Welcome to Valid Points. In today’s issue, Margaux Nijkerk discusses how new relayers and community efforts have contributed to a decline in censorship on Ethereum’s blockchain.For an extended version of this article, view the web post here.
Ethereum’s “censorship” problem has grown over the past few months, with some validators in charge of maintaining the blockchain’s ledger ignoring certain transactions to comply with regulations. But crypto’s anti-censorship purists may have reason to be hopeful.
In the past 24 hours, 66% of blocks that made it onto the Ethereum blockchain were OFAC-compliant, meaning they excluded transactions involving parties sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control.
Traditional institutions typically comply with government sanctions, but in the idealistic world of crypto what some call compliance others call censorship. As more and more Ethereum validators choose to comply with OFAC, sanctioned transactions are taking longer to make it onto Ethereum’s chain, and ideological purists are arguing the network is beginning to fall short on its founding commitments to financial freedom and neutrality.
But the tide may be turning, with the number of censored blocks on Ethereum seeing a steady decline between mid-November and mid-December. According to mevwatch.info, a watchdog site for monitoring Ethereum “censorship”, the highest number of censored blocks came on Nov. 21, when 79% of blocks relayed on Ethereum came from parties that exclude OFAC-sanctioned transactions. Since then, the lowest day was Dec. 9, when censored blocks made up 64%. Most days censorship sits at 68% to 72%.
So what is causing the steady decrease in OFAC-compliant blocks? In addition to community backlash against censorship, there are now more OFAC-agnostic ways of using MEV-Boost – a piece of third-party software that pre-assembles blocks for Ethereum validators.
MEV-Boost is a piece of software that allows validators – those who propose and approve “blocks” of transactions to Ethereum’s ledger – to request pre-made blocks from a network of builders. And ever since the Ethereum Merge in September, most of the blocks that make it onto the blockchain pass through this middleware component.
MEV-Boost was originally built to help validators extract MEV, or Maximal Extractible Value – additional profit that block builders and validators can receive from strategically reordering or including transactions within a block.
The software, which was built by Ethereum research and development firm Flashbots, was born out of the firm’s efforts to solve some issues created by MEV, including centralization and censorship. It was supposed to make it possible for any Ethereum validator, large or small, to easily bite out a piece of the MEV pie.
Validators that use MEV-Boost must select a third-party “relayer” tasked with delivering them pre-built blocks. Some of these relayers, out of sensitivity toward OFAC, automatically filter out blocks containing Tornado Cash transactions. These “censored” relayers included Flashbots’ own relay, the one that most users of the MEV-Boost platform tend to use by default.
So in the weeks since this has all taken place, what has the community done to try to reverse Ethereum’s censorship course?
Since the last time I wrote about MEV-Boost, four new relayers that are noncensoring have entered the market. Those relayers are Agnostic, Relayoor, Ultrasound and Aestus.
Although they currently make up a tiny fraction of blocks relayed, there’s now greater diversity for validators to connect with (six of the 10 relays that are now available are noncensoring).
Others attribute the decline in censorship to the fact that validators are more willing to connect to relays that are not Flashbots, now that they have become more comfortable with the MEV-Boost space.
Celsius Network LLC, et al., have established bar dates for submitting proofs of claim. Persons and entities that agree with their claim as listed in the Schedules [Docket No. 974] need not submit a proof of claim. Otherwise, all persons and entities that assert a claim against Celsius Network LLC and its affiliates must submit a proof of claim before the applicable bar dates outlined in the Bar Date Notice [Docket No. 1368-1].
Pulse Check
The following is an overview of network activity on the Ethereum Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on ETH metrics.
Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.
WHY IT MATTERS: Payments processor Visa recently proposed a system known as “account abstraction” that uses smart contracts that can be used to enable automated programmable payments on Ethereum. This system allows for the creation of a self-custodial wallet that can make automatic recurring payments without requiring the active participation of the user.Read more here.
WHY IT MATTERS: “We’re creating Beacon because, as a network of Web3 founders and operators ourselves, we’re 100% committed to this idea of bringing the next 1 billion users into the space. With everything happening in the news, we know the odds are stacked against us,” Polygon co-founder Sandeep Nailwal said to CoinDesk in an email. Beacon hopes to stand out from other accelerators by building in-house software that can connect founders and investors.Read more here.
WHY IT MATTERS: The Web3 startup behind Bored Ape Yacht Club said Monday Alegre will be joining the company as CEO, effective in the first half of 2023. In April 2020, Alegre was named president and chief operating officer of Activision Blizzard, the powerhouse gaming company behind titles like Call of Duty, World of Warcraft and more. “Throughout my career, I have sought to build disruptive and innovative platforms that provide long-term value to consumers,” Alegre told CoinDesk. “Web3 presents an opportunity to reinvent how content is used, transacted and owned across the globe.” Read more here.
Factoid of the Week
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Open Comms
Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.
You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:
