Ethereum: What 50% OFAC Censored Blocks Mean for the ETH Blockchain
Ethereum [ETH]October 14 witnessed a never-before-seen increase in censorship as over 50% blocks were created in the last 24 hours. These blocks came under the US Treasury’s Office of Foreign Assets Control (OFAC) following compliance recommendations.
Source: MEV Watch
The development meant that more than half of the blocks that were developed in this period were supplied by relays. These relays can be considered the ones that stopped facilitating transactions over Tornado Cash. Furthermore, the relay or utility was an open source, non-custodial, fully decentralized cryptocurrency tumbler running on the Ethereum Virtual Machine compatible network.
In August 2022, OFAC recommended and urged Americans to refrain from using Tornado Cash and cryptocurrency ecosystems. After the merger, however, the emergence of MEV Boost led to an increase in OFAC-compliant blocks.
Maximum Extractable Value or MEV are rewards received by validators when they reorder transactions across a block. An R&D team called Flashbots has developed MEV Boost so that possible fallout from MEV mining can be dealt with.
There are many relays currently in operation, and the one created and managed by Flashbots proved to be the most popular. However, the Flashbots relay prohibited transactions on blocks that have been sanctioned.
Most other relays have so far not enforced this ban. But as more and more relays begin to enforce the OFAC rule, it could become difficult for sanctioned transactions. These include those on the Ethereum blockchain, to get to the Ethereum blockchain.
Other relays such as Blocknative also consider filtering the provided addresses according to OFAC recommendations.
No action from ETH
Members of the cryptocurrency community were quick to react to the development. Martin Köppelmann, CEO of Gnosis Ltd, an Ethereum-based DeFi infrastructure development firm, took to Twitter to say that this is a sad milestone in censorship.
We reached another sad milestone in censorship: 51%
This means that if the censorship validators now stop attesting to non-censoring blocks, they will eventually form the canonical, 100% censorship chain. pic.twitter.com/JrYUjowLpt— Martin Köppelmann 🇺🇦 (@koeppelmann) 14 October 2022
Köppelmann wondered when the Flashbots team would do something. Klarman said validators should connect to non-censoring relays like bloXroute’s relays. These include Ethical and Max-Profit if they want to evade the censorship on Ethereum.
For now, it does not appear that part of Ethereum intends to evade censorship with respect to Tornado Cash.
