Since the “merge”, the change in Ethereum from Proof of Work (PoW) to Proof of Stake (PoS), the second largest blockchain network has changed a lot. More ether is now staking than ever before, and the upgrade has also left its mark on the network in terms of decentralization and censorship resistance.
Since Ethereum’s transition to Proof of Stake, staking validators are no longer responsible for processing transaction blocks. To increase their profits, most use – almost 90 percent of all ETH staking validators – the MEV Boost software. With this software, they can easily select the most profitable sequence of transactions, thereby maximizing their staking returns.
What is MEV Boost?
MEV stands for “Miner Extractable Value” and MEV Boost describes certain software solutions that support ETH staking validators in choosing the most economically attractive order of transactions for inclusion in a new ETH transaction block.
Since Ethereum switched to Proof of Stake, the MEV Boost software has become the standard among validators as it allows them to maximize their staking returns. However, the inclusion of a censorship feature in certain MEV Boost software has also raised concerns about the Ethereum network’s censorship resistance.
What can be problematic about validator software
The problem with the MEV Boost software is that it can break Ethereum’s censorship resistance as it takes away from validators control over the selection of transactions in the blocks they validate.
Immediately after the merge, this circumstance ensured that almost all validators used MEV Boost software that censored certain transactions. The most popular MEV boost software at the time Flashboats dominated the market and blocked transactions linked to addresses on a list of OFAC are included.
OFAC is a branch of the US Treasury Department that enforces certain economic and trade sanctions to protect US security interests. In August 2022, OFAC put Tornado Cash and some associated Ethereum addresses on its sanctions list. Since Flashbots, the company behind what was then the most popular MEV boost software, adhered to OFAC’s list, as of November 2022, around 70 percent of all Ethereum blocks had certain transactions censored. But those days seem to be over and the tide has turned in favor of Ethereum’s decentralization.
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The end of censorship on Ethereum?
Because Flashbots’ MEV Boost software is open source, anyone can modify it to remove censorship. This has led to new MEV boost providers entering the market, such as agnostic and Ultrasound Moneywho use MEV Boost but do not censor transactions. Like the graphic of Mevwatch.info shows, this has led to the proportion of transaction blocks that do not carry out censorship rising to over 70 percent.
The latest development thus shows that censorship resistance at Ethereum has improved significantly. Providers like Agnostic and Ultrasound Money, which do not censor transactions, bring a breath of fresh air to the scene. It can therefore be expected that censorship on Ethereum will continue to decrease. But there is still a long way to go. Almost 30 percent of validators still use MEV Boost software, which censors certain transactions. If you want to check for yourself which staking providers censor transactions and which do not, you can do so at Mevwatch.info do.
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