Miner Extractable Value

Ethereum validator cashes in 689 ETH from MEV-Boost relay

The 689 Ether, worth nearly $1.3 million, is the largest reward received since the 691 Ether reward paid to Lido on March 20.

A 689 Ether (ETH) reward worth $1.28 million has been paid from a single Maximal Extractable Value (MEV)-boost relay block on the Ethereum Beacon Chain in one of the largest rewards in recent months.

Ethereum liquid staking solution Lido was paid the reward from block number 17007842 on the Beacon Chain, which was finalized on April 9, containing 47 transactions, and built by beaverbuild.org, according to transaction data.

The reward almost matched Lido’s most recent high of 691 Ether on March 20.

The figure raised the eyebrows of Martin Köppelmann, the co-founder and CEO of Ethereum-based infrastructure platform Gnosis, who suggested Ethereum users should use a service like MEV Blocker to prevent their transactions from being exploited.

According to MEV Blocker, MEV bots have extracted more than $1.38 billion from Ethereum users attempting to trade, provide liquidity and mint nonfungible tokens (NFTs).

These centralized MEV-boost relays are able to extract value by aggregating blocks from multiple builders to select the one with the highest fees.

One of the most common MEV exploits is the “sandwich” attack, which occurs when an attacker places a large trade on either side of a target’s transaction, manipulating the price and profiting from the price change.

Related: ETH staking on top exchanges contributes to Ethereum censorship: Data

MEV-boost relays stem from the concept of proposer-builder separation, which was introduced by the Ethereum research organization Flashbots in 2021 in the lead-up to Ethereum’s transition to proof-of-stake in September 2022.

Separating the role of proposers from block builders is intended to promote more competition at the consensus level, further decentralize the Ethereum network and strengthen censorship resistance.

However, Ethereum has encountered several censorship issues since the Merge took place, namely compliance with standards laid down by the Office of Foreign Assets Control (OFAC), although the number of compliant blocks has since fallen.

There are currently 10 active relays, with Flashbots responsible for relaying more than 50% of the MEV-boost blocks since MEV was introduced in 2021, according to MEVBoost.org.

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‘Not even a single TX has been censored on ETH’ — Cyber Capital founder

Bons noted that even with 50% OFAC compliance among Ethereum validators, blocks will still be produced within 30 seconds.

Ethereum bulls have hit back against claims the network has become prone to censorship post-Merge, with one arguing that “not even a single” transaction has been censored on the network. 

In a 19-part thread to his 29,100 followers on Oct. 17, Cyber Capital founder and CIO Justin Bons argued that contrary to “what some Bitcoiners are falsely claiming,” not a single transaction on Ethereum has been stopped as a result of Office of Foreign Assets Control (OFAC) sanctions.

Bons was referring to recent reports suggesting Ethereum has become too reliant on OFAC-compliant Miner Extractable Value (MEV)-Boost relays since the Merge.

Last week, it was reported that more than 51% of Ethereum blocks are now complying with the U.S. sanctions after transitioning to proof-of-stake (PoS). 

The crypto-fund manager argued that despite the increasing presence of OFAC-compliant MEV-Boost relays, it only becomes censorship when producers refuse to build on non-compliant blocks, though that would result in forking and splitting of the chain, explaining:

“Even with 50% OFAC compliance, a non-compliant ETH TX will be confirmed within 30 sec! Compared to BTC’s more variable 10min!”

Bons further argued it only takes one contributing validator to include what may be an OFAC-sanctioned transaction in the canonical chain.

“This means that a very small minority of validators/miners can counter such censorship over both ETH & BTC! Easily less than 1% can prevent censorship,” he explained.

Having attributed most of this backlash to “Bitcoiners,” Bons also argued that Ethereum with its new PoS consensus mechanism is “less vulnerable” and “far more secure” than Bitcoin under proof-of-work (PoW) because institutional players are not economically incentivized to try split the chain.

Related: Ethereum may now be more vulnerable to censorship — Blockchain analyst

Ethereum developers have also working to improve Ethereum’s censorship resistance too — with Ethereum developer Terence Tsao of Prysmatic Labs on Oct. 17 announcing that he and fellow developer Marius van der Wijden had begun building a solution to address the issue:

Ethereum co-founder Vitalik Buterin recently proposed a Partial Block Auction solution, where a block builder only has the right to decide some of the contents of the block.

Ethereum research and development organization Flashbots is also looking to soon roll out its fully decentralized and EVM-compatible block builder — Single Unifying Auctions for Value Expression (SUAVE) – in order to combat censorship issues.

On Aug. 8, the United States Treasury Department added more than 40 cryptocurrency addresses allegedly connected to controversial mixer Tornado Cash to the Specially Designated Nationals list of OFAC, effectively barring U.S. residents from using the mixing service. 

‘Not even a single TX has been censored on ETH’ — Cyber Capital founder

Bons noted that even with 50% OFAC compliance among Ethereum validators, blocks will still be produced within 30 seconds.

Ethereum bulls have hit back against claims the network has become prone to censorship post-Merge, with one arguing that “not even a single” transaction has been censored on the network. 

In a 19-part thread to his 29,100 followers on Oct. 17, Cyber Capital founder and chief investment office Justin Bons argued that contrary to “what some Bitcoiners are falsely claiming,” not a single transaction on Ethereum has been stopped as a result of Office of Foreign Assets Control (OFAC) sanctions.

Bons was referring to recent reports suggesting Ethereum has become too reliant on OFAC-compliant Miner Extractable Value (MEV)-Boost relays since the Merge.

Last week, it was reported that more than 51% of Ethereum blocks are now complying with the U.S. sanctions after transitioning to proof-of-stake (PoS). 

The crypto-fund manager argued that despite the increasing presence of OFAC-compliant MEV-Boost relays, it only becomes censorship when producers refuse to build on non-compliant blocks, though that would result in forking and splitting of the chain, explaining:

“Even with 50% OFAC compliance, a non-compliant ETH TX will be confirmed within 30 sec! Compared to BTC’s more variable 10min!”

Bons further argued it only takes one contributing validator to include what may be an OFAC-sanctioned transaction in the canonical chain.

“This means that a very small minority of validators/miners can counter such censorship over both ETH & BTC! Easily less than 1% can prevent censorship,” he explained.

Having attributed most of this backlash to “Bitcoiners,” Bons also argued that Ethereum, with its new PoS consensus mechanism, is “less vulnerable” and “far more secure” than Bitcoin (BTC) under proof-of-work (PoW) because institutional players are not economically incentivized to try split the chain.

Related: Ethereum may now be more vulnerable to censorship — Blockchain analyst

Ethereum developers have also working to improve Ethereum’s censorship resistance too — with Ethereum developer Terence Tsao of Prysmatic Labs on Oct. 17 announcing that he and fellow developer Marius van der Wijden had begun building a solution to address the issue:

Ethereum co-founder Vitalik Buterin recently proposed a Partial Block Auction solution, where a block builder only has the right to decide some of the contents of the block.

Ethereum research and development organization Flashbots is also looking to soon roll out its fully decentralized and EVM-compatible block builder — Single Unifying Auctions for Value Expression (SUAVE) — in order to combat censorship issues.

On Aug. 8, the United States Treasury Department added more than 40 cryptocurrency addresses allegedly connected to controversial mixer Tornado Cash to the Specially Designated Nationals list of OFAC, effectively barring U.S. residents from using the mixing service.