For a couple of years now, MEV-Boost relays or Flashbots have become popular tools in order to gather the maximum value that can be extracted from Ethereum’s block production. However, in recent times, Flashbots have been controversial as people believe the technology threatens Ethereum’s censorship-resistance. Flashbots are responsible for 48% blocks that comply with regulations enforced by the government.
Nakamoto Coefficient or the Government Coefficient — Crypto Users Complain That OFAC-Compliant Flashbots Have Stained Ethereum’s Censorship-Resistance
While Ethereum has been complimented for meeting the demands of environmentalists, critics believe the blockchain network made a trade-off by increasing validator centralization, and the probability of rising censorship for a so-called ‘greener’ blockchain. The Merge was the day that Ethereum changed from being a proof of work (PoW), network, to becoming a proof of stake (PoS), blockchain. PoW supporters criticised Ethereum for increasing potential validator censorship. Four companies held more than 59% (ETH stake) of the total ethereum (ETH).
Flashbots’ future is exciting me more than ever before. https://t.co/hSgI2XMFDG
— @bertcmiller ⚡️🤖 (@bertcmiller) October 14, 2022
However, there are some individuals who do not want to be left behind. dismissed the critics, like the Bitcoin supporter and blogger Eric Wall, who told his Twitter followers that the liquid staking company “Lido isn’t even a pool.” Wall further noted that “Lido can’t decide what blocks anyone of their underlying node operators mine.” Following the topic of increasing validator centralization, another discussion concerning the use of Flashbots or MEV-Boost relays has heightened. Flashbots were created in November 2020. Bitmex researchers describe the MEV-Boost relay technology in a Flashbots Report published in May.
“Flashbots works as follows — Searchers analyse the blockchain and memory pool for MEV opportunities,” the Bitmex report on Flashbots explains. “When they find such an opportunity they create a transaction or bundle of transactions which exploits it. These transactions are then submitted to Flashbots central server. The transactions include payment to the miners. The idea here is that a searcher will no longer bother broadcasting their MEV transactions to the memory pool anymore and will only use the Flashbots system.”
Close to Half of Ethereum’s Daily Blocks Are OFAC-Compliant Blocks
The conversation concerning Flashbots isn’t really about the technology of finding the maximum value that can be extracted from Ethereum’s block production, as the discussion has been solely based on transaction censorshipMEV-Boost relays. For instance, after the U.S. Treasury Department’s watchdog the Office of Foreign Asset Control (OFAC) banned Tornado Cash and several ethereum addresses, crypto supporters believe Flashbots will censors ether transactions. That’s because some MEV-Boost relays or Flashbots are centralized and are regulated under OFAC rules.
Mevwatch.info stats show that 48% of block production had been stopped by OFAC compliant MEVBoost relays. Metrics from flashbots.net’s transparency page show that 46% of blocks on October 14, were OFAC compliant.
Martin Köppelmann, the co-founder of Gnosis, tweeted about the issue when the OFAC-compliant block production was above 51%. “We reached another sad milestone in censorship: 51%,” Köppelmann wrote. “This means if the censoring validators would now stop attesting to non-censoring blocks they would eventually form the canonical, 100% censoring chain.”
Gnosis’ co-founder also added:
Dear Flashbots team – I spoke to many of you personally and you committed to take actions if censorship becomes worse – but if not now, when then?
Flashbots team pledges to fight censorship and introduces SUAVE, a new tool
Robert Miller (product head at Flashbots) stated that Flashbots was working to find a way to combat censorship using a tool called “Flashbots”. SUAVE. SUAVE Tool is available. releasedInsiders predict that next week. In addition, Stephane Gosselin, Flashbots’ co-founder and CEO, quit the project due to disagreements over the ethics of censorship. Speaking exclusively with the theblock.co’s contributor Jeremy Nation, Gosselin told the reporter that censorship resistance is very important.
“In the short term, I am hopeful that validators will avoid connecting to relays that perform censorship,” Gosselin told the publication in a direct message on Twitter. “Blockspace suppliers putting economic pressure against censorship will go a long way to making sure it does not become ubiquitous,” the Flashbots co-founder added. Flashbots’ team was present at Devcon VI. introducedPresenter of the SUAVE Tool explained to audience that it was 100% against censorship.
“[Phil Daian]flashbots is declaring that it is against all forms of censorship. However, they do censor some content. They want to stop censorship through [open source], research and open data,” the Twitter user Lefteris Karapetsas wrote during Daian’s Devcon VI presentation.
How do you feel about the Flashbots and MEV-Boost technology controversy? Comment below and let us know how you feel about the subject.
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