This important point that reinforces the centralization of Ethereum that you must understand

BitMEX also highlighted the need for a complete redevelopment of Flashbots or a similar system to mitigate unforeseen complications in a post-merger era.

After the completion of The Merge upgrade, Ethereum (ETH) switched to a proof-of-stake (PoS) consensus mechanism, helping the blockchain become energy efficient and secure. However, the mining data reveals Ethereum’s heavy reliance on Flashbots – a single server – for block building, raising concerns about a single point of failure for the ecosystem.

Flashbots is a centralized entity dedicated to the transparent and efficient mining of maximum extractable value (MEV), which acts as a relay for the delivery of Ethereum blocks. Data from shows that there are six active relays currently issuing at least one block of Ethereum, namely Flashbots, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, Blocknative and Eden.

As shown above, 82.77% of all relay blocks were built by Flashbots alone, which strongly contributes to the centralization of Ethereum.

A related BitMEX blog pointed out the need for a complete redevelopment of Flashbots or a similar system to mitigate unforeseen complications in a post-merger era. However, Flashbots proponents claim that the system is a Decentralized Autonomous Organization (DAO) and will eventually become decentralized itself.

Complementing data on Flashbot dominance, an analysis by Santiment indicates that 46.15% of Ethereum PoS nodes are controlled by just two addresses.

According to our #Ethereum Post Merge Inflation Dashboard, 46.15% of #proofofstake nodes for storing data, processing transactions, and adding new #blockchain blocks can be attributed to just two addresses. This strong domination by these addresses should be monitored.

“Since the successful Merger, the majority of blocks – somewhere around 40% or more – have been built by two addresses owned by Lido and Coinbase. It is not ideal to see more than 40% of blocks being settled by two providers, especially one that is a centralized service provider (Coinbase),” explained Ryan Rasmussen, crypto research analyst at Bitwise.

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Thomas E.
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