Sajida Zouarhi 🛸 Observability and Censorship in Ethereum

[Music] we be working for at least nine months on Reay and blood building operation until we suspended that and now we're really focused on Illuminating a bit more what's happening on and on the MV supply chain so I'm going to dive into that in this talk we'll be switching off G and I'll see you after cool so I was actually thinking of skipping a the first slides because I think need did a brid job at covering the OPAC angle basically my point here is um when we talk about censorship we open focus on ofac compliancy and for good reason this was a big issue uh last year um EST St is since we had some sychronization going on at the relay the year with uh one relay flash boats being the dominant one and uh also at that point Offa compliance which meant that basically um it was uh uh enforcing the compliancy at the whole ethereum uh Network level uh I actually wrote an article about this a year ago and so I was able to G up some numbers at that time around 80% of the ethereum network was served by m boost and 80% of all those blocks came from flash uh today the situation is much better much improved as we can see on this uh chart um but also something that is interesting is that because we're able to identify this issue monitor it um the commin was able to take action and we've seen the emergence of new renad um non- censoring renad such as fil s is a great example of that helping uh mitigate this uh censorship threats uh We've also seen research happening in the space thanks to the data that uh was available uh and actually seeing that the impact on the inclusion rate and Denay of sensor transaction was actually not as bad as we anticipated so it added a bit more Nuance on our understanding of on what censorship uh actually meant regarding ofac for transaction inclusion so skipping a bit on that part and moving forward to uh the blood building lastic I actually uh took this meme from Tony he didn't use it previous uh uh presentation because this is a great uh way to illustrate the problem that we have now the power has shifted from validator to Builder uh we often discuss about how uh how much of a problem it could be that VOR can enforce their preference over blog content but today in this PBS world that we have it's really the Builder who has all the power and is able to uh decide what's going to go on shade or not so not only that but successful Builders are now mostly vertically integrated AKA Searcher builders high frequency Traders if you will so this position is going to allow them to profit fromia at the transaction level but also at the full Block Level by leveraging any me Left Behind at the end of the block uh in fact we could even argue that me uh which consists of manipulating transaction ordering is a form of censor shipping itself and so those integrated Builders they're very profitable and because of that they're more likely to keep dominating the market compared to neutral Builders um so here we can see that about 82% of all etherum blocks are being built by these three Builders and I think that speaks also to some of the question I heard at the end of of ton talk um two of which are at least uh vertically integrated Searcher Builders two of them are auor compliant so the point of this is to uh is to show that when you have this level of centralization censorship pressure can definitely come from within and we should watch for it it's not always about uh the regulatory environment and this is where the pre- chain layer plays an important role as it helps us reveal What actors are doing and if there is any kind of manipulation Marino it may be that actors of the supply chain have some in incentive to ignore a transaction or delay it to get a better outcome for themselves it's actually hard to say um currently there is no way to enforce good behavior and the social report is limited by the lack of observability and the complexity of the strategies that are being implemented basically if someone is censoring either intentionally or accidentally what can you do about it especially if you're not even aware of it so this bringing me to the point of the need of observability uh on ethereum and just one thing worth noting uh when I say any supply chain it's almost equivalent at least in my mind to saying ethereum at this point because around 93% of all blocks are M this block at at that point so looking at uh very very interesting phenomenon the rise of private transaction on ethereum uh it's also interesting to see that uh private transaction have been more and more popular but ofas are also dealing in popularity thanks to interesting capabilities such as refunds which uh redistribute part of the value to the transaction originated but also thanks to the Privacy prorate Syndicate offer that the introduction of hint AKA program private order flow which was introduced by mshare but some of uh the OFA or private rpcn points users are not getting the financial value they should receive for example when they use the refund parameters they're not seeing their intents uh being respected for example when I transact I expect my transaction to be settled as fast as possible or I can also expect that I'll get the best outcome I can possibly get some guarantees that are stting in the writings are not always respected and sometimes important information can be left out from public documentation and so the question is who is watching out for these things and if no one should be accept the status SP so I'm looking at the offs supply chain which is a variation of the traditional Meed supply chain the the difference we can see here is that the transaction gets to Thea notes to be auctioned off to Searchers instead of lending directly in the blog Builder private M Pool and in pink here you can see uh the actors that you have to trust today and uh we should get much more observability on especially the OFA black Builder interaction which are probably the ones where we know and are able to observe the Le if you don't have observability then you need trust and that's something you should not accept from a system design perspective to give a practical example of why this matters I'm going to uh give you an overview of uh a kid study that my colleague Blair Marshall uh worked on this switch was actually able to present some results at this event during Dev connect um so just to give you a bit of context on how we came about this uh we have a transaction boost an aggregator that is helping users to send their transaction privately to several airp and points by only having to configure one the goal originally was to provide an increased you know customization but also observability uh through a status API so I added a screenshot here to show you exactly what the transac or regulator is able to see when they use the service so a user reach reached out to us uh turns out they were sending over 5,000 plus transaction via transaction boost um only configured n share as uh as a recipient end point but his transaction or ending in the blocks of the top five Builders and he received refunds around 60 only across four out of the five builders which seemed pretty odd especially since the fifth builder wasn't producing any reward but still was winning 20% of its blocks with the user transaction in it so at that point Blair decided to use The Hite Library provided by the Comm to the community by flash dos and he was able to identify 19 transaction that could have received a refund but did not instead the black Builder background boat claimed the opportunity so the user could have received potentially two e of reference but he never actually knew about this until this analysis was done and he never would have so this rate the question is there an information Advantage here if you're vertically integrated Searcher AKA a builder Searcher on web share compared to just a Searcher since the Builder get the C transaction at the same time that Searchers participating in the they get the transaction that is you know lacking some information for privacy's sake so how much is the block uh backgrounding bootes of that Builder taking advantage of its position as a integrated Builder that was one question and at that point uh in the conversation I was kind of looking at everything like this but then the pl thickets our immedate next thought was is this censorship whether accidental or intentional on the Builder side well we can't answer this we know our users have a way of knowing if the Builder actually received the bundles from mshare was me sure able to generate those refund bundles and if yes why did the Builder not receive them and if he did did he decide to ignore them so the short answer is we don't no why because we don't have the equipment of a relay data hii for awayan build ERS we have no idea who received what and when at least uh we were able here to provide some clarity to the user and discuss it with all parties involved which hopefully is a first step in the right direction if you want to read more about this case study and the methodology behind it uh you can check the thread from Blair and we're going to post a blog post shortly with more details in it uh actually it's also going to contain some other findings that we were able to uncover this week with other types of interesting Behavior but this just goes to show how much there is to observe uh to observe to analyze and to seek about in order to improve the ecosystem we really need more people to look into this so I think by by that point we all agree that we are with more observability on the en supply chain for how if you care about privacy and maintaining the trust of your users who sent you their transaction or their bundles it quickly see that it's not a straightforward problem to solve on the other hand allowing users to get wrecked for their own protection doesn't make doesn't make much sense either so another Factor here is the complexity uh observing mle is hard because they're fragmented L distributed and constantly changing so compiling accurate and complete data and making sense of what sophisticated actors are doing is really hard we know that onchain and pre- chain data allows us to track vertical integration uh spot interesting Behavior Uh it's not just about what happened on the Block it's also why and the less observability we have the more we rely on trust and struggle to identify suspicious Behavior going on whether accidental or intentional if we don't F the observability issue we are less likely to build a market that people will want to transact in which is a net loss for the whole Community it is also important that while we're building these games we do not lose track of the original Mission which is to create something better more transparent and more inclusive inclusive than TR five the reality is that today some people are able to leverage programmatically information they receive to extract value before others even have the chance to look at it if ever we can't rely on trust we need safeguards and monitoring the need for more observability couldn't be more clear so at L meeting we decided to take a holistic approach to try and solve this issue and build an observability platform that we for now follow the transaction Explorer gives you the power to visual the mle in real time and is going to be fully open source and open to contribution from the community very soon we believe it will give the ecosystem a new understanding and appreciation for the preach chain layer and the infinite possibilities within it such as studying Meed flow sensorship private man pools interaction between all these actors from the supply chain and much more the early feedback with receipt so far has been encouraging we're currently previewing the platform with a small C of of users who are doing research and Analysis on exactly the topics that we've been discussing today uh if you're interested you can DM me uh this was made possible by a grant from the etherum foundation and the platform will be publicly released and open source in the upcoming week so stay tuned on that note uh thank you all for your attention and see you on T if you want to continue this conversation thank you [Applause] bye is sajo still on or she s harmed