Some MEV-boost relays in Ethereum are choosing to refuse transactions that include addresses on the Office of Foreign Assets Control (OFAC)’s Specially Designated Nationals and Blocked Persons (SDN) list.
MEV-boost is an open-source tool developed by Flashbots that allows for validators to use blocks built and relayed to them by individuals hoping to make arbitrages, or find other opportunities to extract value by ordering transactions.
The implementation of MEV-boost run by Flashbots is one of the of the most popular. It chose to not include transactions that involve addresses on the OFAC SDN list.
How bad is the censorship?
Currently, Labrys data suggests that approximately 24% of all blocks are currently relying on a relayer that is choosing to censor transactions. The data also suggests that among validators who have chosen to use a MEV-Boost relay, approximately 86% of blocks are being censored.
It’s important for validators in Proof-of-Stake (PoS) to have access to MEV (miner extracted value) so that stake does not disproportionately accrue to only some validators. It’s expected that over time, more validators will adopt ways to extract MEV.
Currently, as long as there are still validators who are willing to include those transactions they will eventually get included in the blockchain.
Are there other ways to prevent censorship?
EigenLayer has proposed an alternative implementation of MEV-boost where validators would be staked on their layer and block-builders would no longer build entire blocks. This would allow the rest of blocks to be filled up with transactions to sanctioned addresses.
As Ethereum continues to move closer to Proposer Builder Separation, it’s more important to find ways to incentivize inclusion of likely-to-be censored transactions if they hope to retain censorship-resistance.
One proposal to achieve this is to implement a crList, which provides a way to punish validators who participate in censoring transactions. This is still an active research space and these proposals are not currently part of Ethereum.