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Why is it critical for Ethereum to be censorship-resistant as a blockchain?

The Ethereum blockchain has brought many technologies to light in the real world, introducing decentralized apps and ecosystems where they are much needed. Ethereum’s smart contracts have revolutionized the development of regular agreements, making them automated, cheap, and fast. Decentralized apps provide transparency and efficiency regarding privacy and resistance to censorship, instances in which centralized applications have failed many times.

However, Ethereum is not perfect, regardless of its uniqueness. The increasing transaction volume led to network congestion, and the high fees made it unfeasible for those who want to take advantage of the Ethereum price. Now, according to Binance, the network has made investing easier.

Besides transactions, Ethereum has also struggled with censorship-free maintenance, especially since the US government sanctions some of its programs and projects. At the same time, block builders have found ways to arrange blocks in specific ways to censor them, an increasing practice over the network.

So, why is being censorship-free so important?

Ethereum

What does it mean to be censorship-resistant as a blockchain?

The feature of censorship resistance means that anyone can access networks or platforms at any time if they follow the same guidelines. Censorship resistance became a thing when Bitcoin was released on the market, and most blockchains implemented it because it offers more transparency and security for users.

The feature is useful in all blockchain communities, but DeFi is particularly important regarding censorship. Compared to traditional finance, where restrictions and regulations hinder people’s access to such services, decentralized finance breaks these barriers and ensures anyone can use them.

Ethereum needs to enhance its censorship-resistance features

Ethereum was created to be available to anyone, and its protocols allow people of any age or political affiliation, as well as location, to use it. Since blockchains are based on cryptography and P2P networks, they don’t require intermediaries to verify transactions, so there are no barriers to who can send or receive cryptocurrency.

At the same time, the PoS consensus mechanism enhances Ethereum’s censorship resistance, providing energy-efficient systems and fast transactions. Hence, it offers numerous benefits for the community, whose efforts contribute to the blockchain’s security.

However, Ethereum is at risk of censorship because a significant number of its blocks have excluded some transactions related to real-world sanctions, hindering people’s right to use the blockchain.

Ethereum validators want to comply with official institutions

The main reason why this trend is increasing is due to validators’ inclination to comply with institutions like the SEC (Securities and Exchange Commission) or OFAC (Office of Foreign Assets Control), as they fear becoming a target. The SEC has indeed stated that it will fight against most cryptocurrencies, considering them risky and with no value for the real world.

Yet, this occurrence is against the financial freedom and neutrality features wanted from the crypto market. It has been noticed that network censorship on Ethereum stands at about 70% on most days, but it has reached even higher stats than this. However, users found a solution against censorship.

MEV-Boost used as middleware

After the Merge update, when Ethereum became more sustainable and cheaper, blocks were passed through the MEV-Boost software, through which validators could request blocks to be provided by builders on the network. The system was created to help validators profit by deciding a block’s place.

Among its features, the MEV machine was set to fight centralization and censorship, one of the most overrated problems on the Ethereum blockchain. Today, almost all validators use the technology, but users are reticent about it after one of Ethereum’s projects was sanctioned by the OFAC.

Hence, they found a way to leverage the technology by using it as a third-party system, which made transactions slower, but they have been accompanied by many other projects that fight censorship.

Blockchains can’t be censored entirely

Although the risk of censorship surrounds Ethereum, the chances of becoming censored entirely are close to zero due to the decentralized technology. Its design makes it difficult even for centralization to happen, as it would take for the perpetrator to own 51% of the entire blockchain, which requires considerable effort in breaking the network.

Even in the real world, censorship-resistance ecosystems are important because they affect capital controls, bank runs and freedom of speech. Within blockchains, censorship-resistance is achieved through the architecture implemented by developers. It’s known that a cheap and fast blockchain might be less censorship-resistant because the technologies for setting them are not that secure. That’s why, unfortunately, complex blockchains tend to be safer and more censorship-resistant.

Censorship resistance is important for crypto as well

Most people believe that cryptocurrencies should only be reliable and secure. Still, if they’re not censorship-resistant, they have no value on the market since they don’t receive enough exposure, and communities can’t access them.

Crypto assets have been created to be used as open-access financial tools without the need for governmental involvement. So, if creators are hindered by the same institutions that fail the population, cryptocurrencies have no real use in that case because they will only be accessed by influential peers, and centralization will deepen.

Of course, censorship-resistant ecosystems and assets are also not helpful in making a change in the financial system because the public ledger should protect all users, whether anonymous or not, when making their transactions. The main goals of the crypto market are to solve the issues within the traditional financial systems, such as slow downturns and inefficiency. Therefore, developers and communities must take charge of their ecosystems and improve them continuously, not allow official institutions to take over them.

Bottom line

Ethereum, the second most used cryptocurrency and best blockchain technology, faced several challenges regarding censorship resistance and centralization. Some communities seem to be banned from making new blocks or accessing some financial tools, which is worrying considering that the industry wants to be transparent. At the same time, risks of centralization are increasing, especially with staking pools, where only a few of the pools have the power to control prices. So, Ethereum must be censorship-resistant to ensure credentials and safety. 

IEMA IEMLabs
IEMA IEMLabshttps://iemlabs.com
IEMLabs is an ISO 27001:2013 and ISO 9001:2015 certified company, we are also a proud member of EC Council, NASSCOM, Data Security Council of India (DSCI), Indian Chamber of Commerce (ICC), U.S. Chamber of Commerce, and Confederation of Indian Industry (CII). The company was established in 2016 with a vision in mind to provide Cyber Security to the digital world and make them Hack Proof. The question is why are we suddenly talking about Cyber Security and all this stuff? With the development of technology, more and more companies are shifting their business to Digital World which is resulting in the increase in Cyber Crimes.
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