Blockchain Censorship

Authors: Anton Wahrstätter, Jens Ernstberger, Aviv Yaish, Liyi Zhou, Kaihua Qin, Taro Tsuchiya, Sebastian Steinhorst, Davor Svetinovic, Nicolas Christin, Mikolaj Barczentewicz, Arthur Gervais

Permissionless blockchains promise resilience against censorship by a single entity. This suggests that deterministic rules, not third-party actors, decide whether a transaction is appended to the blockchain. In 2022, the U.S. ØFAC sanctioned a Bitcoin mixer and an Ethereum application, challenging the neutrality of permissionless blockchains.

In this paper, we formalize, quantify, and analyze the security impact of blockchain censorship. We start by defining censorship, followed by a quantitative assessment of current censorship practices. We find that 46% of Ethereum blocks were made by censoring actors complying with OFAC sanctions, indicating the significant impact of OFAC sanctions on the neutrality of public blockchains.

We discover that censorship affects not only neutrality but also security. After Ethereum’s transition to ¶oS, censored transactions faced an average delay of 85%, compromising their security and strengthening sandwich adversaries.