Over 62% of all transaction blocks on the Ethereum blockchain are compliant with OFAC sanctions

According to MEV Watch, 63% of all transaction blocks on the Ethereum blockchain are compliant with OFAC sanctions due to regulatory guidance.

The most important driver is the widespread use of maximal extracted value relays, which reorder blocks of transactions to maximize rewards.

Nonetheless, the metric is almost certain to fuel further debate about the use of MEV relays and the threat of transaction censorship on the publicly accessible Ethereum network.

Flashbots, which said it would ignore transactions from the transaction mixing service Tornado Cash, which was sanctioned earlier this year by the US government, is the most widely used of those relays, accounting for nearly 49% of the total MEV block market.

Since The Merge, an increasing number of proof of stake participants have chosen to access validation rewards through service providers. This trend’s consolidation, combined with Flashbot dominance, has resulted in an increasing number of OFAC-compliant blocks.

Flashbots is not ignoring the problem. The company proposed ways to mitigate transaction censorship and announced a new protocol that will open source and gradually decentralize MEV code development.

The announcements followed the resignation of co-founder Stephane Gosselin, who left due to disagreements with the team over network censorship.

As many network participants see Flashbots as a source of censorship, strategy lead Hasu recently stated that a lack of neutral relays and reliance on vertical relays that also function as builders and may favor their own blocks over others is a “failure of the ecosystem.”

Although the team’s remaining founder, Phil Daian, does not see Flashbots creating a fully censored Ethereum network by proposing 100% of Ethereum blocks, the use of Flashbots continues to rise.