48% of Ethereum Blocks Face Censorship from OFAC Compliant Flashbots – Bitcoin News

For a couple of years, MEV-Boost relays or Flashbots have become popular tools to gather the maximum value that can be extracted from the production of Ethereum blocks. However, in recent times, Flashbots have been controversial as people believe the technology threatens Ethereum’s censorship resistance. This is because Flashbots account for 48% of blocks that comply with government-enforced regulations.

Nakamoto coefficient or governance coefficient? — Cryptocurrency users complain that OFAC-compliant flashbots have tainted Ethereum’s censorship resistance

While Ethereum has been praised for meeting the demands of environmentalists, critics believe the blockchain network made a trade-off by increasing validator centralization and the likelihood of increasing censorship for a so-called “greener” blockchain. . The day after The Merge, when Ethereum transitioned from a proof-of-work (PoW) network to a proof-of-stake (PoS) blockchain, PoW supporters criticized Ethereum for the increased possibility of validator censorship. . Data had shown that more than 59% of all ethereum (ETH) staked was held by four companies.

Although some people fired critics, such as Bitcoin supporter and blogger Eric Wall, who told his Twitter followers that the liquid venture “Lido isn’t even a group.” Wall further noted that “Lido cannot decide what blocks any of its underlying node operators.” Following the theme of increasing validator centralization, another discussion about using Flashbots or MEV-Boost relays has intensified. Flashbots emerged in November 2020, and Bitmex researchers describe what the MEV-Boost relay technology does in a Flashbots report published last May.

“Flashbots work as follows: search engines scan the blockchain and memory pool for MEV opportunities,” Bitmex’s report on Flashbots explains. “When they find that opportunity, they create a transaction or a package of transactions that exploits it. They then send these transactions to the centralized Flashbots server. These transactions also include a payment for the miners. The idea here is that a seeker will no longer bother to broadcast their MEV transactions to the memory pool and will just use the Flashbots system.”

Close to half of daily Ethereum blocks are OFAC compliant blocks

The conversation about Flashbots is not really about the technology to find the maximum value that can be extracted from the production of Ethereum blocks, as the discussion has been based solely on transaction censorship derived from MEV-Boost relays. For example, after the US Treasury Department’s watchdog, the Office of Foreign Assets Control (OFAC), banned Tornado Cash and several ethereum addresses, crypto supporters believe that Flashbots will censor cryptocurrencies. ether transactions. This is because some MEV-Boost relays or Flashbots are centralized and regulated by OFAC rules.

48% of Ethereum blocks face censorship from OFAC-compliant flashbots

At the time of this writing, 48% of block production has been applied by OFAC complaint MEV-Boost relays, according to statistics from mevwatch.info. Metrics from the flashbots.net transparency page show that 46% of blocks on October 14 were OFAC compliant.

48% of Ethereum blocks face censorship from OFAC-compliant flashbots

Martin Köppelmann, co-founder of Gnosis, tweeted about the issue when OFAC-compliant block production was above 51%. “We have reached another sad milestone in censorship: 51%”, Köppelmann wrote. “This means that if censorship validators were now to stop vouching for uncensored blocks, they would eventually form the 100% censorship canonical chain.”

The Gnosis co-founder added:

Dear Flashbots Team, I have spoken to many of you personally and you have pledged to take action if censorship worsens, but if not now, when?

The Flashbots team is committed to fighting censorship and introduces a new tool called SMOOTH

According to the Flashbots team and product manager Robert Miller, Flashbots is working on a solution to address censorship issues with a tool called AFFABLE. The SOFT tool is configured to be released next week, according to informants. Additionally, Flashbots co-founder Stephane Gosselin left the project over disagreements over the ethics behind censorship. Speaking exclusively to theblock.co contributor Jeremy Nation, Gosselin told the reporter that resistance to censorship is very important.

“In the short term, I am hopeful that validators will avoid connecting to relays that do censorship,” Gosselin told the publication in a direct message on Twitter. “Blockspace providers lobbying economically against censorship will go a long way in making sure it doesn’t become ubiquitous,” the Flashbots co-founder added. At Devcon VI, the Flashbots team inserted the new SOFT tool to the audience, and also explained that the project is 100% against censorship.

“[Phil Daian] he is stating that he is 100% against censorship and even though flashbots censor today they want to fight against censorship and the way to do that is through [open source]research and open data”, Twitter user Lefteris Karapetsas wrote during Daian’s Devcon VI presentation.

Tags in this story

bitmex research, Blockchain network, transaction censorship, censorship, controversy, Devcon VI, Devcon VI discussions, ether, Ethereum, Ethereum (ETH), Flashbots, Flashbots censorship, Flashbots controversy, Gnosis co-founder, Lefteris Karapetsas, Martin Köppelmann, MEV- Boost relays, OFAC rules, OFAC compliant, OFAC compliant block, Office of Foreign Assets Control, Phil Daian, Sanctions, Stephane Gosselin, SUAVE, technology, Treasury Department watchdog, US sanctions USA

What do you think of the controversy surrounding MEV-Boost relays or Flashbots technology? Let us know what you think about this topic in the comments section below.

jamie redman

Jamie Redman is the news lead at Bitcoin.com News and a fintech journalist based in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open source code, and decentralized applications. Since September 2015, Redman has written over 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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