Ethereum block producers Beaverbuild and Titan Builder have produced 88.7% of blocks on the mainnet in the last two weeks. This data was announced by Ethereum Foundation researcher Toni Wahrstätter. This trend is due to the rise of special order flow (XOF), Wahrstätter noted in an October 17 X (formerly Twitter) post.

XOF is defined as a type of private transaction stream sold only by certain applications, which reduces true competition in block auctions. This creates a smaller transaction pool among block producers.

Decentralization is critical to ensuring the security of the Ethereum network. Having centralized structures control a large portion of blocks could theoretically lead to the prioritization of certain transactions, which contradicts the decentralization philosophy of blockchain technology.

However, some analysts do not see this as a major centralization problem. Bitget Research chief analyst Ryan Lee points out the “builder-proposer” distinction in Ethereum’s basic design.

According to Lee, thanks to this distinction, the recommender cannot see the content of the producer’s proposed block. That is, the recommender simply selects the most profitable block and uses it for verification. This prevents block producers from manipulating certain transactions.

While Lee states that this structure alleviates centralization concerns in the Ethereum network, he emphasizes that neither producers nor validators have full control over which transactions are included or excluded from the chain. However, some experts warn that this structure does not completely eliminate the risks of centralization.

In particular, software engineer Kishan Kumar thinks that maximal extractable value (MEV) incentives could harm Ethereum’s decentralization principle.

Kumar warned that if a miner or block producer has a high mining power check, they may reorder transactions or exclude some transactions. Such manipulations can increase the risk of centralization of the network.

Such overwhelming dominance among Ethereum block producers encourages further research into the need to increase the censorship resistance of the network. Wahrstätter notes that such centralization issues could become less of a concern with strong censorship resistance guarantees.

Ethereum is currently working on censorship resistance and research in this area continues rapidly. However, the centralization problems created by special order flows (XOF) are still among the challenges that need to be solved.

On the other hand, the increase in the number of validators joining the Ethereum network is seen as one of the positive developments in centralization. The number of Ethereum validators has increased by 30% over the past year.

Institutional adoption of cryptocurrencies is cited as an important factor behind this increase. The interest of institutional investors in the Ethereum network stands out as one of the factors that strengthen the decentralized structure of the network.

Although the concentration of block producers in Ethereum raises centralization concerns, the current structure of the network and the growing number of validators mitigate these risks. However, this highlights the importance of the network’s efforts to provide greater censorship resistance and decentralization.