What’s Going On With Ethereum’s MEV-Boost?
Soon after the U.S. Treasury’s Office of Foreign Asset Control (OFAC) blacklisted the Tornado Cash mixer program in August, Ethereum research and development firm Flashbots announced that it would, in accordance with U.S. Treasury Department sanctions, begin censoring transactions by means of a key piece of infrastructure used by many of the validators that run Ethereum’s proof-of-stake blockchain.
For many developers, writing code is a form of free speech and, as such, it should be protected by the First Amendment of the U.S. Constitution. So when the U.S. government sanctioned the smart contracts affiliated with Tornado Cash, the action was seen by many members of the crypto community as an attack on free speech. Flashbots, by adhering to the sanctions, also fell prey to the community’s first amendment scorn. In response to the backlash, Flashbots raced to make open source its MEV-Boost code before the Merge so that others could develop their own, non-censoring versions of MEV-Boost relays.
This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum’s evolution and its impact on crypto markets. Subscribe to get it in your inbox every Wednesday.
Maximal extractable value (MEV) refers to the income that block builders and validators receive as a result of inserting or reordering transactions within a block. Researchers of MEV have tried to solve issues that have caused it to become an unexpected vector for user exploitation, centralization and (now) censorship.
Flashbots is a research and development team that has been working on ways to reduce the negative effects of MEV through MEV-boost, a middleware component that allows validators to request blocks from a network of builders. They designed it to enable validators to skirt MEV centralization while providing a good option for solving some proposer-builder separation problems.
But, in turn, the problem of block censorship appears to be on the rise.
Read more: As Censorship on Ethereum Begins, Could This Open-Sourced Code Help Counter It?
Since the Merge, dashboards have appeared that monitor the activity of MEV-boost.
Three companies, Flashbots, BloXroute and Blocknative, make up the majority of relays for MEV-Boost. As of writing, of the MEV-Boost blocks that have been relayed, roughly 84% of them have been proposed via Flashbots.
A Flashbots monitoring dashboard shows that by early October 39% of all blocks that have been proposed on the Ethereum PoS blockchain have been put forth by Flashbots' relay, up from 12% right after the Merge. This number is only increasing day by day.
The Flashbots team has been relatively quiet on the subject of censorship, despite pressure from Ethereum developers and researchers who view the move as dangerous for the protocol. On Sept. 29, Robert Miller, the product lead of Flashbots, acknowledged the censorship outcry that has been circulating online in a tweet: “I hear you and appreciate the scrutiny.”
I hear you all and appreciate the scrutiny. We don’t ask you to trust us but to watch what we do and our impact in the long run.— @bertcmiller ⚡️🤖 (@bertcmiller) September 29, 2022
A Twitter thread also emerged last month with data published by Toni Wahrstatter, an Ethereum researcher, that looked at data created with the MEV-Boost relays. The data showed that as of Sept. 27, Flashbots has created 19,436 blocks since the Merge, all of which have censored Tornado Cash transactions. Other relayers, though, have also chosen to include Tornado Cash transactions; hence, these censored blocks appear to be forming the majority, regardless of which relayer is used.
While many developers have pressured Flashbots to uncensor their relay, Wahrstatter told CoinDesk, “Flashbots has been doing a great job in keeping MEV under control and they open sourced their MEV-boost software in time before the Merge, allowing competitors to enter the block-building market. This is important to stress, so Flashbots [is] definitely fighting on the right side. Now users can decide upon using the MEV-Boost relay of their preference.”
Data shows that the Flashbots MEV-Boost Relay (same for the Flashbots builders) is censoring @TornadoCash transactions.— Toni Wahrstätter (@Nero_ETH) September 27, 2022
Since the Merge, not a single transaction interacting with the Tornado Cash contracts has been included in their MEV-boosted blocks. /1 pic.twitter.com/C1fbvolCcX
Martin Koppelman, the co-founder of the Gnosis trading protocol and a vocal advocate for uncensoring Tornado Cash, also pointed at a screenshot that he took, where from the 20 blocks he saw produced 11 of them were done by Flashbots, meaning they did not include Tornado Cash transactions.
Out of the last 20 blocks, 11 used MEVboost. All those blocks have been built by Flashbots which censors transactions to Tornado. Meanwhile, the adoption of MEVboost is rapidly rising.— Martin Köppelmann 🇺🇦 (@koeppelmann) September 28, 2022
How do we fix this? pic.twitter.com/O5Uy5jwkgE
Other MEV-Boost options
Other options for validators to be non-censoring are out there. BloXroute Labs is emerging as the next biggest relay provider after Flashbots. It currently runs three relays: BloXroute Max Profit, BloXroute Ethical and BloXroute Regulated, the last of which is sanctions compliant (meaning they censor Tornado Cash transactions).
CEO of BloXroute Labs, Uri Klarman, told CoinDesk that BloXroute “felt that deciding whether validators should or shouldn’t include [sanctioned] transactions is outside our pay grade” and that it chose to introduce a relay that censors Tornado Cash depending on users’ discretion and specific legal standing.
“You have BloXroute running relays that allow validators to choose which transactions they wish to include or exclude in the blocks offered to them,” Klarman added.
As for what Flashbots’ dominance over MEV-Boost means for other relays, Klarman noted that BloXroute is “in contact with every major validator, and quite a few of them told us they'll start by connecting only some of the validators and only to Flashbots, and expand as they grow comfortable with this new landscape.”
Klarman also added that censorship can become a non-issue only if “block builders and relays from other parts of the world would get traction with validators. But for this to happen we need to make sure validators connect to multiple relays, and not fall to ‘let's just use Flashbots.’”
It’s hard to imagine how the censorship issue will be resolved on Ethereum, especially as the use of Flashbots’ relay only continues to grow. Flashbots has not stated whether it would introduce an uncensored relay despite public pressure. Researchers and developers are still grappling with how to handle this MEV problem, and time will only tell how this will all play out.
Read more: Crypto-Mixing Service Tornado Cash Code Is Back on GitHub