EIP 7805 Upgrade Introduced to Combat Censorship Issues on Ethereum

• EIP 7805 introduces enforced inclusion lists to prevent transaction censorship in Ethereum block production.
• Two entities currently control 95% of Ethereum blocks, raising centralization and censorship concerns.
• The upgrade shifts power from block builders to validators, enhancing Ethereum’s decentralization.

The second largest blockchain, Ethereum ($ETH), is facing concern over over centralization in block production, where two block producers control 95% of blocks. This centralization could result in probable transaction censorship utilizing sophisticated techniques in Maximal Extractable Value (MEV). The proposed Ethereum improvement proposal (EIP) 7805 aims to eliminate this problem and improve the blockchain’s censorship resistance.

Centralization in Block Production and MEV Concerns

Block production on Ethereum has become significantly centralized, with two entities, Beaverbuild and Titanbuild, accounting for validating most blocks. This high level of centralization poses risks to the blockchain’s decentralization and inclusivity. MEV, which allows network participants to manipulate Ethereum’s mempool and prioritize certain transactions for personal gain, exacerbates these concerns.

Jarrod Watts, Developer Relations (DevRel) at Abstract Chain, highlighted these risks in a post on X. He pointed out that this centralization makes Ethereum vulnerable to censorship, as powerful block builders can manipulate transaction inclusion. He noted this undermines the integrity of Ethereum’s validation process and compromises its decentralization.

EIP 7805: Enhancing Ethereum’s Decentralization

EIP 7805 introduces the concept of Fork-choice Enforced Inclusion Lists (FOCIL) to mitigate the risks posed by centralization. Under this upgrade, 16 validators will be selected before each block as an “inclusion list committee members.” These committee members will compile lists of transactions from the mempool to include in the subsequent block.

Block builders will include these transactions, ensuring fair representation of mempool activities. Validators can only vote for blocks that contain all transactions from the inclusion lists. Blocks that fail to include these transactions will be considered invalid and excluded from the blockchain. This mechanism redistributes power from block builders to validators, addressing the imbalance caused by MEV strategies.

EIP 7805 may not eliminate centralization issues in block production entirely, but it aims to reduce the likelihood of censorship and enhance transparency and inclusivity in Ethereum’s transaction validation process.

EIP 7805: Broader Ethereum Vision

EIP-7805 is part of a larger vision of Ethereum proposed by Justin Drake, a veteran of the Ethereum Foundation. This effort, known as the “Beam Chain,” introduces nine major changes to the blockchain’s technical architecture and transaction handling mechanisms.

The Ethereum community has been optimistic about such changes to its platform stating it would benefit the market. However, Ether’s ($ETH) recent market performance shows that the network faces many obstacles. On 21st November, $ETH/BTC ratio was the lowest since March 2021, at 0.03196. However, EIP 7805 is among others that try to enhance Ethereum’s robustness and decentralization.