amt)
-}
diff --git a/x/auction/keeper/mocks_test.go b/x/auction/keeper/mocks_test.go
new file mode 100644
index 0000000..108aff8
--- /dev/null
+++ b/x/auction/keeper/mocks_test.go
@@ -0,0 +1,144 @@
+package keeper_test
+
+import (
+	"reflect"
+
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	stakingtypes "github.com/cosmos/cosmos-sdk/x/staking/types"
+	"github.com/golang/mock/gomock"
+)
+
+type MockAccountKeeper struct {
+	ctrl     *gomock.Controller
+	recorder *MockAccountKeeperMockRecorder
+}
+
+type MockAccountKeeperMockRecorder struct {
+	mock *MockAccountKeeper
+}
+
+func NewMockAccountKeeper(ctrl *gomock.Controller) *MockAccountKeeper {
+	mock := &MockAccountKeeper{ctrl: ctrl}
+	mock.recorder = &MockAccountKeeperMockRecorder{mock}
+	return mock
+}
+
+func (m *MockAccountKeeper) EXPECT() *MockAccountKeeperMockRecorder {
+	return m.recorder
+}
+
+func (m *MockAccountKeeper) GetModuleAddress(name string) sdk.AccAddress {
+	m.ctrl.T.Helper()
+	ret := m.ctrl.Call(m, "GetModuleAddress", name)
+	ret0, _ := ret[0].(sdk.AccAddress)
+	return ret0
+}
+
+func (mr *MockAccountKeeperMockRecorder) GetModuleAddress(name interface{}) *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "GetModuleAddress", reflect.TypeOf((*MockAccountKeeper)(nil).GetModuleAddress), name)
+}
+
+type MockBankKeeper struct {
+	ctrl     *gomock.Controller
+	recorder *MockBankKeeperMockRecorder
+}
+
+type MockBankKeeperMockRecorder struct {
+	mock *MockBankKeeper
+}
+
+func NewMockBankKeeper(ctrl *gomock.Controller) *MockBankKeeper {
+	mock := &MockBankKeeper{ctrl: ctrl}
+	mock.recorder = &MockBankKeeperMockRecorder{mock}
+	return mock
+}
+
+func (m *MockBankKeeper) EXPECT() *MockBankKeeperMockRecorder {
+	return m.recorder
+}
+
+func (m *MockBankKeeper) GetAllBalances(ctx sdk.Context, addr sdk.AccAddress) sdk.Coins {
+	m.ctrl.T.Helper()
+	ret := m.ctrl.Call(m, "GetAllBalances", ctx, addr)
+	ret0 := ret[0].(sdk.Coins)
+	return ret0
+}
+
+func (mr *MockBankKeeperMockRecorder) GetAllBalances(ctx, addr interface{}) *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "GetAllBalances", reflect.TypeOf((*MockBankKeeper)(nil).GetAllBalances), ctx, addr)
+}
+
+func (m *MockBankKeeper) SendCoins(ctx sdk.Context, fromAddr sdk.AccAddress, toAddr sdk.AccAddress, amt sdk.Coins) error {
+	m.ctrl.T.Helper()
+	m.ctrl.Call(m, "SendCoins", ctx, fromAddr, toAddr, amt)
+	return nil
+}
+
+func (mr *MockBankKeeperMockRecorder) SendCoins(ctx, fromAddr, toAddr, amt interface{}) *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "SendCoins", reflect.TypeOf((*MockBankKeeper)(nil).SendCoins), ctx, fromAddr, toAddr, amt)
+}
+
+type MockDistributionKeeperRecorder struct {
+	mock *MockDistributionKeeper
+}
+
+type MockDistributionKeeper struct {
+	ctrl     *gomock.Controller
+	recorder *MockDistributionKeeperRecorder
+}
+
+func NewMockDistributionKeeper(ctrl *gomock.Controller) *MockDistributionKeeper {
+	mock := &MockDistributionKeeper{ctrl: ctrl}
+	mock.recorder = &MockDistributionKeeperRecorder{mock}
+	return mock
+}
+
+func (m *MockDistributionKeeper) EXPECT() *MockDistributionKeeperRecorder {
+	return m.recorder
+}
+
+func (m *MockDistributionKeeper) GetPreviousProposerConsAddr(ctx sdk.Context) sdk.ConsAddress {
+	m.ctrl.T.Helper()
+	ret := m.ctrl.Call(m, "GetPreviousProposerConsAddr", ctx)
+	ret0 := ret[0].(sdk.ConsAddress)
+	return ret0
+}
+
+func (mr *MockDistributionKeeperRecorder) GetPreviousProposerConsAddr(ctx any) *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "GetPreviousProposerConsAddr", reflect.TypeOf((*MockDistributionKeeper)(nil).GetPreviousProposerConsAddr), ctx)
+}
+
+type MockStakingKeeperRecorder struct {
+	mock *MockStakingKeeper
+}
+
+type MockStakingKeeper struct {
+	ctrl     *gomock.Controller
+	recorder *MockStakingKeeperRecorder
+}
+
+func NewMockStakingKeeper(ctrl *gomock.Controller) *MockStakingKeeper {
+	mock := &MockStakingKeeper{ctrl: ctrl}
+	mock.recorder = &MockStakingKeeperRecorder{mock}
+	return mock
+}
+
+func (m *MockStakingKeeper) EXPECT() *MockStakingKeeperRecorder {
+	return m.recorder
+}
+
+func (m *MockStakingKeeper) ValidatorByConsAddr(ctx sdk.Context, consAddr sdk.ConsAddress) stakingtypes.ValidatorI {
+	m.ctrl.T.Helper()
+	ret := m.ctrl.Call(m, "ValidatorByConsAddr", ctx, consAddr)
+	ret0 := ret[0].(stakingtypes.ValidatorI)
+	return ret0
+}
+
+func (mr *MockStakingKeeperRecorder) ValidatorByConsAddr(ctx, consAddr any) *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "ValidatorByConsAddr", reflect.TypeOf((*MockStakingKeeper)(nil).ValidatorByConsAddr), ctx, consAddr)
+}
diff --git a/x/auction/keeper/msg_server.go b/x/auction/keeper/msg_server.go
index ba42fe1..ac8b9da 100644
--- a/x/auction/keeper/msg_server.go
+++ b/x/auction/keeper/msg_server.go
@@ -20,18 +20,19 @@ func NewMsgServerImpl(keeper Keeper) *MsgServer {
 	return &MsgServer{Keeper: keeper}
 }
 
-// AuctionBid is the server implementation for Msg/AuctionBid.
 func (m MsgServer) AuctionBid(goCtx context.Context, msg *types.MsgAuctionBid) (*types.MsgAuctionBidResponse, error) {
 	ctx := sdk.UnwrapSDKContext(goCtx)
 
-	// This should never return an error because the address was validated when the message was ingressed.
+	// This should never return an error because the address was validated when
+	// the message was ingressed.
 	bidder, err := sdk.AccAddressFromBech32(msg.Bidder)
 	if err != nil {
 		return nil, err
 	}
 
-	// Ensure that the number of transactions is less than or equal to the maximum allowed.
-	maxBundleSize, err := m.Keeper.GetMaxBundleSize(ctx)
+	// Ensure that the number of transactions is less than or equal to the maximum
+	// allowed.
+	maxBundleSize, err := m.GetMaxBundleSize(ctx)
 	if err != nil {
 		return nil, err
 	}
@@ -40,27 +41,54 @@ func (m MsgServer) AuctionBid(goCtx context.Context, msg *types.MsgAuctionBid) (
 		return nil, fmt.Errorf("the number of transactions in the bid is greater than the maximum allowed; expected <= %d, got %d", maxBundleSize, len(msg.Transactions))
 	}
 
-	// Attempt to send the bid to the module account.
-	if err := m.Keeper.bankkeeper.SendCoinsFromAccountToModule(ctx, bidder, types.ModuleName, msg.Bid); err != nil {
+	proposerFee, err := m.GetProposerFee(ctx)
+	if err != nil {
 		return nil, err
 	}
 
-	// TODO: figure out how to handle payments to the escrow address.
-	// Ref: https://github.com/skip-mev/pob/issues/11
+	escrow, err := m.Keeper.GetEscrowAccount(ctx)
+	if err != nil {
+		return nil, err
+	}
+
+	if proposerFee.IsZero() {
+		// send the entire bid to the escrow account when no proposer fee is set
+		if err := m.bankKeeper.SendCoins(ctx, bidder, escrow, msg.Bid); err != nil {
+			return nil, err
+		}
+	} else {
+		prevPropConsAddr := m.distrKeeper.GetPreviousProposerConsAddr(ctx)
+		prevProposer := m.stakingKeeper.ValidatorByConsAddr(ctx, prevPropConsAddr)
+
+		// determine the amount of the bid that goes to the (previous) proposer
+		bid := sdk.NewDecCoinsFromCoins(msg.Bid...)
+		proposerReward, _ := bid.MulDecTruncate(proposerFee).TruncateDecimal()
+
+		if err := m.bankKeeper.SendCoins(ctx, bidder, sdk.AccAddress(prevProposer.GetOperator()), proposerReward); err != nil {
+			return nil, err
+		}
+
+		// Determine the amount of the remaining bid that goes to the escrow account.
+		// If a decimal remainder exists, it'll stay with the bidding account.
+		escrowTotal := bid.Sub(sdk.NewDecCoinsFromCoins(proposerReward...))
+		escrowReward, _ := escrowTotal.TruncateDecimal()
+
+		if err := m.bankKeeper.SendCoins(ctx, bidder, escrow, escrowReward); err != nil {
+			return nil, err
+		}
+	}
 
 	return &types.MsgAuctionBidResponse{}, nil
 }
 
-// UpdateParams is the server implementation for Msg/UpdateParams.
 func (m MsgServer) UpdateParams(goCtx context.Context, msg *types.MsgUpdateParams) (*types.MsgUpdateParamsResponse, error) {
 	ctx := sdk.UnwrapSDKContext(goCtx)
 
-	// Ensure that the message signer is the authority.
+	// ensure that the message signer is the authority
 	if msg.Authority != m.Keeper.GetAuthority() {
 		return nil, fmt.Errorf("this message can only be executed by the authority; expected %s, got %s", m.Keeper.GetAuthority(), msg.Authority)
 	}
 
-	// Update the parameters.
 	if err := m.Keeper.SetParams(ctx, msg.Params); err != nil {
 		return nil, err
 	}
diff --git a/x/auction/keeper/msg_server_test.go b/x/auction/keeper/msg_server_test.go
new file mode 100644
index 0000000..8aac072
--- /dev/null
+++ b/x/auction/keeper/msg_server_test.go
@@ -0,0 +1,127 @@
+package keeper_test
+
+import (
+	"math/rand"
+	"time"
+
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	stakingtypes "github.com/cosmos/cosmos-sdk/x/staking/types"
+	"github.com/skip-mev/pob/x/auction/types"
+)
+
+func (suite *KeeperTestSuite) TestMsgAuctionBid() {
+	rng := rand.New(rand.NewSource(time.Now().Unix()))
+	accounts := RandomAccounts(rng, 4)
+
+	bidder := accounts[0]
+	escrow := accounts[1]
+
+	proposerCons := accounts[2]
+	proposerOperator := accounts[3]
+	proposer := stakingtypes.Validator{
+		OperatorAddress: sdk.ValAddress(proposerOperator.Address).String(),
+	}
+
+	testCases := []struct {
+		name      string
+		msg       *types.MsgAuctionBid
+		malleate  func()
+		expectErr bool
+	}{
+		{
+			name: "invalid bidder address",
+			msg: &types.MsgAuctionBid{
+				Bidder: "foo",
+			},
+			malleate:  func() {},
+			expectErr: true,
+		},
+		{
+			name: "too many bundled transactions",
+			msg: &types.MsgAuctionBid{
+				Bidder:       bidder.Address.String(),
+				Transactions: [][]byte{{0xFF}, {0xFF}, {0xFF}},
+			},
+			malleate: func() {
+				params := types.DefaultParams()
+				params.MaxBundleSize = 2
+				suite.auctionKeeper.SetParams(suite.ctx, params)
+			},
+			expectErr: true,
+		},
+		{
+			name: "valid bundle with no proposer fee",
+			msg: &types.MsgAuctionBid{
+				Bidder:       bidder.Address.String(),
+				Bid:          sdk.NewCoins(sdk.NewInt64Coin("foo", 1024)),
+				Transactions: [][]byte{{0xFF}, {0xFF}},
+			},
+			malleate: func() {
+				params := types.DefaultParams()
+				params.ProposerFee = sdk.ZeroDec()
+				params.EscrowAccountAddress = escrow.Address.String()
+				suite.auctionKeeper.SetParams(suite.ctx, params)
+
+				suite.bankKeeper.EXPECT().
+					SendCoins(
+						suite.ctx,
+						bidder.Address,
+						escrow.Address,
+						sdk.NewCoins(sdk.NewInt64Coin("foo", 1024)),
+					).
+					Return(nil).
+					AnyTimes()
+			},
+			expectErr: false,
+		},
+		{
+			name: "valid bundle with proposer fee",
+			msg: &types.MsgAuctionBid{
+				Bidder:       bidder.Address.String(),
+				Bid:          sdk.NewCoins(sdk.NewInt64Coin("foo", 3416)),
+				Transactions: [][]byte{{0xFF}, {0xFF}},
+			},
+			malleate: func() {
+				params := types.DefaultParams()
+				params.ProposerFee = sdk.MustNewDecFromStr("0.30")
+				params.EscrowAccountAddress = escrow.Address.String()
+				suite.auctionKeeper.SetParams(suite.ctx, params)
+
+				suite.distrKeeper.EXPECT().
+					GetPreviousProposerConsAddr(suite.ctx).
+					Return(proposerCons.ConsKey.PubKey().Address().Bytes())
+
+				suite.stakingKeeper.EXPECT().
+					ValidatorByConsAddr(suite.ctx, sdk.ConsAddress(proposerCons.ConsKey.PubKey().Address().Bytes())).
+					Return(proposer).
+					AnyTimes()
+
+				suite.bankKeeper.EXPECT().
+					SendCoins(suite.ctx, bidder.Address, proposerOperator.Address, sdk.NewCoins(sdk.NewInt64Coin("foo", 1024))).
+					Return(nil)
+
+				suite.bankKeeper.EXPECT().
+					SendCoins(suite.ctx, bidder.Address, escrow.Address, sdk.NewCoins(sdk.NewInt64Coin("foo", 2392))).
+					Return(nil)
+			},
+			expectErr: false,
+		},
+	}
+
+	for _, tc := range testCases {
+		suite.Run(tc.name, func() {
+			tc.malleate()
+
+			_, err := suite.msgServer.AuctionBid(suite.ctx, tc.msg)
+			if tc.expectErr {
+				suite.Require().Error(err)
+			} else {
+				suite.Require().NoError(err)
+			}
+		})
+	}
+}
+
+func (suite *KeeperTestSuite) TestMsgUpdateParams() {
+	suite.T().SkipNow()
+}
diff --git a/x/auction/keeper/util_test.go b/x/auction/keeper/util_test.go
new file mode 100644
index 0000000..c9ddb2c
--- /dev/null
+++ b/x/auction/keeper/util_test.go
@@ -0,0 +1,99 @@
+package keeper_test
+
+import (
+	"math/rand"
+
+	"github.com/cosmos/cosmos-sdk/client"
+	"github.com/cosmos/cosmos-sdk/codec"
+	codectypes "github.com/cosmos/cosmos-sdk/codec/types"
+	cryptocodec "github.com/cosmos/cosmos-sdk/crypto/codec"
+	"github.com/cosmos/cosmos-sdk/crypto/keys/ed25519"
+	"github.com/cosmos/cosmos-sdk/crypto/keys/secp256k1"
+	cryptotypes "github.com/cosmos/cosmos-sdk/crypto/types"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	"github.com/cosmos/cosmos-sdk/types/tx/signing"
+	authsigning "github.com/cosmos/cosmos-sdk/x/auth/signing"
+	"github.com/cosmos/cosmos-sdk/x/auth/tx"
+	banktypes "github.com/cosmos/cosmos-sdk/x/bank/types"
+)
+
+type encodingConfig struct {
+	InterfaceRegistry codectypes.InterfaceRegistry
+	Codec             codec.Codec
+	TxConfig          client.TxConfig
+	Amino             *codec.LegacyAmino
+}
+
+func createTestEncodingConfig() encodingConfig {
+	cdc := codec.NewLegacyAmino()
+	interfaceRegistry := codectypes.NewInterfaceRegistry()
+
+	banktypes.RegisterInterfaces(interfaceRegistry)
+	cryptocodec.RegisterInterfaces(interfaceRegistry)
+
+	codec := codec.NewProtoCodec(interfaceRegistry)
+
+	return encodingConfig{
+		InterfaceRegistry: interfaceRegistry,
+		Codec:             codec,
+		TxConfig:          tx.NewTxConfig(codec, tx.DefaultSignModes),
+		Amino:             cdc,
+	}
+}
+
+type Account struct {
+	PrivKey cryptotypes.PrivKey
+	PubKey  cryptotypes.PubKey
+	Address sdk.AccAddress
+	ConsKey cryptotypes.PrivKey
+}
+
+func (acc Account) Equals(acc2 Account) bool {
+	return acc.Address.Equals(acc2.Address)
+}
+
+func RandomAccounts(r *rand.Rand, n int) []Account {
+	accs := make([]Account, n)
+
+	for i := 0; i < n; i++ {
+		pkSeed := make([]byte, 15)
+		r.Read(pkSeed)
+
+		accs[i].PrivKey = secp256k1.GenPrivKeyFromSecret(pkSeed)
+		accs[i].PubKey = accs[i].PrivKey.PubKey()
+		accs[i].Address = sdk.AccAddress(accs[i].PubKey.Address())
+
+		accs[i].ConsKey = ed25519.GenPrivKeyFromSecret(pkSeed)
+	}
+
+	return accs
+}
+
+func createRandomTx(txCfg client.TxConfig, account Account, nonce, numberMsgs uint64) (authsigning.Tx, error) {
+	msgs := make([]sdk.Msg, numberMsgs)
+	for i := 0; i < int(numberMsgs); i++ {
+		msgs[i] = &banktypes.MsgSend{
+			FromAddress: account.Address.String(),
+			ToAddress:   account.Address.String(),
+		}
+	}
+
+	txBuilder := txCfg.NewTxBuilder()
+	if err := txBuilder.SetMsgs(msgs...); err != nil {
+		return nil, err
+	}
+
+	sigV2 := signing.SignatureV2{
+		PubKey: account.PrivKey.PubKey(),
+		Data: &signing.SingleSignatureData{
+			SignMode:  txCfg.SignModeHandler().DefaultMode(),
+			Signature: nil,
+		},
+		Sequence: nonce,
+	}
+	if err := txBuilder.SetSignatures(sigV2); err != nil {
+		return nil, err
+	}
+
+	return txBuilder.GetTx(), nil
+}
diff --git a/x/auction/module.go b/x/auction/module.go
index 04a3545..68922a5 100644
--- a/x/auction/module.go
+++ b/x/auction/module.go
@@ -26,7 +26,6 @@ var (
 // ConsensusVersion defines the current x/auction module consensus version.
 const ConsensusVersion = 1
 
-// -------------------- AppModuleBasic -------------------- //
 // AppModuleBasic defines the basic application module used by the auction module.
 type AppModuleBasic struct {
 	cdc codec.Codec
@@ -70,16 +69,11 @@ func (AppModuleBasic) RegisterGRPCGatewayRoutes(clientCtx client.Context, mux *r
 }
 
 // GetTxCmd returns the root tx command for the auction module.
-func (AppModuleBasic) GetTxCmd() *cobra.Command {
-	return nil
-}
+func (AppModuleBasic) GetTxCmd() *cobra.Command { return nil }
 
 // GetQueryCmd returns no root query command for the auction module.
-func (AppModuleBasic) GetQueryCmd() *cobra.Command {
-	return nil
-}
+func (AppModuleBasic) GetQueryCmd() *cobra.Command { return nil }
 
-// -------------------- AppModule -------------------- //
 type AppModule struct {
 	AppModuleBasic
 
@@ -98,7 +92,11 @@ func NewAppModule(cdc codec.Codec, keeper keeper.Keeper, accountKeeper types.Acc
 	}
 }
 
-// RegisterServices registers a the gRPC Query and Msg services for the auciton module.
+// ConsensusVersion implements AppModule/ConsensusVersion.
+func (AppModule) ConsensusVersion() uint64 { return ConsensusVersion }
+
+// RegisterServices registers a the gRPC Query and Msg services for the x/auction
+// module.
 func (am AppModule) RegisterServices(cfg module.Configurator) {
 	// TODO: Define the gRPC querier service and register it with the auction module configurator
 	// TODO: Define the gRPC Msg service and register it with the auction module configurator
@@ -106,33 +104,24 @@ func (am AppModule) RegisterServices(cfg module.Configurator) {
 
 func (a AppModuleBasic) RegisterRESTRoutes(ctx client.Context, r *mux.Router) {}
 
-// RegisterInvariants registers the invariants of the module. If an invariant deviates from its predicted value, the InvariantRegistry triggers appropriate logic (most often the chain will be halted)
+// RegisterInvariants registers the invariants of the module. If an invariant
+// deviates from its predicted value, the InvariantRegistry triggers appropriate
+// logic (most often the chain will be halted).
 func (am AppModule) RegisterInvariants(_ sdk.InvariantRegistry) {}
 
-// InitGenesis performs the module's genesis initialization for the auction module. It returns no validator updates.
+// InitGenesis performs the module's genesis initialization for the auction
+// module. It returns no validator updates.
 func (am AppModule) InitGenesis(ctx sdk.Context, cdc codec.JSONCodec, gs json.RawMessage) []abci.ValidatorUpdate {
 	var genState types.GenesisState
 	cdc.MustUnmarshalJSON(gs, &genState)
 
 	am.keeper.InitGenesis(ctx, genState)
-
 	return []abci.ValidatorUpdate{}
 }
 
-// ExportGenesis returns the auction module's exported genesis state as raw JSON bytes.
+// ExportGenesis returns the auction module's exported genesis state as raw
+// JSON bytes.
 func (am AppModule) ExportGenesis(ctx sdk.Context, cdc codec.JSONCodec) json.RawMessage {
 	genState := am.keeper.ExportGenesis(ctx)
 	return cdc.MustMarshalJSON(genState)
 }
-
-// ConsensusVersion implements AppModule/ConsensusVersion.
-func (AppModule) ConsensusVersion() uint64 { return ConsensusVersion }
-
-// BeginBlock returns the begin blocker for the auction module.
-func (am AppModule) BeginBlock(_ sdk.Context, _ abci.RequestBeginBlock) {} //nolint
-
-// EndBlock returns the end blocker for the auction module. It returns no validator updates.
-
-func (am AppModule) EndBlock(_ sdk.Context, _ abci.RequestEndBlock) []abci.ValidatorUpdate { //nolint
-	return []abci.ValidatorUpdate{}
-}
diff --git a/x/auction/types/expected_keepers.go b/x/auction/types/expected_keepers.go
index 6522c64..90c48a2 100644
--- a/x/auction/types/expected_keepers.go
+++ b/x/auction/types/expected_keepers.go
@@ -2,16 +2,27 @@ package types
 
 import (
 	sdk "github.com/cosmos/cosmos-sdk/types"
+	stakingtypes "github.com/cosmos/cosmos-sdk/x/staking/types"
 )
 
-// AccountKeeper defines the contract required for account APIs.
+// BankKeeper defines the expected API contract for the x/auth module.
 type AccountKeeper interface {
 	GetModuleAddress(moduleName string) sdk.AccAddress
 }
 
-// BankKeeper defines the contract required for bank APIs.
+// BankKeeper defines the expected API contract for the x/bank module.
 type BankKeeper interface {
 	SendCoins(ctx sdk.Context, fromAddr sdk.AccAddress, toAddr sdk.AccAddress, amt sdk.Coins) error
-	SendCoinsFromAccountToModule(ctx sdk.Context, senderAddr sdk.AccAddress, recipientModule string, amt sdk.Coins) error
 	GetAllBalances(ctx sdk.Context, addr sdk.AccAddress) sdk.Coins
 }
+
+// DistributionKeeper defines the expected API contract for the x/distribution
+// module.
+type DistributionKeeper interface {
+	GetPreviousProposerConsAddr(ctx sdk.Context) sdk.ConsAddress
+}
+
+// StakingKeeper defines the expected API contract for the x/staking module.
+type StakingKeeper interface {
+	ValidatorByConsAddr(sdk.Context, sdk.ConsAddress) stakingtypes.ValidatorI
+}
diff --git a/x/auction/types/genesis.pb.go b/x/auction/types/genesis.pb.go
index 881ec9f..ac92b56 100644
--- a/x/auction/types/genesis.pb.go
+++ b/x/auction/types/genesis.pb.go
@@ -76,19 +76,23 @@ type Params struct {
 	// max_bundle_size is the maximum number of transactions that can be bundled
 	// in a single bundle.
 	MaxBundleSize uint32 `protobuf:"varint,1,opt,name=max_bundle_size,json=maxBundleSize,proto3" json:"max_bundle_size,omitempty"`
-	// escrow_account_address is the address of the account that will hold the
-	// funds for the auctions.
+	// escrow_account_address is the address of the account that will receive a
+	// portion of the bid proceeds.
 	EscrowAccountAddress string `protobuf:"bytes,2,opt,name=escrow_account_address,json=escrowAccountAddress,proto3" json:"escrow_account_address,omitempty"`
 	// reserve_fee specifies the bid floor for the auction.
 	ReserveFee github_com_cosmos_cosmos_sdk_types.Coins `protobuf:"bytes,3,rep,name=reserve_fee,json=reserveFee,proto3,castrepeated=github.com/cosmos/cosmos-sdk/types.Coins" json:"reserve_fee"`
-	// min_buy_in_fee specifies the fee that the bidder must pay to enter the auction.
+	// min_buy_in_fee specifies the fee that the bidder must pay to enter the
+	// auction.
 	MinBuyInFee github_com_cosmos_cosmos_sdk_types.Coins `protobuf:"bytes,4,rep,name=min_buy_in_fee,json=minBuyInFee,proto3,castrepeated=github.com/cosmos/cosmos-sdk/types.Coins" json:"min_buy_in_fee"`
 	// min_bid_increment specifies the minimum amount that the next bid must be
 	// greater than the previous bid.
 	MinBidIncrement github_com_cosmos_cosmos_sdk_types.Coins `protobuf:"bytes,5,rep,name=min_bid_increment,json=minBidIncrement,proto3,castrepeated=github.com/cosmos/cosmos-sdk/types.Coins" json:"min_bid_increment"`
-	// front_running_protection specifies whether front running and sandwich attack protection
-	// is enabled.
+	// front_running_protection specifies whether front running and sandwich
+	// attack protection is enabled.
 	FrontRunningProtection bool `protobuf:"varint,6,opt,name=front_running_protection,json=frontRunningProtection,proto3" json:"front_running_protection,omitempty"`
+	// proposer_fee defines the portion of the winning bid that goes to the block
+	// proposer that proposed the block.
+	ProposerFee github_com_cosmos_cosmos_sdk_types.Dec `protobuf:"bytes,7,opt,name=proposer_fee,json=proposerFee,proto3,customtype=github.com/cosmos/cosmos-sdk/types.Dec" json:"proposer_fee"`
 }
 
 func (m *Params) Reset()         { *m = Params{} }
@@ -174,37 +178,40 @@ func init() {
 func init() { proto.RegisterFile("pob/auction/v1/genesis.proto", fileDescriptor_9ed8651e43f855a1) }
 
 var fileDescriptor_9ed8651e43f855a1 = []byte{
-	// 480 bytes of a gzipped FileDescriptorProto
-	0x1f, 0x8b, 0x08, 0x00, 0x00, 0x00, 0x00, 0x00, 0x02, 0xff, 0xb4, 0x93, 0xb1, 0x6e, 0xd4, 0x30,
-	0x18, 0xc7, 0x2f, 0xf4, 0x38, 0x81, 0x8f, 0x52, 0x35, 0xaa, 0x4e, 0xa1, 0xa0, 0x34, 0xea, 0x00,
-	0x51, 0xa5, 0xda, 0xba, 0x02, 0x12, 0x42, 0x2c, 0x77, 0x48, 0xa0, 0x4a, 0x0c, 0x55, 0xba, 0xb1,
-	0x58, 0x4e, 0xf2, 0x35, 0x58, 0xc5, 0x76, 0x88, 0x9d, 0x70, 0x57, 0xf1, 0x04, 0x4c, 0x3c, 0x06,
-	0xea, 0xd4, 0xc7, 0xe8, 0xd8, 0x91, 0x09, 0xd0, 0xdd, 0xd0, 0xd7, 0x40, 0xb1, 0x43, 0xe9, 0xc0,
-	0xda, 0x25, 0x89, 0xfc, 0xfb, 0xec, 0xdf, 0xf7, 0x45, 0x7f, 0xa3, 0x47, 0xa5, 0x4a, 0x09, 0xab,
-	0x33, 0xc3, 0x95, 0x24, 0xcd, 0x98, 0x14, 0x20, 0x41, 0x73, 0x8d, 0xcb, 0x4a, 0x19, 0xe5, 0x8f,
-	0xf4, 0x31, 0x2f, 0x05, 0x34, 0xb8, 0x54, 0x29, 0xee, 0xaa, 0x70, 0x33, 0xde, 0xdc, 0x28, 0x54,
-	0xa1, 0x6c, 0x09, 0x69, 0xbf, 0x5c, 0xf5, 0x66, 0x98, 0x29, 0x2d, 0x94, 0x26, 0x29, 0xd3, 0x40,
-	0x9a, 0x71, 0x0a, 0x86, 0x8d, 0x49, 0xa6, 0xb8, 0xec, 0xf8, 0x3a, 0x13, 0x5c, 0x2a, 0x62, 0x9f,
-	0x6e, 0x69, 0xfb, 0x1d, 0xba, 0xf7, 0xd6, 0x19, 0x0f, 0x0d, 0x33, 0xe0, 0xbf, 0x42, 0x83, 0x92,
-	0x55, 0x4c, 0xe8, 0xc0, 0x8b, 0xbc, 0x78, 0xb8, 0x17, 0xe2, 0xff, 0x77, 0x80, 0x0f, 0x6c, 0xd5,
-	0xb4, 0x7f, 0xfe, 0x73, 0xab, 0x97, 0x74, 0x7b, 0xb6, 0x4f, 0xfb, 0x68, 0xe0, 0x80, 0xff, 0x18,
-	0xad, 0x09, 0x36, 0xa3, 0x69, 0x2d, 0xf3, 0x8f, 0x40, 0x35, 0x3f, 0x01, 0x7b, 0xe2, 0x6a, 0xb2,
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-	0x94, 0x65, 0x99, 0xaa, 0xa5, 0xa1, 0x2c, 0xcf, 0x2b, 0xd0, 0x3a, 0xb8, 0x15, 0x79, 0xf1, 0xdd,
-	0x64, 0xc3, 0xd1, 0x89, 0x83, 0x13, 0xc7, 0xfc, 0x4f, 0x68, 0x58, 0x81, 0x86, 0xaa, 0x01, 0x7a,
-	0x04, 0x10, 0xac, 0x44, 0x2b, 0xf1, 0x70, 0xef, 0x01, 0x76, 0xf3, 0xe3, 0x76, 0x7e, 0xdc, 0xcd,
-	0x8f, 0x5f, 0x2b, 0x2e, 0xa7, 0xcf, 0xdb, 0x36, 0x4f, 0x7f, 0x6d, 0xc5, 0x05, 0x37, 0x1f, 0xea,
-	0x14, 0x67, 0x4a, 0x90, 0xee, 0x67, 0xb9, 0xd7, 0xae, 0xce, 0x8f, 0x89, 0x99, 0x97, 0xa0, 0xed,
-	0x06, 0xfd, 0xfd, 0xf2, 0x6c, 0xc7, 0x4b, 0x50, 0x27, 0x79, 0x03, 0xe0, 0xd7, 0xe8, 0xbe, 0xe0,
-	0x92, 0xa6, 0xf5, 0x9c, 0x72, 0x69, 0xad, 0xfd, 0x1b, 0xb2, 0x0e, 0x05, 0x97, 0xd3, 0x7a, 0xbe,
-	0x2f, 0x5b, 0xed, 0x17, 0xb4, 0x6e, 0xb5, 0x3c, 0xa7, 0x5c, 0x66, 0x15, 0x08, 0x90, 0x26, 0xb8,
-	0x7d, 0x43, 0xe6, 0xb5, 0xd6, 0xcc, 0xf3, 0xfd, 0xbf, 0x22, 0xff, 0x05, 0x0a, 0x8e, 0x2a, 0x25,
-	0x0d, 0xad, 0x6a, 0x29, 0xb9, 0x2c, 0x68, 0x9b, 0x1a, 0xb0, 0x21, 0x08, 0x06, 0x91, 0x17, 0xdf,
-	0x49, 0x46, 0x96, 0x27, 0x0e, 0x1f, 0x5c, 0xd1, 0x97, 0xd1, 0xd7, 0xcb, 0xb3, 0x9d, 0x87, 0xd7,
-	0x64, 0xb3, 0xab, 0x94, 0x77, 0xd1, 0x99, 0x9c, 0x2f, 0x42, 0xef, 0x62, 0x11, 0x7a, 0xbf, 0x17,
-	0xa1, 0xf7, 0x6d, 0x19, 0xf6, 0x2e, 0x96, 0x61, 0xef, 0xc7, 0x32, 0xec, 0xbd, 0x7f, 0x72, 0xad,
-	0xeb, 0x36, 0x7e, 0xbb, 0x02, 0x1a, 0xd2, 0xde, 0x93, 0x7f, 0x67, 0xd8, 0xd6, 0xd3, 0x81, 0x0d,
-	0xf1, 0xd3, 0x3f, 0x01, 0x00, 0x00, 0xff, 0xff, 0x96, 0x16, 0x18, 0xc6, 0x45, 0x03, 0x00, 0x00,
+	// 517 bytes of a gzipped FileDescriptorProto
+	0x1f, 0x8b, 0x08, 0x00, 0x00, 0x00, 0x00, 0x00, 0x02, 0xff, 0xb4, 0x93, 0x31, 0x6f, 0xd3, 0x40,
+	0x14, 0xc7, 0x63, 0x1a, 0x02, 0x5c, 0x5a, 0xaa, 0x5a, 0x55, 0x64, 0x0a, 0x72, 0xa2, 0x0e, 0x25,
+	0xaa, 0xd4, 0x3b, 0xa5, 0x80, 0x84, 0x10, 0x4b, 0x02, 0x2a, 0xaa, 0xc4, 0x50, 0xdc, 0x8d, 0xc5,
+	0x3a, 0xdb, 0xaf, 0xe1, 0x54, 0xee, 0xce, 0xdc, 0xd9, 0x26, 0xa9, 0xf8, 0x04, 0x4c, 0x7c, 0x0c,
+	0xc4, 0xd4, 0x8f, 0xd1, 0xb1, 0x23, 0x62, 0x28, 0x28, 0x19, 0xfa, 0x29, 0x90, 0xd0, 0xdd, 0xb9,
+	0xa5, 0x03, 0x03, 0x4b, 0x17, 0xdb, 0xba, 0xff, 0xff, 0xde, 0xef, 0xbd, 0xe7, 0xf7, 0xd0, 0x83,
+	0x5c, 0x26, 0x84, 0x96, 0x69, 0xc1, 0xa4, 0x20, 0xd5, 0x80, 0x8c, 0x41, 0x80, 0x66, 0x1a, 0xe7,
+	0x4a, 0x16, 0xd2, 0xef, 0xe8, 0x43, 0x96, 0x73, 0xa8, 0x70, 0x2e, 0x13, 0x5c, 0xbb, 0x70, 0x35,
+	0x58, 0x5b, 0x1d, 0xcb, 0xb1, 0xb4, 0x16, 0x62, 0xbe, 0x9c, 0x7b, 0x2d, 0x4c, 0xa5, 0xe6, 0x52,
+	0x93, 0x84, 0x6a, 0x20, 0xd5, 0x20, 0x81, 0x82, 0x0e, 0x48, 0x2a, 0x99, 0xa8, 0xf5, 0x15, 0xca,
+	0x99, 0x90, 0xc4, 0x3e, 0xdd, 0xd1, 0xfa, 0x6b, 0xb4, 0xf8, 0xca, 0x11, 0xf7, 0x0b, 0x5a, 0x80,
+	0xff, 0x1c, 0xb5, 0x72, 0xaa, 0x28, 0xd7, 0x81, 0xd7, 0xf3, 0xfa, 0xed, 0xed, 0x10, 0xff, 0x3b,
+	0x03, 0xbc, 0x67, 0x5d, 0xa3, 0xe6, 0xc9, 0x59, 0xb7, 0x11, 0xd5, 0x77, 0xd6, 0x7f, 0x37, 0x51,
+	0xcb, 0x09, 0xfe, 0x06, 0x5a, 0xe6, 0x74, 0x12, 0x27, 0xa5, 0xc8, 0xde, 0x43, 0xac, 0xd9, 0x11,
+	0xd8, 0x88, 0x4b, 0xd1, 0x12, 0xa7, 0x93, 0x91, 0x3d, 0xdd, 0x67, 0x47, 0xe0, 0x3f, 0x46, 0x1d,
+	0xd0, 0xa9, 0x92, 0x1f, 0x63, 0x9a, 0xa6, 0xb2, 0x14, 0x45, 0x4c, 0xb3, 0x4c, 0x81, 0xd6, 0xc1,
+	0x8d, 0x9e, 0xd7, 0xbf, 0x13, 0xad, 0x3a, 0x75, 0xe8, 0xc4, 0xa1, 0xd3, 0xfc, 0x0f, 0xa8, 0xad,
+	0x40, 0x83, 0xaa, 0x20, 0x3e, 0x00, 0x08, 0x16, 0x7a, 0x0b, 0xfd, 0xf6, 0xf6, 0x3d, 0xec, 0xea,
+	0xc7, 0xa6, 0x7e, 0x5c, 0xd7, 0x8f, 0x5f, 0x48, 0x26, 0x46, 0x4f, 0x4c, 0x9a, 0xdf, 0x7e, 0x76,
+	0xfb, 0x63, 0x56, 0xbc, 0x2b, 0x13, 0x9c, 0x4a, 0x4e, 0xea, 0x66, 0xb9, 0xd7, 0x96, 0xce, 0x0e,
+	0x49, 0x31, 0xcd, 0x41, 0xdb, 0x0b, 0xfa, 0xeb, 0xf9, 0xf1, 0xa6, 0x17, 0xa1, 0x1a, 0xb2, 0x03,
+	0xe0, 0x97, 0xe8, 0x2e, 0x67, 0x22, 0x4e, 0xca, 0x69, 0xcc, 0x84, 0xa5, 0x36, 0xaf, 0x89, 0xda,
+	0xe6, 0x4c, 0x8c, 0xca, 0xe9, 0xae, 0x30, 0xd8, 0x4f, 0x68, 0xc5, 0x62, 0x59, 0x16, 0x33, 0x91,
+	0x2a, 0xe0, 0x20, 0x8a, 0xe0, 0xe6, 0x35, 0x91, 0x97, 0x0d, 0x99, 0x65, 0xbb, 0x17, 0x20, 0xff,
+	0x29, 0x0a, 0x0e, 0x94, 0x14, 0x45, 0xac, 0x4a, 0x21, 0x98, 0x18, 0xc7, 0x66, 0x6a, 0xc0, 0x0e,
+	0x41, 0xd0, 0xea, 0x79, 0xfd, 0xdb, 0x51, 0xc7, 0xea, 0x91, 0x93, 0xf7, 0x2e, 0x55, 0xff, 0x0d,
+	0x5a, 0xcc, 0x95, 0xcc, 0xa5, 0x06, 0x65, 0x9b, 0x75, 0xcb, 0xfc, 0xcd, 0x11, 0x36, 0x79, 0xfd,
+	0x38, 0xeb, 0x6e, 0xfc, 0x47, 0x5e, 0x2f, 0x21, 0x8d, 0xda, 0x17, 0x31, 0x76, 0x00, 0x9e, 0xf5,
+	0x3e, 0x9f, 0x1f, 0x6f, 0xde, 0xbf, 0xe2, 0x9b, 0x5c, 0x2e, 0x4e, 0x3d, 0x8d, 0xc3, 0x93, 0x59,
+	0xe8, 0x9d, 0xce, 0x42, 0xef, 0xd7, 0x2c, 0xf4, 0xbe, 0xcc, 0xc3, 0xc6, 0xe9, 0x3c, 0x6c, 0x7c,
+	0x9f, 0x87, 0x8d, 0xb7, 0x0f, 0xaf, 0x00, 0xcd, 0x44, 0x6f, 0x71, 0xa8, 0x88, 0x59, 0xbd, 0xbf,
+	0x31, 0x2c, 0x35, 0x69, 0xd9, 0xbd, 0x78, 0xf4, 0x27, 0x00, 0x00, 0xff, 0xff, 0x32, 0x3f, 0xb6,
+	0x9a, 0x98, 0x03, 0x00, 0x00,
 }
 
 func (m *GenesisState) Marshal() (dAtA []byte, err error) {
@@ -260,6 +267,16 @@ func (m *Params) MarshalToSizedBuffer(dAtA []byte) (int, error) {
 	_ = i
 	var l int
 	_ = l
+	{
+		size := m.ProposerFee.Size()
+		i -= size
+		if _, err := m.ProposerFee.MarshalTo(dAtA[i:]); err != nil {
+			return 0, err
+		}
+		i = encodeVarintGenesis(dAtA, i, uint64(size))
+	}
+	i--
+	dAtA[i] = 0x3a
 	if m.FrontRunningProtection {
 		i--
 		if m.FrontRunningProtection {
@@ -383,6 +400,8 @@ func (m *Params) Size() (n int) {
 	if m.FrontRunningProtection {
 		n += 2
 	}
+	l = m.ProposerFee.Size()
+	n += 1 + l + sovGenesis(uint64(l))
 	return n
 }
 
@@ -677,6 +696,40 @@ func (m *Params) Unmarshal(dAtA []byte) error {
 				}
 			}
 			m.FrontRunningProtection = bool(v != 0)
+		case 7:
+			if wireType != 2 {
+				return fmt.Errorf("proto: wrong wireType = %d for field ProposerFee", wireType)
+			}
+			var stringLen uint64
+			for shift := uint(0); ; shift += 7 {
+				if shift >= 64 {
+					return ErrIntOverflowGenesis
+				}
+				if iNdEx >= l {
+					return io.ErrUnexpectedEOF
+				}
+				b := dAtA[iNdEx]
+				iNdEx++
+				stringLen |= uint64(b&0x7F) << shift
+				if b < 0x80 {
+					break
+				}
+			}
+			intStringLen := int(stringLen)
+			if intStringLen < 0 {
+				return ErrInvalidLengthGenesis
+			}
+			postIndex := iNdEx + intStringLen
+			if postIndex < 0 {
+				return ErrInvalidLengthGenesis
+			}
+			if postIndex > l {
+				return io.ErrUnexpectedEOF
+			}
+			if err := m.ProposerFee.Unmarshal(dAtA[iNdEx:postIndex]); err != nil {
+				return err
+			}
+			iNdEx = postIndex
 		default:
 			iNdEx = preIndex
 			skippy, err := skipGenesis(dAtA[iNdEx:])
diff --git a/x/auction/types/msgs_test.go b/x/auction/types/msgs_test.go
index 80d599b..3c1dd2e 100644
--- a/x/auction/types/msgs_test.go
+++ b/x/auction/types/msgs_test.go
@@ -116,6 +116,7 @@ func TestMsgUpdateParams(t *testing.T) {
 			msg: types.MsgUpdateParams{
 				Authority: sdk.AccAddress([]byte("test")).String(),
 				Params: types.Params{
+					ProposerFee:          sdk.NewDec(1),
 					EscrowAccountAddress: sdk.AccAddress([]byte("test")).String(),
 				},
 			},
diff --git a/x/auction/types/params.go b/x/auction/types/params.go
index 221bbc3..4cc5157 100644
--- a/x/auction/types/params.go
+++ b/x/auction/types/params.go
@@ -3,6 +3,7 @@ package types
 import (
 	fmt "fmt"
 
+	"cosmossdk.io/math"
 	sdk "github.com/cosmos/cosmos-sdk/types"
 )
 
@@ -13,10 +14,17 @@ var (
 	DefaultMinBuyInFee            = sdk.Coins{}
 	DefaultMinBidIncrement        = sdk.Coins{}
 	DefaultFrontRunningProtection = true
+	DefaultProposerFee            = sdk.ZeroDec()
 )
 
 // NewParams returns a new Params instance with the provided values.
-func NewParams(maxBundleSize uint32, escrowAccountAddress string, reserveFee, minBuyInFee, minBidIncrement sdk.Coins, frontRunningProtection bool) Params {
+func NewParams(
+	maxBundleSize uint32,
+	escrowAccountAddress string,
+	reserveFee, minBuyInFee, minBidIncrement sdk.Coins,
+	frontRunningProtection bool,
+	proposerFee sdk.Dec,
+) Params {
 	return Params{
 		MaxBundleSize:          maxBundleSize,
 		EscrowAccountAddress:   escrowAccountAddress,
@@ -24,6 +32,7 @@ func NewParams(maxBundleSize uint32, escrowAccountAddress string, reserveFee, mi
 		MinBuyInFee:            minBuyInFee,
 		MinBidIncrement:        minBidIncrement,
 		FrontRunningProtection: frontRunningProtection,
+		ProposerFee:            proposerFee,
 	}
 }
 
@@ -36,6 +45,7 @@ func DefaultParams() Params {
 		DefaultMinBuyInFee,
 		DefaultMinBidIncrement,
 		DefaultFrontRunningProtection,
+		DefaultProposerFee,
 	)
 }
 
@@ -57,10 +67,29 @@ func (p Params) Validate() error {
 		return fmt.Errorf("invalid minimum bid increment (%s)", err)
 	}
 
+	if err := validateProposerFee(p.ProposerFee); err != nil {
+		return err
+	}
+
 	return nil
 }
 
-// validateEscrowAccountAddress ensures the escrow account address is a valid address (if set).
+func validateProposerFee(v sdk.Dec) error {
+	if v.IsNil() {
+		return fmt.Errorf("proposer fee cannot be nil: %s", v)
+	}
+	if v.IsNegative() {
+		return fmt.Errorf("proposer fee cannot be negative: %s", v)
+	}
+	if v.GT(math.LegacyOneDec()) {
+		return fmt.Errorf("proposer fee too large: %s", v)
+	}
+
+	return nil
+}
+
+// validateEscrowAccountAddress ensures the escrow account address is a valid
+// address.
 func validateEscrowAccountAddress(account string) error {
 	// If the escrow account address is set, ensure it is a valid address.
 	if _, err := sdk.AccAddressFromBech32(account); err != nil {