Ethereum Block Builders and Growing Censorship Concerns
A recent report reveals that five out of the six largest Ethereum block builders now comply with the United States Office of Foreign Asset Control (OFAC) sanctions. Toni Wahrstätter, an Ethereum researcher and data analyst, highlights a notable rise in censorship in the report.
Ethereum’s Censorship Concerns
According to the report, censorship exists at multiple levels within the Ethereum ecosystem. Validators have the power to selectively include or exclude transactions in blocks, while relays can filter blocks based on certain rules. Builders can also choose to omit specific transactions. These layers of censorship raise concerns about the neutrality and decentralization of the blockchain.
Wahrstätter’s report suggests that censorship resistance is crucial for maintaining political neutrality in blockchains. Decentralization is a fundamental principle, as centralization at any layer of the Ethereum stack can potentially harm the entire ecosystem.
Addressing the Issue
The report also highlights potential solutions to address the issue of censorship. Inclusion lists could provide censoring entities with deniability for including OFAC-sanctioned transactions or compel them to exit the ecosystem if they refuse to comply. Encrypted Mempools, which involve encrypting transaction data while still unconfirmed, could render it impossible for censoring parties to target transactions based on their content.
Despite progress made on the relay front, with the introduction of Ultra Sound, Agnostic, and BloXroute relays, many top builders have implemented censorship by excluding Tornado Cash transactions from their blocks.
OFAC Compliance Among Ethereum Block Builders
After OFAC’s sanctions on Tornado Cash, there was significant debate about whether validators should include these transactions. A report from MEV Watch in March revealed that approximately 30% of blocks added to the Ethereum blockchain within a week were deemed OFAC compliant, meaning they did not include transactions subject to OFAC sanctions, particularly those involving Tornado Cash.
However, a month prior to this, Ethereum validators censored around 50% of blocks that made it onto the blockchain. The last time Ethereum experienced such low levels of censorship was on September 24, 2022.
