After completing The Merge update, Ethereum (ETH) switched to a proof-of-concept (PoS) consensus mechanism, which allows the blockchain to become both less power hungry and more secure. However, mining data shows that Ethereum relies heavily on Flashbots – a single server – for building blocks, raising concerns about a single point of failure for the ecosystem.
Flashbots is a centralized entity whose mission is to enable transparent and efficient maximum extractable value (MEV) mining and which acts as a relay for the delivery of Ethereum blocks. Data from mevboost.org shows that there are currently six active relays issuing at least one block of Ethereum, namely Flashbots, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, Blocknative and Eden.
As can be seen above, 82.77% of all relay blocks were built exclusively by Flashbots, which greatly increases the centralization of Ethereum.
A BitMEX-related blog highlighted the need to completely redevelop Flashbots or a similar system to limit the unknowns in the post-Merger era. Flashbots advocates, however, argue that the system is a Decentralized Autonomous Organization (DAO) and will in turn become decentralized.
Also read: Ethereum Merge: The community reacts with memes, GIFs and testimonials
To complete data on the prevalence of Flashbots, an analysis was carried out by Santiment noticed that 46.15% of Ethereum PoS nodes are controlled by just two addresses.
According to our #Ethereum Post-Merger Inflation Board, 46.15% of the #proof invited nodes to store data, process transactions, and add new ones #blockchain blocks can be attributed to only two addresses. This heavy dominance at these addresses is something to behold. pic.twitter.com/KQdFNgGloD
— Santiment (@santimentfeed) September 15, 2022
According to our #Ethereum Merger Post Inflation dashboard, 46.15% of the #proofofstake nodes used to store data, process transactions and add new #blockchain blocks can be done with just two addresses. The strong dominance of these addresses should be monitored. pic.twitter.com/KQdFNgGloD
— Santiment (@santimentfeed) September 15, 2022
“Since the successful completion of the Merger, most of the blocks – we say around 40% or more – have been taken by two addresses owned by Lido and Coinbase. It is not desirable to have more than 40% of the blocks being built by two providers, especially when one is a centralized service provider (Coinbase),” explained Ryan Rasmussen. , crypto research analyst at Bitwise.
