Ethereum now under US control? 99% of latest relay blocks are censoring network | Hacker News Reader

Ethereum now under US control? 99% of latest relay blocks are censoring network

cryptoslate.com

29 pointspaulpauper18 comments

Clickbaity title. As the article outlines inside 63% of currently produced blocks are OFAC compliant. With an ETH block time of ~12 seconds. There is a 1-(.63^n) chance that an OFAC non-compliant block will be included in n blocks. Once you hit 90 seconds, there's a >99% chance that an OFAC non-compliant transaction will be written to the chain.

If censorship ever came to the blockchain itself i.e. Coinbase (who holds a large stake and needs to comply with OFAC) not attesting non-compliant blocks, there are censorship resistant ways the chain can employ to prevent this - like social slashing, this is a great read on it:

https://ercwl.medium.com/the-case-for-social-slashing-59277f...

What are the implications when an OFAC non-compliant transaction gets written into the chain?

Or vice-versa when an OFAC compliant one does?

There are no implications, since Ethereum is a public ledger where anyone can participate in validating transactions who have at least 32 ETH. For contrast, with bitcoin anyone can add a block who can produce a verifiable hash below the current difficulty target.

It gets muddy where with Ethereum where there are public companies like Coinbase who have to comply with certain laws as they are a financial entity running their own validators with coins from their depositors. Don't get me wrong there is an urgent need for regulatory clarity and not all regulations are bad.

So then is increased length of validation for non-compliant transactions the only tangible drawback?

Which, to be clear, means everyone processing ETH transactions is complicit in circumventing OFAC and should face the legal remedies available.

Lol. You should take this up with the US banks processing millions of dollars of illegal transactions daily and get a light slap on the wrist each and every time they accidentally get caught.

I think the difference is that the US banks didn't go out and deliberately declare "Here's how we're going to empower fascists to circumvent the rules of democratic nations". I'm not making excuses, there's lots of examples of Deutche etc. that are breaking rules, and they should be punished for that. But at the end of the day, they atleast accept the legitimacy of the rules.

I'm not sure I agree with that rhetoric. There are many countries around the world who see the US as a fascist entity who has bombed the shit out of them imposed economic sanctions and destroyed their way of life. As an American I see economic freedom as intrinsically good and what the founders would have always wanted. I do not see our particular set of OFAC rules as democratic neither our economic hegemony as something we need to accept as morally right.

I am not against that set of rules, especially for the legacy system, but it's not on blockchain devs to comply.

We will have to let our legislators decide. Starting to see a good amount of bipartisan support for reasonable regulations (in the eyes someone who is pro crypto). And whatever they decide it will prove the true strength of a blockchain if it can resist censorship. For example, if they choose to make Coinbase comply with OFAC on an attestation level the system should be able to deal with that through social slashing etc.

Sure, absolutely, there are people out there who watch women in Iran get murdered for not wearing a Hijab, or watch the people of North Korea starve to death under a totalitarian dictator, and say "Yeah but the US isn't good either" and they're wrong. There is a bright clear line here, the US is a democracy with real institutions for holding the government to account, and the entities on the OFAC list aren't. If you want to support the totalitarian regimes of North Korea and Iran against the interests of the US fine. But let's call it what it is, you're providing aid to the enemies of freedom and democracy.

The obvious difference is that banks make at least the bare minimum effort to prevent being complicit (KYC). Ethereum validators do not, but there is the argument that there are not tools to effectively do that yet.

I can add some context here. MEV stands for maximum extractable value, it allows you to accept a higher fee to order transactions within a block. This isn't super valuable for most people, but in some cases it can be the difference between making a profit and not.

MEV-Boost is the popular open source base most people use, it's from a company called Flashbots. Using MEV-Boost apparently gives you a good 60% bump in profit, from what I've read, so it's really popular. Some 56% of nodes are using MEV-Boost, and among them only 14% aren't censoring to be OFAC compliant.

Flashbots recently announced they're making a decentralization focused upgrade to the protocol, essentially making this problem a non-issue. In fact, the cofounder recently left due to internal disagreements about it centralization and censorship risks.

If you can't hold it in your hot little hand, or touch it, you don't own it. It can be taken away from you with a drop of ink. (Or a movement of electrons.)

"Wealth is an illusion, wealth in a computer is doubly so." (Apologies to Douglas Adams)

Worded another way, he who has the lead has the silver.

>Should the U.S. decide that a project, protocol, token, or even NFT project on Ethereum no longer serves its interest and adds related addresses to its OFAC sanctions list, that project would struggle to survive in the current climate.

That's absolute not what the OFAC sanctions list is for and it's ridiculous that cites like this continue to pump out this bullshit trying to cover for murderous totalitarian regimes.

You probably live somewhere that somebody considers a "murderous totalitarian regime".

Absolutely, but at the end of the day, the people of the united states get to freely decide whether they support their government policies. I'm not saying the US is good, but it's a helll of a lot better than the Iranians murdering women who don't wear the hijab or NK murdering basically anyone.

Sure, we can do the moral relevatism thing, but I don't have much patience for it to be honest.

Don't have much patience as long as your team is making the rules.

Sanctions apply to specifically identified persons and organizations that meet the criteria of one of the sanctions programs established by law.

There isn't a "no longer serves US interests" sanction program. Sanctions programs are established to further a specific foreign policy or national security, as determined by our democratically elected representatives.

Reply on news.ycombinator.com