‘Regarding Precedence’ — bloXroute Labs’ MEV Rejects OFAC Blocks
One of the largest producers of censorship-resistant blocks on Ethereum has announced that OFAC-approved blocks will begin censoring all MEV relays in compliance with local laws.
The firm, bloXroute Labs – which has produced at least 400,000 Ethereum blocks in its two main Maximum Extraction Value (MEV) relays – announced the policy change in a post on X (formerly Twitter) on December 18, noting:
“Effective immediately, all Blockroute relays will reject bids if they contain OFAC transactions.”
An “OFAC Transaction” is any transaction with a wallet authorized by the United States Office of Foreign Assets Control, or OFAC, as defined by BloxRoot Labs.
All Blockroute Labs relays will be affected, including Blockroute Max's surplus relay, which has more than 380,000 blocks created since the September 15, 2022 Ethereum merger. Labris, an Australian blockchain development company.
Despite the news, bloXroute Labs said it is still committed to making Ethereum decentralized and permissionless while operating within the legal framework.
Advertisement:
bloXroute MEV Relays to avoid w/ OFAC tx blocks
Effective immediately, all blockroute relays will reject bids if they contain OFAC transactions (Tx to addresses that appear on OFAC's SDN list).
We are committed to supporting ETH… pic.twitter.com/9kEdAy82yf
— bloXroute Labs (@bloXrouteLabs) December 18, 2023
However, some members of the Ethereum community say that strict compliance measures are now limiting paths to trust neutrality on Ethereum.
This “sets a precedent for the industry.
“Just like the internet, censorship should be removed. [at the protocol level] And instead, rules and regulations are best implemented at the application level,” explained Feeney.
Given that Ethereum is a global infrastructure, Finney was concerned that more countries would enforce their own sanctions, making it “impossible” to build a block that would meet all regulatory regimes around the world.
“What happens when China or Russia wants to allow transactions? Even though they are targeting legitimate U.S. businesses, should those sanctions apply?”
What, even bloXroute is censoring now?
Man, we need those inclusion details if we don't want Ethereum to be a FED chain, sure this change won't make a big difference, but most relays and builders will bow to OFAC.
Maybe PBS was wrong after all… pic.twitter.com/qzt0OgUhUl
— arixon.eth (@arixoth) December 18, 2023
About 36% of blocks are currently censored by blocks containing OFAC-approved transactions, according to MEVWatch.info, down from a peak of 78% on Nov. 20. It has mostly hovered around 30-40% since March.
MEV relays use authentication to extract value from the blockchain network by adding, removing, or changing the order of transactions in a block. As MEV gains often come at the expense of ordinary users, the MEV-Boost relay was introduced to mitigate that disadvantage.
Related: Flashbots Build Over 82% of Distributed Blocks, Increase Ethereum Centralization
On September 15, 2022, censorship on Ethereum became a concern when it moved to proof-of-stake. A month ago, the United States Office of Foreign Assets Control began blocking certain wallet addresses linked to criminals and linked to the transactions of cryptocurrency miners. Like Tornado Cash.
This has cornered many MEV relays around the world to choose between keeping Ethereum faithfully neutral or complying with local regulations.
While Feeney isn't sure if bloXroute was forced to comply, he's sure the decision wasn't an easy one — the firm admits it will reduce their transfer winnings.
Magazine: Rethinking Ethereum: Blockchain Innovation or Dangerous House of Cards?
