Two builders produce 88% of Ethereum blocks in October, raising concerns

Two Ethereum block builders produced the most blocks in the first two weeks of October, raising concerns about centralization on the world's second largest blockchain network.

Ethereum block builders Beaverbuld and Titan Builder were responsible for 88.7% of the blocks produced on the mainnet over the past two weeks, according to Ethereum Foundation researcher Tony Wahrstetter.

Wahrstätter wrote in October. 17X post:

“This trend is primarily driven by the rise of Private Order Flow (XOF), which is sold exclusively by certain apps. XOF reduces real competition between builders in block auctions, resulting in less collective trading.

The level of decentralization on Ethereum is crucial to the security of the protocol. Centralized entities that control a large percentage of transactions can theoretically prioritize certain transactions, which contradicts decentralized blockchain technology.

RELATED: MicroStrategy Shares Up 1,540% Since 2020, Outpacing S&P 500

Ethereum's centralization is not necessarily a concern – Bittg Research

Despite the dominance of the two developers, this does not necessarily introduce significant centralization issues, said Ryan Lee, chief analyst at Bitget Research.

Lee told Cointelegraph:

“In the basic design of Ethereum, there is proposer-developer separation, which means that the proposer cannot see the specific content of the block proposed by the developer. They only choose the most profitable block from the many blocks that have been verified and distributed by the developers.

According to Lee, this means that block builders cannot prioritize certain transactions. He added:

“Neither builders nor validators can control which transactions are or are not included in the chain, reducing concerns about centralization in Ethereum.

Despite Ethereum's strong consensus model, others are still concerned.

According to software engineer Kishan Kumar, who wrote in a July 23 blog post, powerful validators that use maximum leveraged value (MEV) incentives can have a “disproportionate” impact on the network.

“For example, if a miner controls a significant percentage of the mining power, reordering, inclusion or exclusion of transactions in a block to maximize MEV can undermine the premise of decentralization.”

RELATED: Ether Price Drops in 7-Month Amidst ‘L1 Wars', Analyst Says

Does Ethereum need strong censorship resistance?

Centralization concerns raised by the dominance of these two block developers could be mitigated by stronger censorship resistance on Ethereum, Wahrster added.

If there were strong censorship resistance guarantees, this centralization would be less noticeable. As Ethereum Develops Censorship Resistance, Major Research Underway, New Challenges Related to Centralization by XOF [private order flow] It might still pop up.”

However, Ethereum's validator count has risen by more than 30% in the past year, largely due to increased institutional adoption of the cryptocurrency, which is seen as a positive sign for the network's decentralization.

Unlocking Ethereum's Potential: ETH Dencun Upgrade and ETF. Source: YouTube

Magazine: Proposed Change Could Save Ethereum From L2's ‘Roadmap to Hell'