Censorship of 51% of Ethereum Blocks is Now Possible


More and more Ethereum blocks are being generated by censorious MEV-Boost relays, Flashbots being the most famous. If the MEV organisation really has Ethereum’s best interests at heart, it may choose to cease operations until developers can devise a long-term solution.

MEV Watch reports that yesterday 51% of all Ethereum blocks were created by “OFAC compliant” MEV-Boost relays, which are relays that have publicly indicated their intention to filter transactions via Tornado Cash or other protocols targeted by the U.S. Treasury.

Maximum Extractable Value (MEV) refers to arbitrage possibilities discovered by rearranging transactions inside a block while it is being generated. Flashbots and other MEV-Boost relays connect on-chain merchants and validators with off-chain block-building markets. Since January 2020, MEV has taken more than $675 million from blockchain users, according to statistics from Flashbots.

Since Ethereum migrated to a Proof-of-Stake consensus method, Flashbots and other MEV-Boost relays have been responsible for constructing a growing number of Ethereum blocks. According to MEV monitoring statistics, 90% of blocks were created without MEV-Boost relays on September 15; this percentage has decreased to 43% as of October 14. This is to be anticipated, since validators may achieve much greater yields by transferring their block-building responsibilities to MEV-Boost relays.

The issue is that the main MEV-Boost relays, namely Flashbots, have indicated publicly that they would not include Tornado Cash transactions in the blocks they create. The reason for this is that the Office of Foreign Assets Control (OFAC) placed the privacy protocol on its sanctions list on August 8, claiming it was used only by money launderers and cyber criminals from North Korea. Following the prohibition, large centralised crypto services like Circle and Infura proceeded to block Ethereum addresses, and Flashbots was among the companies who swiftly declared “OFAC compliance.”

Flashbots released their relay code as open source in response to opposition from the Ethereum community; yet, the Flashbots relay is still responsible for about 80% of all MEV-Boost relay block generation. In the twenty-four hours prior to the time of writing, more than 57% of all Ethereum blocks were created by MEV-Boost relays, of which 88% declared they would refuse to contain any Tornado Cash-related transactions. 

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