Ethereum Merge: “15 Days Before and After” Data Analysis, Сensorship in Ethereum Blockchain

On September 15, the Ethereum blockchain switched to a POS system, which, according to the expectations of network users, should have significantly reduced the price of gas, and increased the speed of transaction verification and the speed of block creation.

In this article, I will analyze what actually happened, taking as a basis 15 days before and 15 days after the transition.

Has Gas Become Cheaper?

The main expectation of network users was a decrease in gas prices after the merge, but in fact, this figure decreased slightly, for several days after the transition.

The gas price was lower than the average for the previous months, but already on the 20th of September, the gas price returned to the average value of 19 Gwei.

This is clearly seen in the chart below.

Ethereum average gas price per day in July-August 2022 (source: app.analytex.today)

At the same time, against the backdrop of a general downward trend in the cost of gas in general, the merge went almost unnoticed. In August, the average cost of gas was 18.31 Gwei. In September, the figure was 17.12%.

Ethereum average gas price per day in July-August 2022 (source: app.analytex.today)

In order for the gas price to fall, Ethereum developers need to continue working on increasing network bandwidth. However, they still have not updated their roadmap, so it is not known if the gas price will become significantly lower than the current one.

What Got Better?

The most notable change in the charts since the merge has been the number of blocks created per day. This figure has grown significantly, by about 20%. It is logical that the time of transactions verifying in the block has decreased. This is clearly seen in the chart below.

Eth blocks per day in September 2022 (source: app.analytex.today)

What About Transactions?

There is a slight increase in the number of transactions on the Ethereum network on the day of the merger on September 15th; this figure has grown 2 days after with a peak of 1,322,077 transactions on the 17th of September. Then the indicators returned to the average values.

eth transactions peak, September 2022 (source: app.analytex.today)

Where Is the Problem?

Now there is an acute threat of censorship in the Ethereum network after the merger.

The problem is that after the merge, part of the ether is in 6 decentralized pools - these are StakeWise, Rocket Pool, Lido, Ankr, stakefish, and StaFi, and the other, most of it, is on such centralized platforms as Binance.

Labrys CEO, in a recent interview, said that already more than 51% of Ethereum validators comply with OFAC sanctions, which puts the entire blockchain at risk of censorship.

Many validators and network nodes are geographically located in the United States. Given all these facts, centralization has grown almost 10 times over the past month.

Another problem is the syndicates of MEV (Maximal extractable value) validators that have replaced the so-called flash bots. Moreover, their organization no longer requires huge financial costs and infrastructure.

MEV validators request blocks with an optimized order of transactions from relays. Today, more than 58% of blocks in Ethereum use the MEV bots, which are 100% compliant with OFAC sanctions. Most relays now refuse to transmit blocks containing transactions from ineligible addresses.

Vitalik Buterin spoke out sharply against censorship on the network and called for the shares of its supporters to be burned. But even if the network does not fall under censorship completely, the speed of transaction verification will most likely fall, after which additional costs will arise.

You will have to pay extra for priority, with all the ensuing consequences.

The problem of censorship of the Ethereum blockchain can lead to a disaster for the world of decentralized finance, and the transition to POS is increasingly like a 10 billion dollar pyramid that can collapse at any moment, but we will discuss this in the next article, stay tuned.

Photo by Chris Linnett on Unsplash