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Comment by CobrastanJorji | Hacker News Reader

Ignoring all the obvious jokes here about banking without regulations and throwing good money after bad, I'm interested in the technical aspect of such bans and had some trouble finding resources. The author says "blocked by DeFi protocols such as AAVE and Uniswap." What does this actually mean? I found Uniswap's FAQ on this ( https://help.uniswap.org/en/articles/6149816-address-screeni... ), but I'm not sure what it means to be a blocked address. Is it just that certain companies won't execute transactions directly with those addresses? Is the author somehow prevented from trading their ETH?

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It's the UI being blocked so far. My understanding is that they use APIs from companies like https://www.trmlabs.com/ to decide if a wallet is dirty but the algorithm right now is deeply flawed.

The website blocked his transaction but he was still able to make them go through by using direct calls

Hopefully some zealous prosecutor doesn't see his actions as defying sanctions.

He never said he was sanctioned

True, but I could envision a scenario in which someone working for the government might interpret his actions as bypassing measures put in place to enforce a sanction. Regardless of how valid or invalid it was for his account to be blocked in the first place.

Just wait until staking is merged, 67% of the pools are run by centralized companies wanting to do business in the US, and they start filtering at the transaction level, including or not in blocks based on these same dirty metrics.

Lots of people who became paper rich are going to go the other direction just as fast.

If they filter transactions, ETH will become worthless, causing the relevant stakers to lose all their money since by definition they are the ones with the most money.

Seems like the system will punish censorship as designed.

They will be the majority though, enough to choose the history of the ledger, it's more that they won't allow other validators to join the network, who could invalidate their choices. Thus, the penalties will not be applied.

This guy explains it in detail: https://www.youtube.com/watch?v=gyP0uxxB6V8

How does ETH do to stop miners from rejecting or preferring transactions for blocks today? Pretty sure there have been some interesting stories about transaction front running and other tactics to abuse the system for personal gain (which is a fundamental issue in the unregulated blockchain ecosystem)

The penalties are outside of the network. The penalties are that nobody wants to use a cryptocurrency with transaction filtering, when there are so many without it. Thus, the real-world value of the network token decreases drastically.

There are also a bunch of people sitting on the sidelines, waiting for a regulated network.

Since all of these things are basically just printed money based on the faith of the people, and since ETH is number 2, I think it will survive centralization and regulatory capture, since most of the populace could care less about these things. It just happens to be that the ethos of crypto libertarianism isn't that important to valuing the network.

Those people are free to create their own network right now.

The rules of the ETH network allow for this regulatory capture to happen as well. Decentralized governance means you may not get your way when the majority think differently.

> transaction front running

This also happens in regulated markets, but you have to be very well connected to do it. https://wwnorton.com/books/flash-boys/

Interesting point. Instead of needing to be part of the good-old-boys club, on a decentralized network, anyone can try being corrupt. Hacking works similarly.

which is why blockchain is fundamentally flawed and misaligned with civilized societies

> transaction front running

For anyone interested, see: https://www.paradigm.xyz/2020/08/ethereum-is-a-dark-forest

> If they filter transactions, ETH will become worthless

I'm not sure about that. Some hodlers of ETH might be fine with governments being able to censor transactions. In that case what will determine the price of ETH is also how much of it these people own.

It doesn't matter what some hodlers want; enough won't.

most holders will be via centralized custodial accounts that will abide by US laws

Typical implementation is money can go in, but can't come out til the sanction is lifted. Sorry bout it.

You won't find much on the technical implementation, because the sector as a rule keeps the implementation details generally under wraps. The intent is clear however. Lock as much of their financial resources in a sanctioned account as possible.

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