According to Ethereum researcher Toni Wahrstätter, five out of the six largest block builders on the Ethereum blockchain are actively censoring specific transactions in accordance with directives from the Office of Foreign Assets Control (OFAC) of the Treasury Department. Wahrstätter’s research indicates that most of these censored transactions come from Tornado Cash, a decentralized mixer that has been blacklisted by the Treasury Department due to its use by malicious actors like the North Korean hacker organization Lazarus.
Furthermore, Wahrstätter’s research highlights censorship across three crucial entities that play a role in maintaining Ethereum’s network: validators, relays, and block builders.
Censorship has become a prominent topic as blockchain technology advances and cryptocurrency adoption expands globally. Advocates for decentralized networks often express concerns about the concentration of power in the hands of a few participants, which poses a threat to the integrity of blockchain ecosystems. Wahrstätter’s findings reinforce these concerns.
To address the increasing issues of censorship and centralization on Ethereum (ETH), Wahrstätter put forward two potential solutions.
The first solution involves implementing an inclusion list, which would assist censoring entities in managing transactions that are subject to OFAC sanctions. This approach also suggests removing operators who do not comply with these regulations. It is worth noting that this inclusion list was developed by Ethereum founder Vitalik Buterin and developer Mike Neuder in August 2023.
The second proposal from the researcher is the use of encrypted mempools. This would create a scenario where entities cannot censor on-chain transactions based on their origin or content.
Buterin, a long-standing advocate for privacy and decentralization, emphasized the importance of censorship resistance as a fundamental principle for any blockchain, as previously reported by crypto.news.
Furthermore, the Ethereum creator has expressed criticism towards the United States’ approach to cryptocurrency regulations and the impact they have on networks like Solana (SOL).