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ETH Price Continues to Tumble despite 50% Ethereum Validators Remain Compliant with US Sanctions

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VOC, Voice of Crypto, ETH

It has been observed that more than half of the Ethereum Network’s validators are now running Flasbbots’ MEV-boost software.

According to Lachlan Feeney, CEO of Labrys, many users using this kind of software for validation on the Ethereum network, maybe a huge contributor to censorship within the platform.

More than 45% of the new blocks currently being validated on the Ethereum network are running on MEV-boost relay flash boats and comply with sanctions in the United States.

What Is MEV-boost

From a better perspective, MEV-boosts are proposal-builder separation (PBS) implementations for proof of stake Ethereum. Essentially, they allow validators to increase their staking rewards by an estimated 60% by selling their block space to an open builders market.

Feeney notes that while reports show that 25% of all newly validated blocks since the merge comply with sanctions in the United States, this is far below expectations. He also adds that the number is supposed to be closer to 50% of all new blocks.

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Feeny states that the MEV-boost industry is a regulated one that is mostly based in the US and is, therefore, compliant with their laws. He alleges that these MEV-boost businesses are more than likely censoring some transactions out of the blocks they build and that most of these censored transactions are from Tornado Cash.

Feeney’s Counter Attack

MEV-boost relays are basically centralized entities that allow validators to sell their block spaces to the highest bidder.

Selling their block spaces is profitable to the validators because all they have to do is turn the MEV boost feature on, boost their yields, and in turn make more money.

To counter this, Feeney and Labrys released a MEV watch tool this week, capable of informing validators of which MEV-boost relays are compliant with the Office of Foreign Assets Control (OFAC) Sanctions.

As an explanation of this move by Labrys, Feeney states that this watch tool is only a means to provide awareness to the validators who do not know that their actions are contributing to the censorship of the network.

Toni Wahrstatter, an Ethereum researcher also confirmed Feeney’s allegations in a research paper published on August 28th, showing that of all 19,463 transactions processed by MEV-boost relays, absolutely none included a single Tornado Cash transaction.

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Proving that Feeney may indeed be right.

Chart showing that of all 19,000+ newly processed transactions on MEV-boost relays, none features Tornado Cash transactions 

Chart showing that of all 19,000+ newly processed transactions on MEV-boost relays, none features Tornado Cash transactions | Source: Toni Wahrstatter @Nero_ETH on Twitter

Ethereum Price Analysis

Ethereum currently appears to be trading inside a descending channel and has bounced off the $1,227 support.

Chart showing price action of Ethereum in descending channel

Chart showing price action of Ethereum in descending channel | Source: Tradingview

The next support level the bulls have to worry about is the $1400 level. As illustrated in the chart above, the price action tested this level early this week and is now moving up for a retest.

If the bears push the price lower, we may see a retest of the support around the $1192 level before a rebound or a possible breakdown.

 

 

Disclaimer: The author’s comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR  (do your own research)

 

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Jim Haastrup is a freelance blockchain and metaverse writer. He helps founders, investors, startups, crypto, and blockchain enthusiasts connect with their audience and win investment through the written word.

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