Unchained Given the Sanctions on Tornado Cash, Is Ethereum Censorship Resistant? - Ep. 390
Aug 30, 2022
Drew Hinkes, a partner at KNL Gates and crypto law expert, teams up with Martin Koppelman, co-founder of Gnosis, to explore the complexities of Ethereum amidst sanctions on Tornado Cash. They discuss the unclear legalities of decentralized finance, the impact of proof-of-stake on censorship resistance, and the behavior shifts of miners. The duo also delves into entities involved in staking, the liabilities of validators, and the role of Flashbots in potential censorship. Expect insights on how these challenges affect Ethereum's decentralization and regulatory compliance.
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OFAC Sanctions and Smart Contracts
- OFAC sanctions prevent US persons from transacting with listed entities, blocking their assets.
- This framework, designed for traditional finance, presents challenges when applied to autonomous smart contracts like Tornado Cash.
Miner Reaction to Sanctions
- Some Ethereum miners have changed their behavior by excluding transactions involving sanctioned addresses.
- This pre-merge reaction highlights the uncertainty and challenges posed by the sanctions.
Censorship Resistance: PoS vs. PoW
- Proof-of-stake systems may offer greater censorship resistance than proof-of-work due to potentially higher participation.
- More individuals can run validators at home in proof of stake vs. proof of work.