Abstract
Permissionless blockchains promise to be resilient against censorship by a
single entity. This suggests that deterministic rules, and not third-party
actors, are responsible for deciding if a transaction is appended to the
blockchain or not. In 2022, the U.S. Office of Foreign Assets Control (OFAC)
sanctioned a Bitcoin mixer and an Ethereum application, putting the neutrality
of permissionless blockchains to the test.
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 that intend to comply with OFAC
sanctions, indicating the significant impact of OFAC sanctions on the
neutrality of public blockchains.
We further uncover that censorship not only impacts neutrality, but also
security. We show how after Ethereum's move to Proof-of-Stake (PoS) and
adoption of Proposer-Builder Separation (PBS) the inclusion of censored
transactions was delayed by an average of 85%. Inclusion delays compromise a
transaction's security by, e.g., strengthening a sandwich adversary. Finally we
prove a fundamental limitation of PoS and Proof-of-Work (PoW) protocols against
censorship resilience.