Ethereum, once known for its independence and decentralization, free from any entity or government control, has seen a recent shift in this dynamic. Researcher Toni Wahrstätter has highlighted that currently, the vast majority of Ethereum blocks are censored.

Since its launch in 2015, the block production process on Ethereum has evolved considerably. In the traditional model, transactions were initially pooled in the mempool and then mined or validated. However, this is not always effective, especially when users start to compete for position in a block – early position could yield substantial profits

As Ethereum grew in popularity, its network experienced a surge of Miner Extractable Value (MEV) bots. Engaging in Priority Gas Auctions, these bots competitively raised transaction fees for preferred block placement. This led to higher gas prices, an overloaded pending transaction pool, and inefficient gas usage.

In 2021, developers at Flashbots recognized a solution to this issue and developed MEV-Boost middleware that connects bots with miners. By avoiding the mempool and routing their transactions through Flashbots, these bots could directly incentivize miners for priority placement. This approach effectively addresses the issues of a bloated pending transaction pool and wasted gas.

As Ethereum transitioned to Proof of Stake, the number of validators using the MEV-Boost middleware to gain extra profits from bots has increased. Currently, over 90% of Ethereum blocks are built using MEV-Boost, with total profits from MEV surpassing 300k ETH, equivalent to over $600 million.

Source: meboost.pics

MEV-Boost has indeed had a positive impact on Ethereum's network, but it has also generated concerns among the community. Most validators have stopped assembling blocks on their own, instead depending on third-party builders like Flashbots. 

However, the builder market has always been very centralized. Currently, only five builders are responsible for over 90% of MEV-Boost transactions. The situation worsened when it was revealed that four out of these five builders are censoring transactions in an attempt to comply with U.S. regulations, further deviating from the principle of decentralization.

Saucer: censorship.pics

Censorship intensified significantly after the United States authorities sanctioned Tornado Cash. The protocol has been accused of laundering over $7 billion in stolen cryptocurrencies since 2019. 

Block builders have begun excluding transactions from Tornado Cash and other sanctioned addresses while constructing their blocks.

This has resulted in an astonishing 72% of Ethereum transactions currently being censored. It's highly probable that this number will continue to grow as regulators increase pressure on infrastructure operators crucial to Ethereum’s functioning.

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