A new report shows that today, five of the six largest ethereum block builders are in compliance with sanctions from the United States Office of Foreign Assets Control (OFAC). A post on X by Toni Wahrstätter, ethereum researcher and data analyst, reveals that in recent months there has been a notable increase in censorship.
In particular, OFAC-compliant blocks are those that omit transactions involving parties sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control. Following government sanctions on Tornado Cash transactions for US citizens in August, the majority of blocks added to the blockchain met OFAC compliance.
Growing Concerns About ethereum Censorship
Wahrstätter’s post highlights the multiple layers of censorship within the PBS stack. Validators can selectively include or exclude transactions in blocks or avoid certifying specific validators, and relays can filter blocks based on certain rules. Finally, constructors can simply skip specific transactions.
New online dashboard – https://t.co/1Pnbe14NLG
May it shed light on the scope of censorship and guide us towards the implementation of practical solutions to enshrine a strong form of resistance to censorship.
More information pic.twitter.com/zyau9L3W1h
— Toni Wahrstätter (@nero_eth) September 26, 2023
While progress has been made on the streaming front, thanks to Ultra Sound, Agnostic, and BloXroute streaming, many of the major builders have begun to implement censorship. That means they do not include Tornado Cash transactions in their blocks, Wahrstätter mentioned.
Wahrstätter also highlighted that censorship resistance is crucial to maintaining political neutrality on blockchains. No entity should have control over two-thirds of the content of a blockchain. Therefore, decentralization is a fundamental principle; Centralization at any stack layer can potentially harm the entire ecosystem.
The post also highlighted several promising solutions to address this problem. Inclusion lists can offer censoring entities the ability to deny inclusion of OFAC-sanctioned transactions or force them out of the ecosystem if they are still non-compliant. Encrypted Mempools can also be employed which involve encrypting transaction data while it is not yet confirmed, making it impossible for censoring parties to target transactions based on their content.
Meanwhile, Titan Builder remains the last major block builder and still includes OFAC-sanctioned transactions in its blocks, particularly those associated with Tornado Cash.
OFAC Compliance Among ethereum Block Builders
Following the OFAC sanctions on Tornado Cash, there was significant debate over whether validators should include these transactions. Since then, the ethereum community has been advocating for reversing censorship.
Meanwhile, according to a March report from MEV Watch, nearly one in three blocks added to the ethereum blockchain in a week was deemed OFAC compliant. That means that about 30% of the blocks did not include transactions subject to OFAC sanctions, particularly those involving Tornado Cash.
Just a month before this, ethereum validators were still censoring around 50% of blocks entering the blockchain. The last time ethereum experienced such low levels of censorship was on September 24, 2022.
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