More Ethereum blockchain operators have complied with OFAC sanctions, raising censorship concerns among decentralization advocates and network participants.
Toni Wahrstätter, an Ethereum researcher, noted that five of the six largest block builders on the Ethereum blockchain actively censor certain transactions in accordance with guidelines from the Treasury Department’s Office of Foreign Assets Control (OFAC).
Most of these censored transactions come from decentralized mixers Tornado CashAccording to Wahrstätter, a protocol blacklisted by the Treasury Department due to its use by bad actors, including the North Korean hacker organization Lazarus.
Wahrstätter’s research further highlighted the censorship of three essential actors that keep the Ethereum network functioning: validators, relayers, and block builders.
Censorship is a hot topic as blockchain technology advances and crypto adoption spreads around the world. Proponents of decentralized networks often express unease regarding centralized entities and the power they have over decentralized operations.
These concerns were raised by Wahrstätter, who highlighted that obstacles related to the concentration of power by a few network participants pose a threat to blockchain ecosystems.
“Resistance to censorship is essential to the political neutrality of blockchains. No single entity should control 2/3 of the content of a blockchain. Decentralization is essential; centralization at any layer of the stack can harm the entire ecosystem,”
» said Toni Wahrstätter.
In an effort to combat growing censorship and centralization on Ethereum (ETH), Wahrstätter proposed two solutions.
The first is an inclusion list intended to help censorship entities manage OFAC-sanctioned transactions. This solution also recommends starting non-compliant operators. Notably, this inclusion list was designed by the founder of Ethereum Vitalik Buterin and developer Mike Neuder in August 2023.
Second, the researcher proposed encrypted memory pools that would prevent entities from censoring on-chain transactions based on their origin or content.
Buterin, a longtime advocate of confidentiality and decentralizationnoted that censorship resistance is the foundation of any blockchain, crypto.news previously reported.