Byron, your esteemed writer, is on a well deserved vacation, perhaps somewhere in a crypto paradise enjoying the perks of VAT refunds.

Meanwhile, our incredibly talented Research team will take over today's issue and share a few valuable insights with you.

Enjoy it!

Market Commentary

Happy Hump Day! For the non-Americans out there, this means it's Wednesday and there are only a couple more days left in the week. Keep going strong.

The highly anticipated Celestia token airdrop is now available to be claimed. They are rewarding 7,579 developers and 576,653 onchain addresses. The addresses are associated with active rollup users alongside OSMO and ATOM stakers as a way to capture both the user demographics that would be likely to use Celestia in the future.

For those of us in the US, I have some bad news: You will not be able to claim this airdrop. Even those who virtually “teleport” to a new city through a VPN will struggle to find their way to claim it (trust me, I tried). They really went all out to make sure there were no regulatory issues in questionable jurisdictions. I get it, but I’m sad. Thanks, Gary.

Pudgy Penguins announced that their plush toys, called Pudgy Toys, will now be available in 2,000 Walmart locations. I don’t know about you, but I find the penguins to be the cutest NFT profile picture, and the toys certainly match this aesthetic. Alongside the online world they continue to create and their growing Instagram presence, I can see this becoming a massive brand. And people do not need to know anything about crypto to experience it.

This is definitely not the story of mass adoption I was expecting to get, but this is honestly a huge step in the right direction. Now, let’s do this with applications.

– Westie

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Chart of the Day

Censorship by block builders on Ethereum has been on the rise since the beginning of H2 2023. As a reminder, the supply chain on Ethereum is as follows when validators are running MEV-Boost: A user initiates a transaction through their wallet, whereafter searchers look for extractable value by scanning through transactions located in the mempool, striving to create maximally valuable bundles of transactions. Bundles are sent to builders who, together with transactions they've aggregated on their own and from private order flow, create the most valuable combinations and turn them into blocks. These blocks are finally sent to proposers through relays. Currently, ~92% of blocks come from validators running MEV-Boost. In comparison, validators can also build blocks locally, meaning that they only use public mempool transactions to create a block.

Since the beginning of August, censorship by builders jumped from ~40% to ~70%. Five of the six largest builders currently comply with OFAC sanctions, i.e., they mainly censor transactions touching Tornado Cash. The censoring is done by simply omitting certain transactions. It’s important to note that the other layers within the supply chain, those being validators and relays, can also censor transactions. The former group does this by selectively including or excluding transactions in blocks or by refusing to attest to other specific validators. Meanwhile, the latter group can filter blocks based on specific rules. Solutions for censorship on Ethereum are currently being worked on, with two of the main possible solutions including inclusion lists and encrypted mempools.

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