Uh-oh - 51% of Ethereum Blocks are now OFAC Compliant - Can you say Censorship?
"One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share" [Pereira, A.P. 51% of Ethereum blocks are now compliant with OFAC standards, raising censorship concerns. (Accessed October 15, 2022)].
"According to MEV Watch, 51% of Ethereum’s blocks produced yesterday were built by so-called 'OFAC compliant' MEV-Boost relays, meaning relays that have openly stated their intention to censor transactions related to Tornado Cash or other protocols targeted by the U.S. Treasury in the future" [Carreras, T. 51% of Ethereum Blocks Can Now Be Censored. It's Time for Flashbots to Shut Down. (Accessed October 15, 2022)].
"Maximal extractable value (MEV) refers to the rewards that block builders and validators receive from reordering transactions within a block. Flashbots, an Ethereum-based research and development team, has been working on ways to curb the potential harms of MEV extraction by building MEV-Boost, a piece of software that allows validators to request blocks from a network of builders via a middleman called a relay" [Nijkerk, M. Censored Ethereum Blocks Hit the 51% Threshold Over the Past 24 Hours. (Accessed October 15, 2022)].
Pushback from the Ethereum community prompted Flashbots to release its relay code as open-source; however, the Flashbots relay is still responsible for almost 80% of all MEV-Boost relay block production. In the 24 hours before the time of writing, more than 57% of all Ethereum blocks were produced by MEV-Boost relays; of these, 88% openly stated they would refuse to include transactions in any way related to Tornado Cash. As previously stated, that effectively means that 51% of all blocks were produced by relays comfortable with censoring Ethereum if need be.
[Carreras, supra].
"According to Labrys' page, there are currently seven major MEV-oost relays including Flashbots, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, BlockNative, Manifold and Eden. 'Of the 7 available major relays, only 3 do not censor according to OFAC compliance requirements. OFAC compliant relays will not include any transactions that interact with the Tornado Cash smart contract or other sanctioned wallet addresses as designated by OFAC" [Pereira, supra].
Members of the Ethereum community have been pointing out the problem for about a month now, but few solutions seem to have been put forward: worse, it seems that prominent members of the community are avoiding addressing the issue with any sense of urgency [...] But while Ethereum developers definitely need to figure out a way to change the blockchain’s infrastructure to patch this vulnerability, it’s hard not to criticize Flashbots and other MEV-Boost relays for their behavior throughout this controversy [...] But while Ethereum developers definitely need to figure out a way to change the blockchain’s infrastructure to patch this vulnerability, it’s hard not to criticize Flashbots and other MEV-Boost relays for their behavior throughout this controversy.
[Carreras, supra].
"On Twitter, Martin Köppelmann, the co-founder of the Gnosis trading protocol and a vocal advocate for uncensoring Tornado Cash, shared a screenshot of the 51% OFAC-compliant blocks. Köppelmann pleaded: 'Dear Flashbots team – I spoke to many of you personally and you committed to take actions if censorship becomes worse – but if not now, when then?” [Nijkerk, supra].
"Ethereum doesn’t seem to show any signs of censorship resistance for now, and it seems this issue will continue to gain momentum as more blocks adhere to censoring Tornado Cash transactions" [Id].
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