Ethereum Blockchain’s censorship resistance is now threatened by certain MEV-boost relays (especially Flashbots)
Ethereum’s base layer is already censorship prone and this is not due to big validators holding majority of ETH stake, it’s because of OFAC complaint MEV-boost relays rejecting Tornado Cash related transactions to be included in a Ethereum Block.
Many Ethereum validators use services of MEV-boost relays, where transactions within a block are rearranged for squeezing out maximum profits.
MEV-boost relays provide off-chain Block building marketplaces where Ethereum Blocks are created by rearranging transactions within that Block in the most profitable order so that maximum value is extracted by the validator from that Block.
More than 50% of Ethereum Blocks produced have censored Tornado Cash transactions
Right now according to data from MEV watch atleast 59% of Ethereum Blocks are created using services of MEV-boost relays while still 40% of blocks are created without using the services of MEV-boost relays.
The problem here is that out of these 59% of Ethereum Blocks that were created using services of MEV-boost relays, a majority of Blocks(52%) have been OFAC compliant ones, produced by OFAC compliant MEV-Boost relays like Flashbots.
MEV Watch More than 50% of Blocks have enforced OFAC compliance
This means that 52% of the OFAC compliant Blocks that is produced by OFAC compliant MEV-boost relays would have purposefully not included any transactions related to Tornado Cash Protocol.
Ethereum Validators have censored Tornado Cash transactions without their knowledge
More and more validators have been turning to use services of MEV-boost relays since Ethereum Proof of Stake Blockchain began functioning, as they find it more profitable.
Flashbots is the most widely used MEV-boost relay and its rejecting Tornado Cash transactions and not including them in Blocks, because it’s a OFAC compliant MEV-Boost relay.
MEW Watch More than half of the Blocks produced in the Ethereum Network have provably had transactions of Tornado Cash censored
This is worrying, so many Ethereum validators are censoring Ethereum transactions that relate to Tornado Cash transactions without their knowledge by using services of OFAC compliant MEV-Boost relays like Flashbots… Ouch!!
Block producers are not instructed to censor transactions by any Government yet…
The point is that the Office of Foreign Assets Control (OFAC) may have included Tornado Cash in its sanctions list but it has not instructed Block producers to sanction Tornado Cash transactions.
Infact, Binance and Coinbase validators are validating Tornado Cash transactions , so why are Flashbots boycotting Tornado Cash transactions, by not including them in the Blocks they create for validators?..
Hmmm…
Ethereum Blockchain as a whole has not completely censored Tornado Cash transactions
Now, let’s be happy, that those Tornado Cash transactions although boycotted by Flashbots and other so called OFAC compliant MEV-Boost relays, are still picked up by validators using services of non OFAC complainant MEV Boost relays and validators that are building blocks without using services of MEV Boost relays. However, this may change if validators start using services of MEV-Boost relays like Flashbots.
Also, 52% of the Blocks have been processed using services of OFAC complaint relays who would reject any Tornado Cash related transaction. It’s a big percentage. This is a threat to Ethereum Blockchain being immune to censorship resistance!!
Slashing mechanism can dissuade MEV-boost relays from censuring transactions
Well, the Ethereum community is figuring out how to fix this OFAC MEV-boost relay problem. A possible solution that’s been talked about is having a slashing mechanism for MEV Boost relays who try to censure any Ethereum transactions, just like it’s there for validators.
However, it appears that Flashbots is not open to implement such mechanisms currently because they perhaps don’t share Ethereum and crypto community values for the need of Ethereum Blockchain being Censorship resistant.
Infact, the co-founder of Flashbots, Stephane Gosselin who seemed open to discuss implementing slashing mechanisms to Flashbots, left the company due to disagreements with the team, although he has not yet disclosed what disagreements made him quit Flashbots.
Shrugs…
Ethereum Community are aghast by Flashbots as it’s making the Ethereum Blockchain censorship prone
Hopefully, Ethereum Blockchain has enough percentage of validators who care about Ethereum Blockchain’s censorship resistant nature and don’t use services of OFAC compliant MEV boost relays, although unfortunately it appears it’s very profitable for validators to use services of Flashbots.
So, hopefully, Ethereum community would find solutions to get over this OFAC compliant MEV boost relay problem but many from the crypto community are so angry with Flashbots that they want them to wind up their operations as their services are threatening the integrity of the Ethereum Blockchain
MEV boost relays like Flashbots have reduced gas fees on Ethereum Blockchain by taking the MEV bidding off chain, still their services is not essential to the sustenance of Ethereum Blockchain.
Let's hope Ethereum community able to fix this pressing issue!!
Thankyou for reading!!