Blocknative’s Exit Highlights Concerns Over Centralization and Fee Structure
Blocknative’s Exit Highlights Concerns Over Centralization and Fee Structure
Ethereum network revenue surged to $10 billion in seven years, but the network’s decentralization has come down to only four relayers.
This poses a threat to the platform’s functioning.
Blocknative, a relayer for the Ethereum (CRYPTO: ETH) platform, announced its exit from the network and discontinuation of its MEV-boost relay due to being economically unviable. The industry is heard saying that Blocknative left the ecosystem as its dedicated share was only around 9.64%. The discontinuation was scheduled for Sep. 27, 2023, while Data API will continue to function normally for data downloads until Oct. 4, 2023.
With this, the relayer network has narrowed to just four active players operating with no fees for their services. This has led to rising concerns among investors about highly centralized operations.
The cause behind the Ethereum network remaining with only four relayers started with Ethereum’s transition to the Proof-of-Stake mechanism which made the roles of block proposer and block building as two distinct processes. This led to the well-resourced block builders running their own relays.
All Ethereum transactions use MEV-boost relays. Data from mevboost.pics indicate that 93% of Ethereum blocks created in the past 14 days have made use of MEV-boost. At the time of compilation, relayscan.io data shows five entities are responsible for relaying 98% of the MEV-boosted transactions.
Relayers play an important role in settling transactions on any blockchain network. Tasks include timely and efficient processing, bridging the gap between users and blockchain through the batching, and broadcasting transactions.
Experts believe that a relayer fee mechanism should be activated and the fees should have consensus between the remaining relaying entities and the Ethereum community. In case it continues with a no-fee structure for relayers, worries of high centralization in the Ethereum network will rise.
A recent Flashbots (Research and development organization) proposal targets to forming a PBS Guild for gathering Ethereum neighborhood donations, partly to reward relayers.
Produced in association with Benzinga
