Censorship is now economic. The primary threat to transaction inclusion is not a government firewall but a proposer-builder separation (PBS) auction where builders exclude transactions for profit. This shifts the attack vector from network layers to financial incentives.
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Blog
The Future of Censorship: MEV and Transaction Inclusion
An analysis of how Maximal Extractable Value (MEV) economics have created a financial incentive for validators and block builders to censor OFAC-sanctioned transactions, effectively hardcoding regulatory compliance into Ethereum's consensus mechanism.
introduction
THE NEW FRONTIER
Introduction
Censorship resistance is no longer just about state actors; it is a market dynamic dictated by MEV and block builder incentives.
Validators are not the gatekeepers. Post-PBS, the real power resides with block builders like Flashbots and bloXroute, who assemble blocks for maximum extractable value (MEV). Their profit motives, not ideological stances, determine which transactions are included.
The compliance tool is MEV. Regulators will target OFAC-sanctioned addresses not by shutting down nodes, but by creating a profitable MEV opportunity for builders to censor them. This turns legal pressure into a self-enforcing market mechanism.
Evidence: After the Tornado Cash sanctions, >50% of Ethereum blocks were built compliantly, demonstrating how quickly economic incentives align with external mandates. The censorship risk is already material, not theoretical.
key-trends
MEV, INCLUSION, AND SOVEREIGNTY
Executive Summary: The Censorship Trilemma
Blockchain neutrality is under siege. The push for compliant, OFAC-sanctioned blocks creates a fundamental conflict between decentralization, liveness, and censorship-resistance.
01
The Problem: Builder-Only Blocks
Post-Merge Ethereum's PBS separates block building from proposing, centralizing power. Top builders like Flashbots and beaverbuild can filter transactions, creating compliant blocks. This risks >50% of blocks being built by entities adhering to OFAC lists, effectively censoring at the protocol level.
>50%
OFAC Blocks
~5
Dominant Builders
02
The Solution: Enshrined Proposer-Builder Separation (ePBS)
A protocol-level fix to re-balance power. It enforces credibly neutral rules in the consensus layer, preventing proposers from being forced to accept only compliant blocks. This protects liveness (blocks are always produced) and censorship-resistance (proposers can include any valid tx).
L1 Native
Solution
0%
Builder Veto
03
The Hedge: Intent-Based & Cross-Chain Systems
Applications bypass the trilemma by abstracting execution. Users express desired outcomes (intents), and solvers compete across venues.
- UniswapX: Aggregates liquidity, routes around censored pools.
- Across & LayerZero: Use optimistic verification and decentralized relayers for cross-chain messages.
- CowSwap: Batch auctions hide transaction origin, reducing targeted MEV.
$10B+
Protected Volume
Multi-Chain
Escape Hatch
04
The Fallback: Sovereign Rollups & Alt-L1s
When base-layer neutrality fails, sovereignty provides an exit. Chains with independent sequencing and execution can enforce their own social consensus.
- Rollups on Celestia: Choose their own data availability and sequencer rules.
- Monad, Solana: High-throughput chains with different validator set economics.
- Fuel: Parallelized execution VM for maximal throughput, independent of L1 politics.
1000+
TPS Potential
Sovereign
Rule Set
market-context
THE EXECUTION LAYER
The New Censorship Market
Censorship is no longer a binary state but a dynamic, auction-based market for transaction ordering and inclusion.
Censorship is a revenue stream. Validators and block builders profit from excluding or delaying transactions, creating a formal market for inclusion. This transforms a political attack into an economic one.
MEV-Boost is the first censorship market. Its design outsources block building, creating a sealed-bid auction where censoring builders win. This centralizes power with a few relay operators who enforce OFAC lists.
Enshrined Proposer-Builder Separation (PBS) solves this. Ethereum's roadmap moves the auction on-chain, exposing censorship as a public, verifiable action. Builders who censor lose their bond, making trustless slashing possible.
Flashbots SUAVE is the counter-market. It decentralizes block building by creating a neutral, cross-chain mempool. This fragments the censorship cartel by allowing any searcher to build compliant blocks, commoditizing execution.
MEV AND TRANSACTION INCLUSION
The Censorship Dashboard: On-Chain Metrics
Quantifying censorship resistance and transaction ordering across major block builders and protocols.
| Metric / Feature | Ethereum PBS (Status Quo) | SUAVE (Theoretical) | MEV-Boost++ (Proposal) |
|---|---|---|---|
Builder Censorship Compliance |
| 0% (Decentralized) | Enforced < 5% via slashing |
Avg. Time to Inclusion (censored tx) |
| < 5 blocks | < 10 blocks |
Required Trust Assumption | Relay & Builder Honesty | SUAVE Network Honesty | Proposer-Builder Collusion |
Primary Censorship Vector | OFAC Compliance Lists | Network Liveness Failure | Validator Cartel Formation |
MEV Extraction Efficiency | ~99% (Centralized) | ~85-95% (Competitive) |
|
Implementation Status | Live (Dominant) | Testnet | EIP-7547 Spec |
Key Dependency | Flashbots Relay, bloXroute | SUAVE Chain & Mempool | In-protocol Proposer Commitments |
deep-dive
THE CENSORSHIP FRONTIER
The Slippery Slope: From OFAC Lists to Generalized Blacklists
Compliance-based transaction filtering creates the technical and economic infrastructure for arbitrary, generalized censorship.
OFAC compliance is the gateway. Major relay builders like Flashbots and BloXroute filter transactions from sanctioned addresses. This creates a censorship-ready infrastructure that validators can toggle on with minimal effort, moving censorship from a policy debate to a technical default.
MEV-Boost relays become the choke point. The dominance of compliant relays in the MEV-Boost auction means proposer-builder separation centralizes control. Builders who filter win more blocks; validators who want revenue are forced to accept filtered blocks, creating a de facto censorship mandate.
Generalized blacklists are the logical endpoint. The same relay software that filters OFAC addresses can filter any list. The precedent is set for protocol-level blacklisting of DeFi apps, mixers like Tornado Cash, or entire application categories, enforced by the economic gravity of MEV.
Evidence: 78% post-Merge. Post-Merge, over 78% of Ethereum blocks have been OFAC-compliant. This demonstrates the rapid normalization of censorship when economic incentives align, proving the infrastructure is already operational and dominant.
protocol-spotlight
THE NEW CENSORSHIP FRONTIER
Protocols in the Crosshairs: Builders, Solvers, and Relayers
Post-merge Ethereum shifted censorship power from miners to a new trilemma of specialized actors controlling transaction flow and finality.
01
The Builder's Dilemma: OFAC Compliance vs. Chain Health
Proposer-Builder Separation (PBS) centralizes block construction in ~5-10 dominant builders. Their compliance with OFAC sanctions creates a two-tiered transaction system, threatening credible neutrality and liveness.\n- Risk: >50% of blocks are OFAC-compliant, censoring Tornado Cash relays.\n- Solution: Enshrined PBS or minimal PBS to cryptographically enforce builder neutrality.
>50%
OFAC Blocks
~5
Dominant Builders
02
Solver Networks: The Invisible Arbitrage Cartel
In intent-based systems like UniswapX and CowSwap, solvers compete to fulfill user intents, but risk forming oligopolies that extract maximal value.\n- Problem: A few sophisticated solvers with ~$100M+ capital can dominate, creating a new MEV cartel.\n- Solution: Permissionless solver pools and cryptographic proofs of optimal execution (e.g., CowSwap's settlement).
~100ms
Auction Latency
$100M+
Solver Capital
03
Relayer Centralization: The Single Point of Failure
Cross-chain bridges (LayerZero, Axelar) and rollup sequencers rely on permissioned relayers for message passing and inclusion. This creates a centralized liveness assumption.\n- Risk: A relayer can censor or grief transactions for an entire chain.\n- Solution: Economic slashing, decentralized relay networks, and light-client bridges.
~5-10
Active Relayers
0
Slashing Today
04
SUAVE: The Aspirational Decentralized Mempool
Flashbots' SUAVE aims to decentralize block building by creating a shared, neutral marketplace for transaction ordering and execution. It's a bet against builder centralization.\n- Mechanism: Separates preference expression (users) from execution (builders/solvers).\n- Challenge: Requires massive adoption to overcome existing PBS infrastructure and network effects.
0%
Current Share
100%
Aspirational Goal
05
Enshrined Proposer-Builder Separation (ePBS)
A protocol-level fix to the builder censorship problem. Builders bid for block space in a cryptographically enforced auction where the proposer (validator) cannot see the block contents.\n- Guarantee: Eliminates proposer-level censorship.\n- Trade-off: Adds protocol complexity and may reduce builder efficiency margins.
~2025+
Timeline
Protocol
Layer
06
The Economic Solution: Heavy Slashing for Censorship
Instead of technical fixes, impose crippling economic penalties on validators who skip valid, fee-paying transactions. This aligns incentives with chain neutrality.\n- Mechanism: Inactivity leak or direct slashing for provable censorship.\n- Reality: Politically difficult to implement and define "censorship" on-chain.
32 ETH
Stake at Risk
Low
Implementation Likelihood
counter-argument
THE REGULATORY REALITY
The Steelman: "This is Just Compliance, Not Censorship"
A pragmatic defense of transaction filtering as a necessary adaptation to global financial law, not a betrayal of crypto's ideals.
Compliance is a legal requirement for any entity interfacing with the traditional financial system. Protocols like Tornado Cash triggered OFAC sanctions, forcing infrastructure providers to filter transactions. This is not ideological censorship but a survival mechanism for regulated entities like Coinbase and Circle.
The censorship-resistance debate is naive without acknowledging jurisdiction. A validator in the US operates under different legal constraints than one in a permissionless network. The OFAC compliance list is a concrete legal input, not a subjective moral judgment.
Proof-of-Stake networks centralize legal risk. Major staking services like Lido and Coinbase control significant stake. Their legal departments mandate compliance tools, creating a de facto regulatory capture of block production that permissionless mining pools avoided.
Evidence: After the Tornado Cash sanctions, over 45% of Ethereum blocks were OFAC-compliant, built by validators using Flashbots Protect or MEV-Boost relays configured to filter. This is a measurable, enforceable compliance standard.
risk-analysis
THE FUTURE OF CENSORSHIP: MEV AND TRANSACTION INCLUSION
Bear Case: What Could Go Wrong?
The promise of permissionless finance is undermined by centralized points of control in transaction ordering and inclusion.
01
The Regulatory Capture of Builders
Major block builders like Flashbots and bloXroute become compliance choke points. Regulators pressure them to censor sanctioned addresses, creating a two-tiered system where only compliant transactions are included in profitable blocks.
- Result: >90% of Ethereum blocks could be built by OFAC-compliant entities.
- Risk: Base-layer neutrality is compromised, pushing illicit activity to less secure chains.
>90%
OFAC Blocks
1-2
Choke Points
02
The Proposer-Builder Separation (PBS) Failure
PBS, designed to decentralize block building, fails in practice. Validators consistently choose the highest-paying block, which is built by a centralized, compliant entity. Economic incentives trump decentralization.
- Result: Validator decentralization becomes irrelevant to censorship resistance.
- Mitigation Failure: Projects like EigenLayer and SUAVE attempt to re-decentralize but face adoption and coordination hurdles.
$0
Censorship Cost
100%
Economic Alignment
03
The Rise of Private Orderflow & Exclusive MEV
Users and dApps (e.g., Uniswap, Aave) sell their transaction orderflow to private mempools or exclusive builders like Jito Labs for better execution. This fragments liquidity and creates a shadow system.
- Result: The public mempool becomes a toxic dump of arbitrageable leftovers.
- Endgame: Regular users get worse prices, while sophisticated players capture $1B+ in annual MEV in private channels.
$1B+
Private MEV
Toxic
Public Pool
04
Application-Layer Censorship via RPCs
The censorship threat moves up the stack. Centralized RPC providers like Infura and Alchemy can filter transactions before they even reach a chain. Wallets and dApps become the new gatekeepers.
- Result: Even a perfectly neutral base layer is bypassed.
- Solution Gap: Decentralized RPC networks (e.g., Pimlico, Grove) lack the performance and reliability of incumbents.
>50%
RPC Market Share
~100ms
Latency Penalty
05
The Miner Extractable Value (MEV) Tax on All Users
MEV isn't just extracted from arbitrageurs—it's a tax on every user. Slippage, failed transactions, and frontrunning degrade the UX for all non-MEV participants.
- Result: ~0.5-1.0% of every DEX trade is lost to MEV.
- Unsolved: While CowSwap and UniswapX offer some protection via intents, they rely on centralized solvers that can become new MEV hubs.
0.5-1.0%
Per-Trade Tax
Billions
Annual Extract
06
The L2 Centralization Trilemma
Layer 2s (Optimism, Arbitrum, zkSync) optimize for low cost and high throughput by using centralized sequencers. This creates a single point of failure for censorship and liveness.
- Result: A malicious or compliant sequencer can freeze billions in TVL.
- False Promise: Decentralized sequencer sets are complex and slow to implement, leaving users exposed.
1
Active Sequencer
$10B+
TVL at Risk
future-outlook
THE FORK IN THE ROAD
The Path Forward: Resistance or Resignation?
The future of censorship resistance hinges on the architectural choices made today between centralized sequencers and decentralized, credibly neutral infrastructure.
Centralized sequencers are the default path. Rollup teams like Arbitrum and Optimism control transaction ordering, creating a single point of failure for censorship. This model is efficient but structurally identical to Web2, where a central operator can exclude transactions.
The resistance path is shared sequencing. Protocols like Espresso and Astria are building decentralized sequencer networks that auction block space, preventing any single entity from controlling inclusion. This creates a credibly neutral base layer for rollups.
MEV is the economic engine for resistance. Without MEV, decentralized sequencers lack a sustainable incentive. Systems like Flashbots' SUAVE and protocols like CowSwap demonstrate that transparent MEV extraction funds the infrastructure that prevents censorship.
Evidence: The dominance of centralized sequencers is proven. Over 90% of rollup transaction volume flows through operator-controlled sequencers, making them de facto OFAC-compliant chokepoints by design.
takeaways
MEV & CENSORSHIP RESISTANCE
TL;DR for Busy Builders
The mempool is a battleground. Here's how to design for fair inclusion and capture.
01
The Problem: OFAC Compliance is a Censorship Vector
Validators complying with OFAC sanctions create a two-tiered transaction system, threatening credible neutrality. This isn't theoretical—>50% of Ethereum blocks have been built by compliant validators.\n- Risk: DeFi protocols can be selectively blacklisted.\n- Result: Network liveness depends on non-compliant actors.
>50%
OFAC Blocks
Tiered
Access
02
The Solution: Encrypted Mempools & SUAVE
Hide transaction content from block builders until inclusion. Flashbots' SUAVE is building a decentralized, intent-centric alternative mempool.\n- Mechanism: Users submit encrypted bids/intents.\n- Outcome: Builders compete on execution quality, not frontrunning data.\n- Ecosystem: Enables cross-chain MEV and private orderflow auctions.
0ms
Frontrun Window
Cross-Chain
Scope
03
The Tactic: Proposer-Builder Separation (PBS)
Formally separates block building (competitive, centralized) from block proposal (decentralized, random). Ethereum's PBS via ePBS is critical infrastructure.\n- Builder Role: Aggregates MEV via Flashbots Auction or Titan.\n- Proposer Role: Simply chooses the highest-value header.\n- Goal: Keep validation decentralized while allowing efficient block construction.
~90%
Builder Market Share
ePBS
Ethereum Roadmap
04
The Architecture: Intent-Based Systems (UniswapX, CowSwap)
Shift from transaction execution to outcome declaration. Users submit intents ("I want this token at this price"), and solvers compete to fulfill them.\n- Platforms: UniswapX, CowSwap, Across.\n- Benefit: MEV is internalized as solver competition, improving price.\n- Future: Native integration with SUAVE for cross-domain intent settlement.
~$1B+
Monthly Volume
Better Price
User Outcome
05
The Metric: Time-to-Finality is the New Battleground
Fast finality (e.g., Solana's ~400ms, Aptos' BFT) shrinks the MEV extraction window. However, it centralizes physical infrastructure requirements.\n- Trade-off: Speed vs. geographic decentralization.\n- Innovation: EigenLayer restakers could provide fast finality services.\n- Watch: Networks optimizing for single-slot finality.
~400ms
Solana TTF
Single-Slot
Goal
06
The Hedge: Multi-Chain & App-Chain Strategy
Don't rely on a single L1's censorship resistance. Deploy on multiple execution layers (Ethereum L2s, Solana, Monad) or launch your own app-chain via Celestia, EigenDA, or Arbitrum Orbit.\n- Rationale: Diversify validator set risk.\n- Tooling: LayerZero, Axelar, Wormhole for cross-chain composability.\n- Cost: Increased operational complexity.
10+
Viable L2s
App-Chain
Sovereignty
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