Is Ethereum being hit by censorship? The situation in a glance

11 December 2023

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Ethereum is the world's second-largest blockchain and is living a difficult situation for months with the U.S. government. Data is now showing a sort of censorship. As Coindesk recently reported we can observe an "effort by block builders to exclude transactions linked to entities sanctioned by the U.S. government". In details, four of the five biggest "block builders" on Ethereum are excluding transactions sanctioned by the U.S. government.

Taking stock of the situation

If we want to analyze the present situation we need to take a look to some facts. Last year the U.S. government decided to sanction Tornado Cash – a "privacy mixing" program on Ethereum that helped people transact without leaving a trace. The Treasury Department's Office of Foreign Assets Control (OFAC) said that the program Tornado Cash was used by terrorists and other U.S.-sanctioned entities. It ended with Tornado Crush added to the same blacklist as Iran, North Korea and Hamas. In response, some blockchain advocates were defiant; they balked at OFAC's attempt at "censorship" and gloated that Ethereum would be immune to it as a result of its decentralized construction.
After that almost 72% of data blocks posted to MEV-Boost, middleware that powers almost all of the validators that write blocks to Ethereum, are now considered "censored," up from about 25% in November 2022. "Block builders have the authority to decide which transactions (and in which order) they put into their blocks and which they want to censor," - Toni Wahrstätter, researcher at the Ethereum Foundation, explained - "This means block builders decide upon the content of the blockchain."

The consequences

What we all know is that a blockchain network provides a shared data record that is virtually impossible to change. Unfortunley the consequences of this situation are ironically defeating the original blockchain's aim, that was creating transparency between economic transactions. Some block builders are now using "private mempools" – issuing transactions directly to builders, rather than Ethereum's mempool, to guarantee their inclusion. This can lead to the normalization of private order flow, meaning less transparency. In other words the problems that blockchains were built to avoid.

SOURCES: CoinDesk

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