Ethereum Reverses Post-Merge Censorship Trend

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Con­cerns around pos­si­ble cen­sor­ship of Ethereum trans­ac­tions was preva­lent in the weeks lead­ing up to and after the Merge, but the lat­est data shows that this upward trend may be reversing.

The Merge intro­duced changes to the process of block build­ing along­side the tran­si­tion from proof-of-work to proof-of-stake, that intro­duced some risk of cen­tral­iza­tion, par­tic­u­lar with respect to MEV — or max­i­mum extractable value.

Track­ing site MEV Watch reveals that the per­cent­age of cen­sored blocks has dropped from its all-time high of 79% to rough­ly 70% over the past month. Any­thing less than about 99%, means Ethereum remains cen­sor­ship free.

MEV refers to the max­i­mum amount of income that can be earned by val­ida­tors from the auto­mat­ed process of re-order­ing trans­ac­tions for inclu­sion in a block.

If MEV in a block exceeds stan­dard block rewards, val­ida­tors may choose to re-orga­nize a block to cap­ture the income gen­er­at­ed by MEV for themselves. 

In order to pre­vent mali­cious MEV prac­tices, val­ida­tors choose to use MEV-Boost relays which allow them to request blocks from a net­work of builders.

But after the US Treasury’s Office of For­eign Assets Con­trol (OFAC) sanc­tioned cryp­to pri­va­cy ser­vice Tor­na­do Cash, pop­u­lar MEV-Boost realy provider Flash­bots — which is based in the US — decid­ed to remain OFAC-com­pli­ant, mean­ing it would ignore any trans­ac­tions which were restrict­ed by OFAC.

That alone is not enough to cen­sor Ethereum, although it can delay some trans­ac­tions, Uri Klar­man, CEO of relay provider bloXroute Labs pre­vi­ous­ly told Blockworks.

“If I had an OFAC-restrict­ed trans­ac­tion, it [would] take more time for my trans­ac­tion to be includ­ed, but even­tu­al­ly a val­ida­tor, which isn’t ignor­ing [OFAC trans­ac­tions] would include it,” Klar­man said. 

Nev­er­the­less, the con­cern with­in the Ethereum com­mu­ni­ty is that if the pro­por­tion of cen­sored blocks were to become too high, it could threat­en a fun­da­men­tal ethos of Ethereum — cred­i­ble neu­tral­i­ty — as well as a desir­able fea­ture of most pub­lic blockchain net­works: cen­sor­ship resistance.

Com­ing up with tech­ni­cal solu­tions to pre­serve these val­ues is a major goal of the Ethereum community.

Developing SUAVE

Ethereum devel­op­ers have also launched a new project to com­bat censorship.

Dubbed SUAVE, short for “Sin­gle Uni­fy­ing Auc­tions for Val­ue Expres­sion,” the project aims to decen­tral­ize block build­ing itself.

SUAVE was first teased at Dev­con, the Ethereum foundation’s annu­al con­fer­ence, where Philip Daian, a Flash­bots stew­ard, said its lat­est tech­nol­o­gy would “make Trad­Fi look embar­rass­ing.” The project’s lat­est vision was unveiled in a blog post on Nov. 22. 

At a high lev­el, SUAVE will be a new blockchain that acts as a plug-and-play mem­pool and decen­tral­ized block builder for oth­er blockchains. 

“SUAVE goes beyond sequenc­ing for a sin­gle blockchain. We designed SUAVE to be the mem­pool and block builder for all blockchains,” Hasu, pseu­do­ny­mous strat­e­gy lead at Flash­bots tweet­ed.  

Through build­ing a decen­tral­ized sequenc­ing lay­er, the Flash­bots team wants to “give domains con­trol over their own val­i­da­tion guar­an­tees and ensure small­er domains stay decentralized.”

Domains means any com­bi­na­tion of layer‑1 or layer‑2 blockchains, but also side-chains, shards, and even cen­tral­ized exchanges.

Flash­bots does not intend to par­tic­i­pate in the mar­ket­place beyond boot­strap­ping, the com­pa­ny noted. 

“We con­sid­er this strat­e­gy the most aligned with our mis­sion and the health of the entire ecosys­tem,” the com­pa­ny said.


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