Labrys

‘Concerning precedent’ — bloXroute Labs’ MEV relays to reject OFAC blocks

December 19, 2023 Coin Telegraph

Ether hits 11-month high as post-Shapella withdrawals pass 1M ETH

April 17, 2023 Coin Telegraph

Since the Shapella hard fork on April 12, Ether has seen a price gain of nearly 10%.

Over 1 million Ether (ETH) worth $2.1 billion has now been withdrawn from Ethereum’s Beacon Chain within the first four days of the Shapella hard fork and Ether has pushed over $2,100 for the first time in 11 months.

The 1.03 million ETH withdrawals have come from 473,7000 withdrawal requests, with Saturday, April 15 being the largest withdrawal day at 392,800 ETH according to data from beaconcha.in.

Of the active validators, nearly 87% or 469,000 of the 540,000 are now able to withdraw their staked Ether.

*April 15 to 16 saw the largest Ether withdrawals processed so far, with 392,800 and 280,400 Ether withdrawn respectively. Source:* *beaconcha.in*

While members of the Ethereum community were split on what impact Shapella would have on the price of Ether, the first four days have produced close to a 10% rise.

*ETH has increased about 9% since the Shapella upgrade took effect late on April 12. Source:* *CoinGecko*

The figures are of little “surprise” to Lachlan Feeney, chief executive of blockchain consulting and development firm Labrys, who explained to Cointelegraph that many validators are re-staking Ether back onto the Beacon Chain:

“Much of the stake that has been withdrawn over the last few days is actually going straight back into The Beacon Chain as validators are looking to compound their interest. So much so that net stake is currently increasing.”

Given the current macroeconomic climate, Feeney explained that many early stakers wanted to liquidate after what has been nearly a 30-month wait for some.

Over the mid to long-term, Feeney believes the Shapella hard fork will only increase the amount of Ether staked, which of course will only strengthen Ethereum at the consensus level:

“Because Shapella is a massive de-risking event, over the medium to long-term more, not less, ETH will be staked. We anticipate that in the not too distant future, we will reach a record high of Ether being staked.”

Markus Thielen, the head of research at digital asset platform Matrixport explained to Cointelegraph that the closure of crypto exchange Kraken’s staking services may have contributed to the higher figures:

“It appears largely due to the Kraken's staking business being unwound. This will only have a temporary effect as we are also seeing a significant demand from investors who now are able to stake with more visibility on the liquidity of staked positions.”

Thielen said he expects a large amount of un-staked Ether from Kraken to be “recycled” back into the Beacon Chain through other entities.

While Thielen anticipates the positive price action to cool off this week amid increased selling pressure, he thinks Shapella will ultimately attract more institutional investors to stake on Ethereum.

The 1 million milestone is a 500% increase from an April 11 prediction by blockchain intelligence firm Glassnode, which estimated only 170,000 Ether to be un-staked after the first week of Shapella.

On-chain analytics firm Nansen slightly overshot the mark, predicting 1.4 million Ether would be withdrawn after the first few days of Shapella.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

OFAC-compliant blocks on Ethereum hit three-month low of 47%

February 14, 2023 Coin Telegraph

Block Builders

Back in November, the percentage of Ethereum blocks complying with orders from the Office of Foreign Asset Control peaked at 79%.

The percentage of Ethereum blocks complying with orders set by the United States Office of Foreign Asset Control (OFAC) has now fallen to 47% — the lowest level since Oct. 11.

The latest milestone in reversing censorship comes nearly three months after the percentage of OFAC-compliant blocks peaked at 79% on Nov. 21.

OFAC-compliant blocks are those that exclude transactions involving parties sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control.

A fall in compliant blocks could be seen as a win for those who oppose censorship within the Ethereum ecosystem.

*Percentage of OFAC-compliant blocks following the Ethereum Merge on Sept. 15. Source.* *MEV Watch.*

Blockchain consulting firm Labrys, the creator of MEV Watch, said in a statement thathe fall may be attributed to more validators opting to use MEV-boost relays that do not censor transactions in accordance with OFAC requirements.

“In particular, the BloXroute Max Profit relay, Ultrasound Money relay and Agnostic Boost relay have picked up most of the change in market share.”

MEV-boost relays act as trusted mediators between block producers and block builders, which enables Ethereum validators to outsource their block production to other block builders.

Lachlan Feeney, the CEO of Labrys, said in a Feb. 14 statement that he’s happy with how the Ethereum community has responded to the censorship issue since it first surfaced post-Merge.

He noted the recent fall in censorship-compliant blocks was particularly notable given it was achieved without a user-activated soft fork (UASF). He noted that “many members” of the Ethereum community had called for the soft fork prior to the Merge to combat censorship.

“I am incredibly proud of the Ethereum community for the progress we have made with this issue,” said Feeney, adding:

“When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress addressing the issue.”

However, “there is still more work to be done,” Feeney stressed.

OFAC most notably sanctioned Ether (ETH) and USD Coin (USDC) wallet addresses that transact using the Ethereum-based privacy mixing tool Tornado Cash on Aug. 8.

*A visualization of the last 100 blocks showing which are OFAC-compliant. Source.* *MEV Watch*

After the first 24 hours of Ethereum under its new proof-of-stake consensus mechanism on Sept. 16, only 9% of blocks were OFAC-censored.

However this figure sharply increased over the next two months, peaking at 79% on Nov. 21.

The percentage of OFAC-compliant blocks then hovered around the 68-75% range until Jan. 29 when it was 66%. Since then, it has steadily decreased despite a few minor spikes.

45% of ETH validators now complying with US sanctions — Labrys CEO

September 30, 2022 Coin Telegraph

Censorship

Labrys CEO Lachlan Feeney is trying to raise awareness among validators running Flashbots’ software that they may potentially be contributing to censorship within the Ethereum network.

According to the CEO of blockchain development agency Labrys, Lachan Feeney, approximately 45% of all Ethereum blocks currently being validated run MEV-boost relay flashbots and comply with United States sanctions.

Speaking to Cointelegraph in an interview on Sept. 30, Feeney noted that while reports have stated that 25% of all blocks validated since the Merge complies with United States sanctions, this is a lagging indicator and the current number is likely to be closer to one out of every two blocks.

Feeney pointed out that MEV-Boost relays are regulated businesses, often U.S.-based, and are “censoring certain transactions in the blocks that they build, particularly transactions from Tornado Cash.”

The CEO also pointed out validators have a financial incentive to use MEV-Boost relays, which would drive an uptick in their usage, noting:

“The issue, is that from the validators perspective, these guys are paying them to sort of do this. So if you want to make more money, you just turn this feature on and as a validator, you sort of boost your yield.”

MEV-Boost relays are centralized entities dedicated to efficient Maximal Extractable Value (MEV) extraction. With Flashbots being the most popular, MEV-Boost relays effectively allow validators to outsource block production and sell the right to build a block to the highest bidder.

Labrys released an MEV Watch tool on Sept. 28, which can inform validators about which MEV-Boost relays comply with Office of Foreign Assets Control (OFAC) sanctions. Referring to the motivation behind the tool, Feeney said:

“We’re just trying to raise some awareness for those who are unaware that by running this software, they are potentially contributing to censorship of the network.”

Feeney noted a worst-case situation often referred to as hard censorship, where “nodes would be forced by regulation to basically discard any blocks with any of these transactions in them.”

“That would mean no matter how long you waited, no matter how much you paid, you would never get to a point where those sanctioned transactions would get included in the blockchain,” he explained.

He also pointed out that even in the event of soft censorship, where sanctioned transactions would eventually be validated, it could take hours and require a high priority fee, resulting in a sub-par user experience.

These findings are reinforced by Ethereum researcher Toni Wahrstätter, who published research on Sept. 28 suggesting that of the 19,436 blocks verified by the Flashbots Mev-Boost Relay, none included a Tornado cash transaction.

*How many blocks from different MEV Boost Relays contain Tornado Cash transactions. Source: Toni Wahrstätter.*

Censorship fears were prevalent before The Merge. Speaking to Cointelegraph, the lead investigator for crypto compliance and forensic firm Merkle Science, Coby Moran, suggested the prohibitive cost of becoming a validator could result in the consolidation of validator nodes to the bigger crypto firms — who are much more susceptible to being influenced by government sanctions.

Dogecoin becomes second largest PoW cryptocurrency

September 16, 2022 Coin Telegraph

Bitcoin

Following the Ethereum Merge, Dogecoin now only trails Bitcoin as the biggest proof-of-work cryptocurrency.

Meme-inspired cryptocurrency Dogecoin (DOGE) is now officially the second largest proof-of-work (PoW) crypto in terms of market cap, following the Ethereum network's proof-of-stake upgrade on Sept. 15.

Bitcoin (BTC) of course remains miles ahead of Dogecoin’s market cap of $7.83 billion, though the well-followed memecoin is still comfortably ahead of the third place PoW cryptocurrency Ethereum Classic (ETC) (with a market cap of $4.69 billion), Litecoin (LTC) ($4.01 billion) and Monero (XMR) ($2.65 billion).

*Ranking of PoW-Based Cryptocurrencies by Market Cap. Source:* *Coinmarketcap.com.*

One Dogecoin fan appeared to be in disbelief of Dogecoin’s rise to become the second largest PoW cryptocurrency, stating “who would have thought that this would happen. Congrats #Dogefam.”

But it wasn’t taken well by everyone. One Twitter user responding to a tweet about the news asked how people could take the crypto industry seriously with a memecoin so close to the top spot, emphasizing the need to remove “useless coins” from public view.

But Dogecoin may also soon find itself competing against ETHPoW - the Ethereum PoW hard fork chain that will continue mining, according to the official Twitter account of the ETHPoW, which is currently priced at $13.64.

Ethereum's transition to PoS may have added pressure on PoW-powered cryptocurrency networks to transition to a more sustainable consensus mechanism.

In a statement to Cointelegraph, Lachlan Feeney, the founder and CEO of Australian-based blockchain development agency Labrys said “the pressure is on” Bitcoin now to justify the PoW system over the long term."

He added that "reluctance to carry out its own transition to PoS will be huge."

Meanwhile, the Dogecoin Foundation has been considering a transition of Dogecoin to a proof-of-stake after first hinting at the shift in Sept. 2021, which was put forward by Ethereum co-founder Vitalik Buterin, who is also an advisor for the Dogecoin Foundation.

In Dec. 2021, the Dogecoin Foundation released its “Dogecoin Trailmap” which proposed to build a Dogecoin “community staking” version that resembled PoS.

“Such a version would allow all Dogecoin users to stake their DOGE and get extra tokens for supporting the network,” the Dogecoin Foundation said.

However, little progress has been made since then, as it still appears to be in “proposal” status according to the Dogecoin website.

DOGE is currently priced at $0.06 at the time of writing.

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