Labrys CEO warns of censorship on the Ethereum network

What’s new? Lachlan Feeney, the CEO of blockchain development agency Labrys, said that the Ethereum network could face censorship as a result of the September 15 transition to the Proof-of-Stake (PoS) consensus algorithm. In his view, 45% of validators using Flashbots’ software are forced to comply with US sanctions, Cointelegraph reports.

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What other statements have been made? Reports indicate that only 25% of all blocks run MEV-boost relays, the software for which was developed by the American team, Flashbots. However, according to Feeney, this figure is actually much higher at 45%. He noted that relays with Flashbots software can censor “certain transactions in the blocks that they build,” as required by US regulators.

According to the head of Labrys, validators have a financial incentive to use MEV-boost, which will lead to further growth in their adoption. MEV-boost relay flashbots allow validators to outsource the production of new blocks and sell the right to create blocks to the party that will pay the most for it.

On September 28, Labrys released an MEV Watch tool, which informs validators about which MEV-boost flashbots comply with sanctions from the Office of Foreign Assets Control (OFAC), part of the US Treasury Department. According to Feeney, the main motivation behind creating the tool was to raise awareness among those unaware that running such software potentially contributes to censorship of the network. The head of Labrys stressed that censorship could lead to the fact that a number of transactions would never be included in the blockchain.

Feeney’s concerns were confirmed by Ethereum researcher Toni Wahrstätter. On September 28, he published research showing that of the 19 436 blocks verified by the MEV-boost flashbots, not a single one included transactions related to the Tornado Cash crypto mixer that came under OFAC sanctions in August.

Earlier, Ethereum co-founder Vitalik Buterin spoke out against possible censorship of the blockchain protocol. In a related poll by blogger Eric Wall, he supported the option of involving burning the share of validators that would block transactions at the protocol level, agreeing with OFAC’s censorship. And the CEO of crypto exchange Coinbase Brian Armstrong said that the platform would stop participating in ETH staking if US regulators demanded that transactions be censored.

To find out what Vitalik Buterin thinks is most important for Ethereum after The Merge, see GetBlock Magazine’s article.