25% of Ethereum Blocks Comply With US Sanctions and Can Censor Transactions

30 September 2022, 08:00 GMT+0000
Updated by Kyle Baird
30 September 2022, 08:00 GMT+0000
In Brief
  • Over 25% of Ethereum blocks are compliant with OFAC, raising concerns about censorship.
  • OFAC has sanctioned Tornado Cash and addresses associated with it.
  • Some in the community are discussing alternatives as the criticism comes in swift and fast.
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A number of MEV-Boost relays are regulated under OFAC and can censor transactions. Over 25% of Ethereum blocks are now compliant with OFAC regulations.

Reports are emerging that there might be some cause for concern regarding censorship on the Ethereum network. One website, MEV Watch, shows that some MEV-Boost relays are regulated under OFAC and can censor certain transactions. Currently, over 25% of Ethereum blocks are compliant with OFAC regulations.

Status of OFAC compliant blocks: MEV Watch

OFAC is the Office of Foreign Assets Control, a division of the United States Treasury Department that manages and imposes sanctions. The department has made headlines in the crypto market before, largely because it sanctioned Tornado Cash and addresses associated with it.

As described on the website, “MEV-boost is a service that Ethereum PoS Validators have the option to run to outsource their block production duties to the highest bidder.” There are seven such major MEV-Boost relays, of which only three do not censor transactions according to OFAC requirements.

Four out of seven relays are OFAC compliant: MEV Watch

As such, those that comply with OFAC requirements will not include any transactions that interact with the Tornado Cash smart contract or any other sanctioned addresses. Unsurprisingly, those in the crypto space have begun to look at this development with concern.

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Alternatives already discussed as censorship extent analyzed

Nearly a quarter of all MEV-Boost relays can censor those transactions. Some have made calculations with respect to how many blocks are being censored, with a report stating that “among validators who have chosen to use an MEV-Boost relay, approximately 86% of blocks are being censored.”

However, the report does note that if there are still validators willing to include those transactions, they will be added to the blockchain. There are teams that are working on being censorship resistant, including EigenLayer, which has proposed an alternative. Founder Sreeram Kannan spoke about this solution on Twitter, talking about allowing unused blockspace that will be filled by the block producer.

Ethereum and crypto communities express concern

Social media was quick to be filled with discussion on the matter, with a good portion of the crypto community expressing a lot of worry about censorship taking place at such a fundamental level. They have all called for neutrality, while also asking for a protocol-level change that prevents such censorship from happening.

Some have also asked those running a staking node to not contribute towards censorship by way of requesting them not to use the primary MEV flashbots relayer.

The debate about censorship after The Merge has been going on for some time, with crypto analyst Eric Wall also weighing on the Tornado Cash development. He said that any validator attempting to censor transactions should face repercussions.

Fears over centralized have been growing since it was discovered that over 80% of Ethereum blocks were relayed by flashbots after The Merge. Santiment data also showed that over 45% of ETH transactions were processed by two wallets.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.