The US Treasury OFAC administers and enforces financial sanctions implemented by the US, an example of which is the controversial ban on Tornado Cash. Following the Merge upgrade, Ethereum has relied on MEV-boost relays for producing blocks, going from 43% in October to 90% in September.
New data reveals that over 50% of the blocks on the Ethereum network meet the US Treasury OFAC’s standards. That happened about one month after the second-largest cryptocurrency platform completed its Merge upgrade.
Tornado Cash Is in a Phase of Gradual Elimination
The US Treasury OFAC administers and enforces all the financial sanctions implemented by the US government. An example is a recent ban on the crypto mixer Tornado Cash, which many consider excessive.
According to data from Labrys, 51% of Ethereum blocks comply with the US Treasury OFAC’s standards. They limit some operations on the network, refusing to process transactions related to Tornado Cash.
The blockchain solutions firm found the above blocks resulted from MEV-boost relays. These are subject to OFAC regulation, which explains the censorship on the network.
Following the Merge upgrade, Ethereum has experienced growing reliance on MEV-boost relays for producing blocks. Only 43% of the blocks on the network were not from MEV upgrades in October, compared to 90% in September. Relays currently create 57% of the blocks on Ethereum.
The Relays of Flashbot Censor Tornado Cash Transactions
Relays allow Ethereum PoS validators to award their block production tasks to the highest bidder. The MEV-boost relays mainly aim to reduce the risks of peak consumption. By reordering transactions into blocks, the maximum extractable value (MEV) describes the revenue opportunities of block builders and validators.
In addition, MEV-Boost relays are centralized entities serving as trusted intermediaries between block makers and block builders. According to Labrys, that enables the market to accommodate more manufacturers, encouraging competition and increasing the profits of validators. Besides, they pointed out that the MEV-Boost Relays might bring about better censorship resistance for Ethereum.
However, over 51% of Ethereum blocks comply with the OFAC’s sanctions. The research firm Flashbots operates the largest and most popular Ethereum relays. Since these account for nearly 80% of all blocks produced by Ethereum, Flashbots relay all censored Tornado Cash transactions.
The report from Labrys showed that the network mainly has seven MEV-boost relays. They include Flashbot, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, BlockNative, Manifold, and Eden. However, only three of those relays produce blocks that are resistant to lockouts.
The Crypto Community Responds to that Situation
The crypto community has expressed its dissatisfaction with the situation. For example, Martin Köppelmann, the co-creator of Gnosis, described the recent milestone as regrettably undesirable.
The entrepreneur approached the Flashbots teams after contacting them to ask for a solution to the censorship issue. They told him they would take measures if the problematic situation with the relays worsened.
In addition, Uri Klarman, the CEO of bloxRoute labs, advised validators to connect to uncensored relays. He argued that this would allow reducing the disadvantages caused by censorship.
By Alexander Salazar
