Why Ethereum Needs Fairness Mechanisms that Do Not Depend on Participant Altruism

TL;DR

Ethereum's decentralization and censorship resistance are compromised by proposer behavior, with very few acting altruistically; thus, fairness mechanisms must incorporate incentives or penalties beyond relying on altruism.

Contribution

This paper empirically analyzes proposer behavior on Ethereum, revealing that altruistic proposers are insufficient to uphold decentralization and proposing the need for incentive-based fairness mechanisms.

Findings

91% of proposers delegate to centralized services

6.1% of proposers interact with external services without altruism

Less than 1.4% of proposers act in line with Ethereum's ideals

Abstract

Ethereum's ideals of decentralization and censorship resistance are undermined in practice, motivating ongoing efforts to reestablish these properties. Existing proposals for fairness mechanisms depend on the assumption that a sufficient fraction of block proposers adhere to Ethereum's protocols as intended. We refer to such proposers as altruistic, as this behavior may come at the cost of reduced revenue. Prior analyses indicate that a consistent share of 91 percent of proposers delegate block construction to centralized services, effectively signing externally constructed blocks blindly, and are thus not considered altruistic. To assess whether the remaining 9 percent of proposers genuinely exhibit altruistic behavior, we conducted an empirical analysis and found that an additional 6.1 percent also interact with such external services. Further, we found that less than 1.4 percent of proposers consistently acted in accordance with Ethereum's decentralization and censorship resistance objectives. These findings suggest that relying solely on the mere presence of altruistic proposers is insufficient to ensure that proposed fairness mechanisms reestablish Ethereum's ideals, highlighting the need for additional incentive- or penalty-based mechanisms.