Bessie Liu

Concerns around possible censorship of Ethereum transactions was prevalent in the weeks leading up to and after the Merge, but the latest data shows that this upward trend may be reversing.



The Merge introduced changes to the process of block building alongside the transition from proof-of-work to proof-of-stake, that introduced some risk of centralization, particular with respect to MEV — or maximum extractable value.



Tracking site <a href="https://www.mevwatch.info/" target="_blank" rel="noreferrer noopener">MEV Watch</a> reveals that the percentage of censored blocks has dropped from its all-time high of 79% to roughly 70% over the past month. Anything less than about 99%, means Ethereum remains censorship free.



MEV refers to the maximum amount of income that can be earned by validators from the automated process of re-ordering transactions for inclusion in a block.



If MEV in a block exceeds standard <a href="https://www.blockworksresearch.com/glossary#block-reward" target="_blank" rel="noreferrer noopener">block rewards</a>, validators may choose to re-organize a block to capture the income generated by MEV for themselves. 



In order to prevent malicious MEV practices, validators choose to use MEV-Boost relays which allow them to request blocks from a network of builders.



But after the US Treasury’s Office of Foreign Assets Control (OFAC) <a href="https://blockworks.co/tornado-cash-sanctions-expose-potential-defi-achilles-heel" target="_blank" rel="noreferrer noopener">sanctioned crypto privacy service Tornado Cash</a>, popular MEV-Boost realy provider Flashbots — which is based in the US — decided to remain OFAC-compliant, meaning it would ignore any transactions which were restricted by OFAC.



That alone is not enough to censor Ethereum, although it can delay some transactions, Uri Klarman, CEO of relay provider bloXroute Labs previously told Blockworks.



“If I had an OFAC-restricted transaction, it [would] take more time for my transaction to be included, but eventually a validator, which isn’t ignoring [OFAC transactions] would include it,” Klarman said.&nbsp;



Nevertheless, the concern within the Ethereum community is that if the proportion of censored blocks were to become too high, <a href="https://blockworks.co/news/ethereum-is-not-under-attack-understanding-mev-boost-relays" target="_blank" rel="noreferrer noopener">it could threaten</a> a fundamental ethos of Ethereum — credible neutrality — as well as a desirable feature of most public blockchain networks: censorship resistance.



Coming up with technical solutions to preserve these values is a major goal of the Ethereum community.



<h3 class="wp-block-heading">Developing SUAVE</h3>



Ethereum developers have also launched a new project to combat censorship.



Dubbed SUAVE, short for “Single Unifying Auctions for Value Expression,” the project aims to decentralize block building itself.



SUAVE was <a href="https://blockworks.co/news/ethereum-is-not-under-attack-understanding-mev-boost-relays" target="_blank" rel="noreferrer noopener">first teased </a>at Devcon, the Ethereum foundation’s annual conference, where Philip Daian, a Flashbots steward, said its latest technology would “make TradFi look embarrassing.” The project&#8217;s latest vision was unveiled in a <a href="https://writings.flashbots.net/the-future-of-mev-is-suave/">blog post</a> on Nov. 22. 



At a high level, SUAVE will be a new blockchain that acts as a plug-and-play <a href="https://www.blockworksresearch.com/glossary#mempool" target="_blank" rel="noreferrer noopener">mempool</a> and decentralized block builder for other blockchains. 



“SUAVE goes beyond sequencing for a single blockchain. We designed SUAVE to be the mempool and block builder for all blockchains,” Hasu, pseudonymous strategy lead at Flashbots <a href="https://twitter.com/hasufl/status/1595492568157937665" target="_blank" rel="noreferrer noopener">tweeted</a>.  



Through building a decentralized sequencing layer, the Flashbots team wants to “give domains control over their own validation guarantees and ensure smaller domains stay decentralized.”



Domains <a href="https://twitter.com/natanb55/status/1469103889056256005" target="_blank" rel="noreferrer noopener">means</a> any combination of layer-1 or layer-2 blockchains, but also side-chains, shards, and even centralized exchanges.



Flashbots does not intend to participate in the marketplace beyond bootstrapping, the company noted.&nbsp;



“We consider this strategy the most aligned with our mission and the health of the entire ecosystem,” the company said.



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Ethereum Reverses Post-Merge Censorship Trend

<div id="highlights-block_634dba27c3ba7" class="highlights">
 <ul>
 <li>SUAVE has been in the works for over a year, according to Flashbots developers</li>
 <li>Further details about the project will be announced this week</li>
 </ul>
 
</div>



Flashbots, a research and development organization <a href="https://cms.blockworks.co/new-flashbots-upgrade-could-revolutionize-crypto-markets-after-the-merge/" target="_blank" rel="noreferrer noopener">with the goal to reduce</a> the potential harms of Maximum Extractable Value (MEV), revealed a new project to address centralization and censorship concerns on MEV extraction for Ethereum and Ethereum virtual machine-compatible blockchains.



The project, <a href="https://twitter.com/hasufl/status/1580983853824765952" target="_blank" rel="noreferrer noopener">code named SUAVE</a> which stands for “Single Unifying Auctions for Value Expression,” will be an open-source MEV-aware, privacy-focused, encrypted mempool for users and wallets, Philip Daian, a Flashbots steward said at Devcon Bogotá.



“We’re going to provide optimal user execution that harnesses MEV,” Daian said. “So we’re going to use MEV as this decentralized engine in the long term, to make sure the users get really the best execution on their trades in a way that’s really going to make TradFi look embarrassing very shortly.”



<h3 class="wp-block-heading">What is the SUAVE vision for MEV?</h3>



MEV refers to the maximum amount of income that can be extracted from block production after validators include or reorder transactions on a block.&nbsp;



If the MEV available in a block exceeds standard block rewards, validators could then reorganize the blocks to capture the value of the income generated by MEV for themselves, making it a risk for exploitation and centralization.



Flashbots has been actively working on reducing these problems through MEV-Boost, software that enables builders to auction blocks to validators and prevent MEV centralization by allowing each party to earn a contribution for their efforts.&nbsp;



SUAVE’s goal is to decentralize and democratize MEV-Boost by making it open source and widely available, even to competitors and users.



The overarching goal is to avoid entrenching centralized forces, such as private or exclusive order flow into the way relays and block builders do business, Daian said, “because these will destroy the system that we love, as a whole.”



<h3 class="wp-block-heading">Risk of centralization and a decentralized solution</h3>



After the <a href="https://cms.blockworks.co/tornado-cash-sanctions-expose-potential-defi-achilles-heel/" target="_blank" rel="noreferrer noopener">Tornado Cash sanctions</a>, Flashbots, a US entity, began omitting transactions related to the <a href="https://cms.blockworks.co/crypto-mixers-and-privacy-coins-can-they-resist-censorship/" target="_blank" rel="noreferrer noopener">cryptocurrency mixer</a> to remain OFAC-compliant. That’s led to a new worry — censorship.



As one of the largest MEV-Boost relays, Flashbots has the power to delay the incorporation of sanctioned transactions into Ethereum blocks — or slots as they’re now known, following the proof-of-stake consensus switch.



Flashbot’s avowed obligation to follow regulatory requirements has caused concern <a href="https://twitter.com/koeppelmann/status/1580893089077809153" target="_blank" rel="noreferrer noopener">among some</a> in the Ethereum community. But the consensus among developers seems to be that the concerns are <a href="https://twitter.com/basilesportif/status/1581906143538221058" target="_blank" rel="noreferrer noopener">mostly overblown</a>.



The Flashbots team is well aware of the potential pitfalls, and Daian said Flashbots “[does] not intend to impose our utility functions, or our legal risk analyses, on the Ethereum network, full stop.”



Indeed, the launch of SUAVE — a project that the Flashbots team has been working on for over a year — is expressly aimed at distributing the power of MEV, even if that means helping Flashbots’ competitors.



Further details about SUAVE are expected this week.



Macauley Peterson contributed reporting.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Suave