After the completion of The Merge upgrade, Ethereum (ETH) transitioned to a Proof-of-Stake (PoS) consensus mechanism, helping the blockchain become energy-efficient and secure. However, mining data reveals Ethereum’s heavy reliance on Flashbots – a single server – for building blocks, raising concerns about a single point of failure for the ecosystem.
Flashbots is a centralized entity dedicated to the transparent and efficient mining of Maximum Extractable Value (MEV), 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 in Ethereum, namely Flashbots, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, Blocknative, and Eden.
As shown above, across the lot, 82.77% of all relay blocks were built by Flashbots alone, which is a strong contributor to Ethereum’s centralization.
A related BitMEX blog pointed out the need for a complete redevelopment of Flashbots or a similar system to mitigate unforeseen complications in a post-merger era. However, Flashbots proponents argue that the system is a Decentralized Autonomous Organization (DAO) and will eventually become decentralized itself.
Related: Ethereum Merge: the community reacts with memes, GIFs and tributes
In addition to data related to the dominance of Flashbots, an analysis by Santiment noted that 46.15% of Ethereum PoS nodes are controlled by just two addresses.
According to our #Ethereum Dashboard post-merger inflation, 46.15% of #proofofstake nodes to store data, process transactions and add new #blockchain blocks can be assigned to only two addresses. This strong dominance of these addresses should be monitored. pic.twitter.com/KQdFNgGloD
— Santiment (@santimentfeed) September 15, 2022
“Since the successful merger, the majority of blocks – around 40% or more – have been built by two addresses belonging to Lido and Coinbase. It is not ideal to see more than 40% of blocks being installed by two providers , especially one that is a centralized service provider (Coinbase),” explained Ryan Rasmussen, crypto research analyst at Bitwise.