According to the CEO of blockchain development agency Labrys, Lachan Feeney, approximately 45% of all Ethereum blocks currently being validated run MEV-boost relay flashbots and are compliant with US sanctions.
In an interview with Cointelegraph on Sept. 30, Feeney noted that, while reports have claimed that 25% of all blocks validated since the merger are compliant with US sanctions, this is a lagging indicator and the current figure is likely to be closer to one in two blocks.
Feeney pointed out that MEV-Boost repeaters are regulated companies, often based in the US, and are “censoring certain transactions in the blocks they build, particularly Tornado Cash transactions”.
The CEO also noted that validators have a financial incentive to use MEV-Boost relays, which would drive increased usepointing out:
“The thing is, from a validators perspective, these guys are paying them to do this. So if you want to earn more money, activate this feature and, as a validator, increase your performance.”
MEV-Boost relays are centralized entities dedicated to the efficient extraction of the maximum extractable value (MEV). With flashbots being the most popular, MEV-Boost relays allow validators to outsource block production and sell the right to build a block to the highest bidder..
On September 28, Labrys launched the MEV Watch tool, which can inform validators about which MEV-Boost relays comply with the sanctions of the Office of Foreign Assets Control (OFAC). Referring to the motivation for the tool, Feeney said:
“We are just trying to make people aware that by running this software they are potentially contributing to network censorship.”
Feeney pointed to a worst-case scenario, often referred to as hard censorship, where “nodes would be forced by regulation to basically discard any block containing any of these transactions.”.
“That would mean no matter how long you wait, no matter how much you pay, you would never get to a point where those sanctioned transactions would get onto the blockchain,” he explained..
He also pointed out that Even in the case of soft censorship, where sanctioned transactions would eventually be validated, it could take hours and require a high-priority fee, resulting in a subpar user experience..
These findings are reinforced by Ethereum researcher Toni Wahrstätter, who published research on September 28 that suggests that of the 19,436 blocks verified by the Flashbots Mev-Boost relay, none included a Tornado Cash transaction.
Censorship fears were prevalent before the merger. Speaking to Cointelegraph, the researcher at cryptocurrency forensics and compliance firm Merkle Science, Coby Moran suggested that the prohibitive cost of becoming a validator could lead to the consolidation of validator nodes into larger cryptocurrency companies, which are much more susceptible to being influenced by government sanctions..
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