# The Silhouette of Resilience

[Data Always](https://twitter.com/data_always) - March 23, 2024

**tl;dr**
> By examining the distribution of MEV block values we footprint `min-bid` usage across major proposer sets. We combine this footprinting with Tornado Cash transaction data and find that `min-bid` contributes at least 7% of all censorship resistance, while the majority (79%) comes from non-censoring MEV-Boost builders. Among these builders, Titan builder stands out, facilitating the inclusion of 56% of all sanctioned transactions on the network.

**Assumed Audience:** Ethereum researchers and validators. You are aware of the current [state of censorship](https://censorship.pics/) on Ethereum and know what the [`min-bid` parameter](https://writings.flashbots.net/the-cost-of-resilience) in MEV-Boost does.

**Data Sources:**
- MEV block value data from [dataalways/mevboost-data](https://github.com/dataalways/mevboost-data) on GitHub
- Top-level entities from [Hildobby](https://twitter.com/hildobby_)'s proposer [pubkey set](https://dune.com/queries/3267314) on Dune
- Lido node operator pubkeys from the [pubkey\_mapping dataset](https://mevboost.pics/data.html) on mevboost.pics
- Tornado Cash data forked from [coldfire](https://dune.com/coldfire) on Dune and then merged with decoded extra data to identify block builders.

**Conflicts of Interest**: This research was entirely unfunded. The authors have exposure to ether, but declare no other meaningful conflicts of interest.

---

Implemented at the height of [relay censorship](https://writings.flashbots.net/the-cost-of-resilience) after The Merge, the `min-bid` parameter allows proposers to opt out of MEV-Boost blocks and revert to local block building when the value of a block is below a custom threshold. This leaves a distinct footprint in MEV data, which we can use to analyze which proposer sets use the option.

## Staking Entities

Starting with a control, we plot the distribution of MEV block values for the second-largest proposer set, Coinbase. Comparing the distribution to the rest of the network, we see that both are log-normally distributed in block value and have complete overlap. This indicates that Coinbase does not use the `min-bid` parameter across its proposer set.


Coinbase is by no means the exception--almost no large entities appear to leverage the `min-bid` parameter across their proposer set. The four biggest entities who actively use the parameter are Upbit, Daniel Wang, Octant and KuCoin. In each distribution below, we see a hard cutoff representing the block value at which the proposer set reverts to local building.


Combined, these entities represent 2.5% of staked ether, but their configurations vary dramatically. KuCoin appears to have the strongest setting, building blocks valued at less than 0.05 ETH locally, while Octant has the weakest setting, reverting to local building only for block values smaller than 0.01 ETH.

## Lido Node Operators

We observe higher adoption of min-bid among [Lido node operators](https://fees-monitoring.lido.fi/?tab=noProposingInfo) (each controlling about 1% of total stake) compared to the rest of the network. Plotting a time series of the least valuable MEV blocks for each operator, we see clear changes in behavior over time. Recently, Prysmatic Labs and ChainSafe have adopted `min-bid`, while Sigma Prime discarded their configuration earlier this year.


ChainSafe, Prysmatic Labs, and Stakin all have aggressive `min-bid` configurations, reverting to local block building when block values are less than 0.07 ETH. Attestant uses a weaker configuration of 0.035 ETH, which is still relatively strong compared to the rest of the network.

## Theoretical Impact

We were able to tag 6.5% of proposers, weighted by staked ether, as users of `min-bid`. This represents a lower bound of `min-bid` usage. Lido operators account for over half of this total and have the most aggressive configurations.


In total, local building reversions due to `min-bid` should account for 2.65% of all blocks. Given that [91% of blocks](https://mevboost.pics/) are currently built with MEV-Boost, this suggests that `min-bid` represents 30% of locally built blocks. As [64% of blocks](https://censorship.pics/) are currently built by censoring builders, `min-bid` should be reponsible for about 7% of non-censored blocks.

## Empirical Distribution of Censorship Resistance

The largest source and cleanest dataset of censored transactions is Tornado Cash withdrawals, therefore we use them as a proxy for all censored transactions on the network in this analysis. Plotting Tornado Cash transaction counts versus inclusion delays in a log-y scale, we observe a [linear relationship](https://twitter.com/Data_Always/status/1706814925115461743/) that reflects the average rate of censorship of the network.

<p><iframe src="https://dune.com/embeds/3541826/5959146/" width = 100% height = 350/></iframe></p>

Although the social layer tends to frame local block building as the censorship-resistant backbone of the community, about 80% of blocks containing Tornado Cash withdrawals are actually built through MEV-Boost.

<p><iframe src="https://dune.com/embeds/3535198/5947751/" width = 100% height = 350/></iframe></p>

We see that the majority (70%) of MEV-Boost blocks containing Tornado Cash withdrawals built over the past six months were built by Titan. Jet builder and Penguin builder have built 11% and 6% respectively, while the remaining 13% comes from a diverse set of smaller builders. Taking these rates into account along with PBS permeation, Titan builds 56% of all blocks containing Tornado Cash withdrawals.

<iframe src="https://dune.com/embeds/3541759/5958996/" width = 100% height = 350/></iframe></p>

Titan is the dominant OFAC non-compliant PBS block builder. In the Tornado Cash withdrawals dataset we see that bloXroute and beaverbuild stopped including these transactions in their blocks in response to the [sanctioning of Tornado Cash](https://www.chainalysis.com/blog/tornado-cash-sanctions-challenges/) by the US Department of Treasury in August 2023. Titan's market share of these transactions has been relatively stable since the Summer of 2023.

<iframe src="https://dune.com/embeds/3542844/5960978/" width = 100% height = 350/></iframe></p>

Isolating the subset of locally built blocks, we find that 33% of those containing Tornado Cash withdrawals are the result of `min-bid` (6.9% of all blocks). These blocks have top MEV bids at the end of the slot valued lower than the proposer's parameter. An additional 40% of locally built blocks come from untagged proposers, while the final 27% are built locally for indeterminate reasons. The majority of these come from the top ten staking entities by size, suggesting that the primary causes are minor configuration issues, payload timeouts, etc.

<iframe src="https://dune.com/embeds/3541805/5959086/db5cad34-9e10-41a0-b939-72cc4e69f998" width = 100% height = 350/></iframe>

## Summary

Approximating block building censorship from the distribution of Tornado Cash withdrawals, we find that the network's censorship resistance comes from the following sources:
- 79% of censorship resistance comes from PBS
- 56% from Titan builder (71% of PBS blocks)
- 23% from other MEV-Boost builders (29% of PBS blocks)
- 21% of censorship resistance comes from local block building
- 8% from untagged proposers building blocks locally (40% of local block building)
- 7% from `min-bid` usage (33% of local block building)
- 6% from reversions to local block building for indeterminate reasons (27% of local block building)

We believe that these sources will likely all trend down in time. As the gap closes between traditional and decentralized finance, non-atomic MEV will grow and cause beaverbuild, rsync-builder, and beelder to build a greater share of blocks (all of whom censor). Further, as MEV strategies continue to evolve and Ethereum grows in popularity, block values should trend up causing a decrease in `min-bid` reversions for any given configuration. Finally, new decentralized entrants to the staking ecosystem are rare, with most capital flowing into already established enties.

The proposed solution to censorship resistance is to add complexity to the protocol by adding support for [inclusion lists](https://ethereum-magicians.org/t/eip-7547-inclusion-lists/17474). However, a simpler and faster solution could be to change the MEV-Boost default to make `min-bid` opt-out. If the common belief is that defaults are sticky and enabling inclusion lists by default will cause adoption to stay high, then we should be able to extend that logic to `min-bid`.

## Open Questions
- How often do OFAC non-compliant transactions make a difference and cause non-censoring builders to win blocks?
- Empirically, how expensive are `min-bid` reversions? How do final block values for these locally built blocks compare to MEV bid values?
- Is there support for changing the [`min-bid` default](https://github.com/flashbots/mev-boost/blob/d263722153bf8938bcce4d2de08aa1383b4a6277/cli/main.go#L38) in MEV-Boost to make censorship resistance opt-out instead of opt-in? What value should `defaultRelayMinBidEth` be set to?