Analysts from On-chain have sounded the alarm that Ethereum, the world’s most popular blockchain platform, may be already under the control of the United States government. Willy Woo, an analyst from On-chain, has tweeted that most applications built on the second largest blockchain are centralized, and all transactions are subject to censorship.

The liquidity metric for the decentralised finance (DeFi) applications is increasing, with 69% of Ethereum blocks being compliant with the US Treasury’s Office of Foreign Assets Control (OFAC), as of three months after the September update. The compliance is related to the Maximum Extractable Value (MEV) – Relays, where the production of Ethereum blocks is subcontracted.

The centralization of Ethereum is a major concern for the cryptocurrency community, as it was found that 52% of Ethereum nodes are hosted on Amazon Web Services (AWS), a powerful and prominent infrastructure provider. This has caused alarm, as only two entities have control of over 50% of the Ethereum network – Lido and Coinbase, which hold 30.24% and 14.74% respectively.

Willy Woo has also analysed the liquidity ratio for two Ethereum dApps, MakerDAO and Compound. It was found that MakerDAO is still decentralized, but Compound is becoming increasingly centralized. This liquidity ratio can be used to determine that it is 10x harder to exchange DAI (MakerDAO’s stablecoin) for Ethereum than for USDC.

The trend towards centralization is becoming more apparent, due to recent market turmoil, such as the FTX crash. Crypto developers and users will need to be aware of the risks of losing decentralization as more centralized entities gain in importance.