What about censorship on Ethereum?

More than two-thirds of all blocks on the new Ethereum (ETH) Proof-of-Stake blockchain are currently in compliance with new US sanctions. These are the sanctions of the Office of Foreign Assets Control (OFAC), which were drawn up under Tornado Cash, the privacy protocol that it banned this year.

Censorship on Ethereum

Users running so-called Miner Extractable Value (MEV) relays are, in a way, contributing to the censorship on the Ethereum network. MEV relays should be seen as a kind of intermediary between block producers and block builders, which are used by major parties such as Binance, Celsius Network, Coinbase, Kraken and Lido Finance.

Users can stake (staking) their ether on any of the mentioned platforms, which run the MEV software. In principle, platforms can choose to run other software, but that would mean acting against the law. For exchanges such as Coinbase and Kraken, which must comply with US law, this is not a realistic option.

As a result, a significant portion of the network adheres to US government regulations. This means that certain transactions from wallets that are blacklisted by OFAC will not be included in blocks from these manufacturers. At the time of writing, 68 of the last 100 blocks have been produced under US law and regulations.

Is this dangerous for ethereum?

In principle, it is not a desirable development for Ethereum, as it may introduce censorship on what should be an open and decentralized network. It’s not catastrophic at the moment. A score of 68 out of 100 blocks means that there were 32 more blocks that did not comply with US rules.

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So far, no transactions have been completely stopped. Only part of the network participates in this. It just shouldn’t grow much further, but that seems to be moving in the right direction.

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