As Ethereum’s staking ecosystem evolves to include more sophisticated institutional participants, including banks, asset managers, and custodians, staking considerations extend beyond uptime and rewards to include compliance, transparency, and operational control. One of the most overlooked risks facing institutional stakers today is the use of non-compliant or opaque MEV relays.
If your validators are using MEV-Boost software, they are likely relying on third-party MEV relays to source blocks. But not all relays are created equal. Some censor transactions. Some don’t comply with U.S. sanctions lists. Others lack transparency into their operational methodologies and transaction filtering criteria.
In this post, we explore what OFAC-compliant relays are, why they matter, and how institutions can ensure their Ethereum validators are aligned with both stringent compliance mandates and optimal performance.
A Quick Primer: What Are MEV Relays?
MEV-Boost is open-source software that is now considered a standard feature of Ethereum validator operations, with over 90% of Ethereum blocks coming through MEV-Boost. It facilitates Proposer-Builder Separation (PBS), a system that separates block proposing from block building, allowing validators to outsource block construction to professional builders competing to offer the most profitable blocks.
Between those builders and your validator sits the relay, a trusted intermediary that acts as a conduit to MEV-Boost (and, hence, the proposer) and:
- Receives blocks from builders
- Validates them
- Forwards blockheaders, including bids, to MEV-Boost
This connection is facilitated by the MEV-Boost software run by your validator, which connects to one or more relays and receives their block headers. If connected to multiple relays, the validator’s MEV-Boost software can compare bids and select the block header that will provide the highest value, increasing the overall staking reward for that block.
Relays are therefore a critical link in the staking stack, and one that introduces compliance risk. It’s important for institutional participants to have transparency into their selection and operational characteristics as part of ensuring that overall validator operations meet compliance mandates.
Why OFAC Relays Matter to Institutions
For institutional validators, especially those operating in or serving the U.S., relay selection isn’t just a technical detail; it’s a potential source of regulatory exposure.
Using non-compliant MEV relays can introduce serious risks, including the unintentional inclusion of transactions involving sanctioned entities. In short, you can’t manage what you don’t see, which makes transparent, compliant relay infrastructure critical for institutions.
Figment’s Stance on OFAC Relays
At Figment, we offer relay transparency and customization to meet the needs of institutions operating under different regulatory requirements and ethical frameworks.
By default:
- Figment uses 100% OFAC compliant relays
- Relay settings are auditable
- We monitor relay behavior continuously and update configurations
The block building landscape is dynamic and evolving, and the Ethereum community is continuously evaluating improvements. This research explores various facets, including the behavior of participants in the builder market and the design of novel markets, potentially toward integrating these specialized roles directly into the Ethereum protocol in the long-term. For institutional stakers, this means that the current landscape of relays and builders is likely to transform and mature in the future.
Figment also maintains close engagement with Ethereum core development and MEV ecosystem stakeholders to ensure our relay configurations evolve as both network standards and global regulations change.
Best Practices for Validator Operators
If you’re managing validators internally or working with a third-party provider, here are five questions to ask:
- Which relays are we connected to?
- Are those relays OFAC-compliant, non-censoring, or a mix?
- Can we configure our relay preferences?
- How do relay settings impact our rewards, compliance, and uptime?
A high-performing validator that’s out of compliance, or a compliant one that’s missing out on MEV rewards, can both carry risks. Institutions need to balance both dimensions.
Looking Ahead
MEV is no longer a niche topic, it’s central to validator economics and Ethereum’s block production. As regulation continues to develop and transparency expectations rise, institutions need clarity around how their validators interact with relays.
At Figment, we help institutions navigate this complexity by providing secure infrastructure, configurable relay options, and compliance-aligned operations. We combine this technical expertise with our leading support and insights, leveraging our deep understanding of the Ethereum staking ecosystem to optimize your validators’ performance while prioritizing risk mitigation.
Choosing the right relays isn’t just about maximizing rewards, it’s about ensuring robust compliance, operational transparency, and maintaining control over your staking activities. By choosing to stake with Figment, institutions can benefit from our understanding of how different relays handle OFAC sanctions, their operational integrity, and their impact on validator performance. To explore how these insights can shape a compliant and effective Ethereum staking approach for your institution, please schedule a call with us.
