Ethereum’s OFAC-compliant blocks fall to 27%, marking a drop in protocol-level censorship

The percentage of OFAC-compliant Ethereum blocks has taken a significant plunge.

The percentage of blocks created using compliant relays has dropped to a daily rate of 27% from 80% in November 2022, according to data from analysis site mevwatch.info. This decrease reveals a substantial reduction in protocol-level censorship by Ethereum validators relying on the MEV Boost mechanism.

Maximum Extractable Value, or MEV, refers to the maximum value that can be extracted from block production, achieved by strategically reordering transactions within a block. In the Ethereum proof-of-stake blockchain, MEV is facilitated by the open-source software MEV Boost. This software assembles transactions and proposes blocks, relaying them to the block validators.

Validators use such software to help boost their earnings. MEV Boost operates in conjunction with various competing entities that run a type of software known as «relay software,» which creates bundles of transactions for dispatch to validators.

Relay operators and censorship

In August 2022, a shift occurred when some relay operators, including the largest one at the time, Flashbots, began filtering specific transactions on the network. This change was in response to an action by the Office of Foreign Assets Control (OFAC), which sanctioned Tornado Cash and several associated Ethereum addresses in August 2022.

Daily OFAC Compliant Blocks | Source: mevwatch.info

By November 2022, around 80% of all blocks on Ethereum were OFAC-compliant, largely due to widespread adoption of Flashbots. This had substantial implications for Ethereum’s neutrality as a Layer 1 network, sparking considerable concerns among its community.

However, the trend appears to have reversed since then. Non-censoring relay operators such as Ultra Sound Money and Agnostic now command over 60% adoption rate among validators, according to data from relayscan. Meanwhile, Flashbots’ relay operators have seen a significant dip in validator adoption.

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