51% OF ETHEREUM BLOCKS ARE NOW COMPLIANT WITH OFAC STANDARDS, RAISING CENSORSHIP CONCERNS

Last updated: June 19, 2025, 23:50 | Written by: Jed McCaleb

The decentralized world of cryptocurrency is facing a potentially significant challenge.Just a month after Ethereum's historic Merge, a concerning trend has emerged: over 51% of Ethereum blocks are now compliant with the U.S.Treasury's Office of Foreign Assets Control (OFAC) standards.This milestone, highlighted by blockchain development firm Labrys' data and amplified across Twitter, has ignited a fiery debate about censorship, centralization, and the very future of decentralized finance (DeFi).What does this mean for Ethereum, and why are so many people worried? One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys data, as MEV-Boost relays take over market share. On Twitter, users highlighted how the figures represent a milestone towards censorship, as more blocks are under surveillance:This article dives deep into the issue, exploring the reasons behind OFAC compliance, the implications for censorship resistance, and what this could mean for the future of the world’s second-largest cryptocurrency.We'll examine the role of MEV-Boost relays, the concerns voiced by prominent figures like Gnosis co-founder Martin Köppelmann, and discuss what steps, if any, can be taken to address this growing challenge. One month after the Merge, 51% of ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-boost relays takes over market share. On Twitter, usersThe stakes are high, and the future of Ethereum as a truly decentralized platform may hang in the balance.

Understanding OFAC Compliance and its Impact on Ethereum

The Office of Foreign Assets Control (OFAC) is a division of the U.S.Treasury Department that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. [ad_1]One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share. On Twitter, users highlighted how the figures represent a milesThese sanctions can target countries, individuals, and entities involved in activities like terrorism, drug trafficking, and other illicit actions. In a tweet on Friday, Gnosis co-founder Martin K ppelmann raised fresh Ethereum centralization concerns as he highlighted that data from mevwatch.info showed that 51% of Ethereum blocks were compliant with the Office Of Foreign Assets Control (OFAC), the sanctions enforcement arm of the US Treasury.When applied to cryptocurrency, OFAC compliance essentially means that entities operating within the Ethereum network (in this case, block producers) must actively screen transactions and prevent those involving sanctioned addresses or individuals from being included in blocks.

This is where the concern arises. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys data, as MEV-Boost relays take over market share.Ethereum, by design, is intended to be a permissionless and censorship-resistant platform. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share.The idea is that anyone can participate in the network, regardless of their location or identity, and that transactions should be processed without discrimination. According to new data, over half of the blocks on the Ethereum network now reportedly comply with the US Treasury OFAC s standards. This comes roughly a month after the platform s monumental merge update.However, if a majority of block producers are actively censoring transactions to comply with OFAC regulations, the promise of decentralization is undermined.It creates a scenario where a single entity (the U.S. government, through OFAC) can effectively control a significant portion of the Ethereum network. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relaysThis isn't just about a theoretical risk; it's about the potential for real-world censorship, impacting users' ability to transact and interact with decentralized applications (dApps).

The Role of MEV-Boost Relays in OFAC Compliance

The increasing OFAC compliance is intricately linked to the rise of MEV-Boost relays after the Merge. One month after the Merge, MEV-boost relays expanded its market share as block builders, data shows. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share. On Twitter, users highlighted how the figures represent a milestone towards censorship, as moreBut what exactly are MEV-Boost relays and how did they influence the current situation?

MEV stands for Maximal Extractable Value (previously known as Miner Extractable Value). One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share. On Twitter, users highlighted how the figures represent a milestone towards censorship, as more blocks are under surveillance:We reached another sad milestone in censorship: 51% This means if the censoring validatorsIt represents the profit that can be made by block producers (formerly miners, now validators) by strategically ordering, including, or excluding transactions within a block.MEV can be extracted through various methods, such as front-running (executing a trade before another party based on inside information) or sandwich attacks (placing trades around a pending transaction to profit from the price movement).

MEV-Boost is a middleware designed to democratize access to MEV. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share. On Twitter, users highlighted how the figures represent a milestone towards censorship, as more blocks are under surveillance:Instead of relying solely on their own resources, validators can connect to multiple MEV-Boost relays. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share. On Twitter, users highlighted how the figures represent a milestone towards censorship, as more blocks are under surveillance:WeThese relays aggregate transaction bundles from various searchers (entities that actively seek MEV opportunities) and offer the most profitable bundle to the validator.This allows validators to increase their rewards without having to actively participate in the complex MEV extraction process.

However, here’s the catch: Many of these MEV-Boost relays are operated by entities that are required to comply with OFAC regulations. 51% of Ethereum blocks are now compliant with OFAC standards, raising censorship concerns Ethereum's upgrade to PoS consensus led to mev-boost relay rise in theThis means they are actively filtering transactions and excluding those associated with sanctioned addresses. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share. On Twitter, users highlighted how the figures represent a milestone towards censorship, as more blocks are under surveillance:We reached another sad milestone in censorship: 51%This means if the censoring validatorsWhen a validator connects to an OFAC-compliant relay, they are essentially outsourcing the censorship decision to the relay operator.Since a significant portion of validators are using MEV-Boost to enhance their profitability, the prevalence of OFAC-compliant relays has led to a situation where a majority of Ethereum blocks are now being filtered for sanctioned transactions.

Why are validators choosing OFAC compliant relays?

The primary reason for validators to choose OFAC-compliant MEV-Boost relays is simple: profitability. 51% of Ethereum blocks are now compliant with OFAC standards, raising censorship concernsBy using these relays, validators can significantly increase their block rewards. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys' data, as MEV-Boost relays take over market share. On TwitterIn a competitive environment, the financial incentive to maximize profits often outweighs concerns about censorship resistance. One month after the Merge, MEV-boost relays expanded its market share as block builders, data shows. One month after the Merge, 51% of Ethereum blocks were compliant with OFAC standards, according to blockchain development Labrys data, as MEV-Boost relays take over market share.It is also worth noting that a validator running their own node is a complex and costly task, so using a relay abstracts that complexity away. 51% of Ethereum blocks are now compliant with OFAC standards, raising censorship concerns 51% of Ethereum blocks are now compliant with OFAC standards, raising censorship concernsThe relays effectively subsidize running the consensus layer client.

Concerns About Censorship and Centralization on Ethereum

The milestone of 51% OFAC compliance has triggered widespread anxiety within the Ethereum community, and for good reason.

Compromised Censorship Resistance: The core principle of a decentralized blockchain is its ability to resist censorship.If a majority of block producers are willing to censor transactions, the network becomes vulnerable to external control.Governments or other powerful entities could potentially pressure these block producers to censor transactions they deem undesirable, effectively stifling free expression and hindering legitimate use cases.
Increased Centralization: The reliance on a limited number of MEV-Boost relays, particularly those that are OFAC-compliant, contributes to centralization.The power to decide which transactions are included in blocks is concentrated in the hands of these relay operators, diminishing the distributed nature of the Ethereum network.
Potential for Future Expansion of Sanctions: The current OFAC regulations primarily target a relatively small number of addresses and individuals.However, there is a risk that these sanctions could be expanded in the future to include a wider range of activities or entities.If this happens, the level of censorship on Ethereum could increase significantly, further eroding its decentralization.
Impact on DeFi: Decentralized finance (DeFi) relies on the principles of open access and permissionless innovation.If Ethereum becomes heavily censored, it could stifle the growth of DeFi and limit its ability to provide financial services to individuals and communities who are underserved by traditional financial institutions.

Martin Köppelmann's Warning: A Wake-up Call

Gnosis co-founder Martin Köppelmann was one of the first to raise the alarm about the 51% OFAC compliance milestone, emphasizing the urgency of addressing this issue.His concerns highlight the potential for a slippery slope, where increasing censorship could fundamentally alter the character of Ethereum.

Possible Solutions and Mitigation Strategies

Addressing the challenges posed by OFAC compliance requires a multi-faceted approach involving technical solutions, community engagement, and regulatory clarity.

Promoting Non-Censoring MEV-Boost Relays: One of the most immediate steps that can be taken is to encourage the development and adoption of MEV-Boost relays that do not censor transactions.This would provide validators with alternative options for maximizing their profits without compromising censorship resistance.This might mean relays that have stricter operational parameters.
Validator Diversity: Encouraging a more diverse set of validators is crucial.The cost of entry for validators must be reduced and education about the importance of decentralization must be emphasized.
Technical Solutions for Transaction Obfuscation: Developing and deploying technical solutions that can obfuscate transaction data could help to circumvent censorship.For example, privacy-enhancing technologies (PETs) like zero-knowledge proofs can be used to hide the details of transactions, making it more difficult for relay operators to identify and censor them.
Regulatory Clarity: A clear and consistent regulatory framework for cryptocurrencies is essential.This would help to provide clarity to MEV-Boost relay operators and validators, enabling them to make informed decisions about how to comply with regulations without unduly compromising decentralization.
Community Advocacy and Education: Raising awareness about the risks of censorship and promoting the importance of decentralization are crucial.The Ethereum community needs to actively engage in discussions about these issues and advocate for solutions that protect the network's core principles.

What Can Individual Ethereum Users Do?

While the challenge of OFAC compliance might seem overwhelming, individual Ethereum users can take steps to contribute to a more decentralized and censorship-resistant network:

Support Validators Who Prioritize Censorship Resistance: Research and support validators who are committed to maintaining a non-censoring approach.This could involve staking your ETH with these validators or publicly advocating for their efforts.
Educate Others About the Importance of Decentralization: Share information about the risks of censorship and the benefits of a truly decentralized Ethereum network with your friends, family, and colleagues.
Use Privacy-Enhancing Tools: Explore and utilize privacy-enhancing tools and techniques to protect your transactions from being censored.
Participate in Community Discussions: Engage in discussions about OFAC compliance and censorship resistance on forums, social media, and other platforms.Share your ideas and contribute to finding solutions.

The Future of Ethereum: Balancing Compliance and Decentralization

The 51% OFAC compliance milestone represents a critical juncture for Ethereum.The network faces the challenge of balancing regulatory compliance with its core principles of decentralization and censorship resistance.The choices that are made in the coming months will have a profound impact on the future of Ethereum and its role in the broader cryptocurrency ecosystem.There will likely be ongoing debate and experimentation with new methods to balance these competing concerns.

The path forward is not easy, and there are no simple solutions.However, by embracing innovation, fostering community engagement, and advocating for responsible regulation, Ethereum can navigate this challenge and emerge as a stronger, more resilient, and truly decentralized platform.

Frequently Asked Questions (FAQ)

What happens if a validator includes a transaction with a sanctioned address?

If a validator includes a transaction involving a sanctioned address, they risk facing penalties from OFAC.These penalties can include fines, legal action, and even being blacklisted from participating in the U.S. financial system.The severity of the penalty will depend on the specific circumstances and the nature of the violation.

Is it possible to completely eliminate censorship on Ethereum?

Completely eliminating censorship on any decentralized network is extremely challenging, if not impossible.However, the goal is to minimize the potential for censorship and ensure that the network remains as resilient as possible.By implementing technical solutions, fostering community engagement, and advocating for responsible regulation, it is possible to significantly reduce the risk of censorship on Ethereum.

How can I tell if a validator is OFAC-compliant?

It is not always easy to determine whether a validator is OFAC-compliant, as they may not publicly disclose this information.However, you can look for validators who are transparent about their practices and who are committed to upholding censorship resistance.You can also research the MEV-Boost relays that validators are using, as this can provide clues about their compliance policies.Be aware that this information may change, and continuous due diligence is needed.

Conclusion: A Call to Action for Decentralization

The fact that over 51% of Ethereum blocks are now compliant with OFAC standards raises serious censorship concerns, underscoring the potential conflict between regulatory compliance and the foundational principles of decentralization.The rise of MEV-Boost relays, while offering financial incentives for validators, has inadvertently created a pathway for censorship, threatening the permissionless nature of Ethereum.The community must actively engage in finding solutions, supporting non-censoring alternatives, and advocating for regulatory clarity.The future of Ethereum as a truly decentralized platform hinges on the collective action of its users, developers, and stakeholders.The stakes are high, and the time to act is now.Strive to educate yourself, support validators who prioritize censorship resistance, and advocate for a decentralized future.Only through collective effort can we ensure that Ethereum remains a bastion of freedom and innovation.