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Blocknative discontinued its MEV-boost relayer service on Ethereum last week. While other relayers do remain, a large majority of Ethereum transactions are now handled by just four entities.

Relayers are responsible for bridging transactions between block builders and proposers. Without relayers, the network would face delays in transaction confirmations, reduced efficiency and potential bottlenecks, disrupting the smooth processing of transactions.

This development not only raises centralization concerns, but also underscores one of Ethereums central obstacles post-Merge: Relayers are providing costly services without compensation.

Blockworks: Some funding approaches would solicit community donations to reward relayers while keeping the service free. Why didnt you buy into these sorts of funding models?

Cutler: Were a US-based entity, and that means OFAC SDN is a fact of life for us. We work very hard to be ecosystem aligned, and there are a lot of hard line stances as it relates to OFAC SDN compliance. A number of the public goods funding approaches that were being discussed for relays explicitly carved out relays that were OFAC SDN compliant, and I had some in-depth conversations with [Ethereum Foundation] core devs who basically felt that this was a black and white issue.

By the way, each infraction of OFAC SDN is up to a $30 million fine and up to 30 years in jail, right? And each transaction can be considered an infraction. So its like infinite liability. We were put in a sort of a rock and a hard place situation where we couldnt satisfy both.

Blockworks: Were you told OFAC compliance would keep you from receiving funds from community relayer funds that are currently in the works?

Cutler: While this was a topic of active discussion, specifically we never got that far. I think from our perspective this is really not about covering our costs. I mean, certainly the costs are substantial, but you know were trying to build a business here. And so just keeping the lights on and maybe not even paying for engineer salaries doesnt really cut it. Were trying to drive growth, right?

Blockworks: One argument made against more baked-in revenue creation for relays is that charging fees creates a slippery slope where fees increase and users find ways to circumvent relays. What would you say to this?

Cutler: There is no other part of core Ethereum infrastructure which is really funded as a public good, maybe other than consensus clients, and theyre funded pretty heavily. So why do we pass the hat for something which is operationally required?

I was always an advocate for what I call missed slot insurance. Theres many examples of relays, including Blocknative, making staking pools pull due to missed slots. My answer was there should be a hard fee with a hard benefit. The hard fee is youre gonna pay into an insurance pool, and in the event where the relay network doesnt do its job, you can expect missed slot insurance. OK, conversely, if youre using a relay which is not part of the structure, you cannot expect insurance, but this is the bargain.

Really what the network wants from the relay network is not competition. It wants utility. I flip on the light switch, and the lights come on, and I sort of understand that theres a whole set of people who might be involved in delivering the power, but I dont want to think about any of that. I dont want to hear that, like, the oil came out of the ground in Bahrain and then got put on a boat that got caught up in the Suez Canal, and you gotta call the boat company. Youre like, no, I just want the lights to go on, right? Youre receiving this massive benefit from our operations, and there should be some sort of fee structure thats associated with it.

Blockworks: To zoom out for a second, why do relayers matter for Ethereum and the worldview its trying to advance?

Cutler: The whole idea is were building the foundation of the next economy thats fundamentally more equitable than the existing system, and maybe its inevitable we recreate it, right? Thats something that is concerning to me.

At the relayer network, we now have four entities two in the US, two in Europe that relay 93% of all the blocks on Ethereum. Theres no explicit economic incentive, therefore there are implicit economic incentives that are opaque. There are all sorts of economic incentives to do things like colocation and theres all sorts of backroom deals that are possible and may even be happening right now. The network is much more centralized than folks realize and is on a trend to become more centralized. Its going in the wrong direction, and hey, Blocknative exiting, we can decide if this is a good or a bad thing or if its a non event, but theres no question its now more centralized this week than it was last week.

This interview has been edited for brevity and clarity.

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Ethereum is 'much more centralized than folks realize': Blocknative's Matt Cutler - Blockworks