Flashbots build over 82% relay blocks, adding to Ethereum centralization

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Fol­low­ing the com­ple­tion of The Merge upgrade, Ethereum (ETH) tran­si­tioned into a proof-of-stake (PoS) con­sen­sus mech­a­nism, help­ing the blockchain become ener­gy effi­cient and secure. How­ev­er, min­ing data reveals Ethereum’s heavy reliance on Flash­bots — a sin­gle serv­er — for build­ing blocks, rais­ing con­cerns over a sin­gle point of fail­ure for the ecosystem.

Flash­bots is a cen­tral­ized enti­ty ded­i­cat­ed to trans­par­ent and effi­cient Max­i­mal Extractable Val­ue (MEV) extrac­tion, which acts as a relay for deliv­er­ing Ethereum blocks. Data from mevboost.org show that there are six active relays cur­rent­ly deliv­er­ing at least one block in Ethereum, name­ly Flash­bots, BloXroute Max Prof­it, BloXroute Eth­i­cal, BloXroute Reg­u­lat­ed, Block­na­tive and Eden. 

Relays sort­ed by num­ber of deliv­ered blocks. Source: mevboost.org

As shown above, out of the lot, 82.77% of all relay blocks have been found to be built by Flash­bots alone — con­tribut­ing heav­i­ly to Ethereum centralization. 

A relat­ed blog from Bit­MEX high­light­ed the need for a com­plete rede­vel­op­ment of Flash­bots or a sim­i­lar sys­tem to mit­i­gate unfore­seen com­pli­ca­tions in an era after the Merge. How­ev­er, Flash­bots pro­po­nents argue that the sys­tem is a decen­tral­ized autonomous orga­ni­za­tion (DAO) and will even­tu­al­ly become decen­tral­ized itself. 

Relat­ed: Ethereum Merge: Com­mu­ni­ty reacts with memes, GIFs and tributes

Com­ple­ment­ing the data relat­ed to Flash­bots’ dom­i­nance, an analy­sis from San­ti­ment indi­cat­ed that 46.15% of Ethereum’s PoS nodes are con­trolled by only two addresses.

“Since the suc­cess­ful com­ple­tion of the Merge, the major­i­ty of the blocks — some­where around 40% or more — have been built by two address­es belong­ing to Lido and Coin­base. It isn’t ide­al to see more than 40% of blocks being set­tled by two providers, par­tic­u­lar­ly one that is a cen­tral­ized ser­vice provider (Coin­base),” explained Ryan Ras­mussen, cryp­to research ana­lyst at Bitwise.



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