OFAC is Attempting to Censor Transactions From Getting into the Blockchain

Key Takeaways:

  • Following the Merge upgrade, Ethereum core developers extensively explored several attack vectors against the protocol’s censorship resilience on August 18.
  • Numerous methods that should be used to maintain the protocol’s integrity in the face of probable state-level opposition were also explored.

A decentralized, open, free internet is currently in danger. This might sound like hyperbole, but sadly, it is not. The Ethereum community is questioning if the new sanctions targeting Tornado Cash may jeopardize the blockchain itself as Proof-of-Stake is soon arriving.

There have recently been worries that US-based validators will submit to OFAC pressure and suppress or rearrange blocks to keep particular transactions out of the network.

After The Merge, Vitalik Buterin was so incensed by the idea that validators would abide by OFAC penalties that he vowed that any validators who did so should have their ETH staked burnt. He agreed such acts should be viewed as “an attack on Ethereum and burn their stake via social consensus” if they do not include Tornado Cash transactions.

Through his Twitter account, @JackNiewold, the founder of Crypto Pragmatist, shed more information on this censoring issue. He went to great length on a few key points from the Ethereum Core Developers Meeting on August 18.

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The capacity to punish dishonest actors by human coordination after the event is one of the major benefits of Proof-of-Stake over Proof-of-Work.

According to @MicahZoltu, who addressed the present possibility/threat, the main worry is that many users are unaware that this is essentially a feature of proof-of-stake; that feature’s strength is the community’s capacity to “fork” someone.

In his exact words, “If you know that you will be punished severely if you do ‘bad thing X,’ then you are less likely to do ‘bad thing X’ 

And if the punishments are strong enough, and the benefits you gain are low enough, then no one may ever do ‘bad thing X.’”

However, if we observe cartel-style censorship, we will develop the code and deploy software that cuts and punishes, or we will take other action to fight against it. The core developers will support the “not-censoring train” and attempt to write the code required.

Micah expects that the core developer community will move to stop chain censorship if any actor or group tries to avoid the rules to conform to sanctions.

Similar worries were voiced by Harsh Rajat, the creator of the Ethereum Push Notification Service. He regards social consensus as being as significant to legal precedent. We must struggle for them both.

Aside from the controversy surrounding Ethereum’s consensus algorithm, specific crypto projects in the ecosystem have made the proactive decision to guarantee they are OFAC-compliant. An open source technology ban would be analogous to charging Ford with patent infringement for creating the automobile. It is disappointing to see worthy projects being compelled to follow regulations out of fear of being targeted or because of how the regulations are drafted.

The uncertainty over the ecosystem’s future feels heavy to some as the Merge date looms with each new block. Rettig states, “[Ethereum] had one job—ONE JOB: censorship resistance.”

The community has essentially failed if user transactions on the network are subject to censorship.  Many people share this viewpoint. The main objective of Ethereum and blockchain technology as a whole is censorship resistance. There won’t be much left to accomplish when we concede on that.

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