As of October 14, Ethereum [ETH] experienced an unprecedented rise in censorship, with more than 50% of blocks produced in the previous day. Following compliance recommendations, these blocks were placed under the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department.
The breakthrough meant that relays were now used to distribute more than half of the blocks created during this time. These relays can be regarded as having stopped supporting Tornado Cash transactions. The relay or tool was also an open-source, non-custodial, completely decentralized bitcoin tumbler that operated on networks that were compatible with the Ethereum Virtual Machine.
OFAC advised and urged Americans to refrain from utilizing Tornado Cash and cryptocurrency ecosystems in August 2022. But after the Merge, MEV Boost’s introduction brought an increase in OFAC-compliant blocks.
MEV, or the maximum extractable value, is the compensation validators receive after rearranging transactions within a block. In order to address the potential consequences of MEV extraction, an R&D team by the name of Flashbots has been working on MEV Boost.
There are other relays running at the moment, but the one built and run by Flashbots has proven to be the most used. Flashbots, however, relay prohibited transactions on authorized blocks.
So yes, the majority of other relays have not implemented this prohibition. However, when more relays start enforcing the OFAC requirement, it can become more challenging for sanctioned transactions. These include individuals who have successfully reached the Ethereum blockchain.
As recommended by OFAC, other relays, including Blocknative, are also thinking about filtering the selected addresses.
No action was taken by ETH. People in the bitcoin community responded to the news quickly. This is a tragic turning point in censorship, tweeted Martin Köppelmann, the CEO of Gnosis Ltd, an Ethereum-based DeFi infrastructure development company.
