For several years, MEV-Boost relays or Flashbots have been a popular tool for collecting the maximum value that can be extracted from Ethereum block production. Recently, however, Flashbots have become controversial because they are considered a technology that threatens Ethereum’s resistance to censorship, as Flashbots account for 48% of all blocks that are compliant with government-enforced regulations.
Nakamoto Factor or Government Factor. – Crypto Users Complain That OFAC-Compliant Flashbots Have Stained Ethereum’s Censorship-Resistance
Complaints that OFAC-Compliant Flashbots Have Stained Ethereum’s Censorship-Resistance
While Ethereum has been praised for meeting the demands of environmentalists, critics believe the blockchain network has made a trade-off by centralizing validators, increasing the probability of rising censorship for the so-called “green” blockchain. The day after The Merge, when Ethereum transitioned from a proof-of-work (PoW) network to a proof-of-stake (PoS) blockchain, PoW supporters criticized Ethereum for the increased likelihood of validator censorship. Data showed that over 59% of staked Ethereum (ETH) was held by four companies.
I have never been more excited about the future of flashbots. https://t.co/hSgI2XMFDG
– ⚡️⚡️ (@bertcmiller) . 10/14/2022
But, likebitcoin advocate and bloggerpeopledismissed the criticism. Eric Wall told Twitter followers that the liquid staking company “Lido is not even a pool,” and Wall further noted that “Lido can’t decide which blocks to mine for any of their underlying node operators.” Following the topic of centralization of validators, another discussion on the use offlashbotstook place. There is also a growing discussion about Flashbotsand MEV-Boost relays, with Flashbots coming out in November 2020 and Bitmex researchers describing inwhat MEV-Boost relay technology does. A Flashbots report published last Maydescribes what MEV-Boost relay technology looks like.
“Flashbots works like this – a searcher analyzes the blockchain and memory pool for MEV opportunities.” A Bitmex report on Flashbots explains. “When they find such an opportunity, they create a bunch of trades and transactions to take advantage of it. They then submit these transactions to the central Flashbots server. These transactions include payments to miners. The idea here is that the searcher will no longer bother to broadcast his MEV transactions to the memory pool, but will only use the Flashbots system.”
Nearly half of Ethereum’s daily blocks are OFAC compliant
Because the discussion about Flashbots has been based solely ontransaction censorshipcaused by MEV-Boost relays, there is really no real discussion about techniques to find the maximum value that can be extracted from Ethereum’s block production. For example, after the Office of Foreign Assets Control (OFAC), the U.S. Treasury Department’s watchdog agency, banned Tornado Cash and some ethereum addresses, crypto advocates believe Flashbots censor ether transactions. That is because some MEV-Boost relays or Flashbots are centralized and regulated by OFAC rules.
57} According to statistics from mevwatch.info, as of this writing, 48% of block generation is enforced by OFAC complaint MEV-Boost relays.59} Transparency of flashbots.netIndicators from the page show that 46% of blocks on October 14 were OFAC compliant.
Martin Köppelmann, co-founder of Gnosis, tweeted about the issue once OFAC-compliant block production exceeded 51%.” Another sad milestone in censorship: 51%,” Köppelmann wrote. “This means that if censorship validators now stop authenticating to non-censored blocks, they will eventually form a legitimate 100% censored chain.”
The Gnosis co-founder adds:
Dear Flashbots team – I have personally spoken with many of you and you have promised to take action if the censorship gets worse – but if not now, when then.
The Flashbots team vows to fight censorship and introduces a new tool called SUAVE.
According to the Flashbots team and product director Robert Miller, Flashbots is working on a solution to censorship concerns with a tool calledSUAVE. According to insiders, the SUAVE tool will be releasednext week. Additionally, Flashbots co-founder Stephane Gosselin has left the project due to disagreements about the ethics behind censorship. In an exclusive interview with theblock.co contributor Jeremy Nation, Gosselin told reporters that resistance to censorship is very important.
“In the short term, we hope that validators will avoid connecting to relays that censor,” Gosselin told the journal in a direct Twitter message.The Flashbots co-founder added that “Blockspace’s suppliers are the only ones who are willing to At Devcon VI, the Flashbots teamintroduced the new SUAVE tool to the audienceand further explained that the project is 100% against censorship. percent against censorship.
Twitter user Lefteris Karapetsas said during Daian’s Devcon VI presentation that “[Phil Daian] is 100% against censorship, Flashbots is censoring today, but we want to fight censorship, the We want to fight censorship, and we do it through [open source], research, and open data.
Image credits: Shutterstock, Pixabay, Wiki Commons