I was browsing Reddit over the weekend when I came across two threads: One on r/buttcoin poking fun at Aave’s official front-end blocking addresses and one on r/ethereum from a user saying he created a “mirror” user interface to bypass this. Meanwhile, there's a full-blown debate on Twitter about what exactly a company’s obligation is. Should front-ends block any and all addresses that may have ever interacted with a Tornado Cash address? Or should they be more specific, blocking only transactions that can be directly tied to sanctioned addresses? And while we know that the Tornado Cash and its developers’ GitHub accounts were suspended and at least one developer was arrested, are the sanctions having any effect on Tornado Cash itself? Let’s answer that last question first. I was curious about what the effect the sanctions had on the mixer’s usage, and so I asked the good folks over at Nansen.ai. Between July 31 and Aug. 6 (i.e. pre-sanction), Tornado’s users sent about 26,000 ETH into the mixer and took about 25,000 ETH out, according to data from Nansen. Between Aug. 7 and Aug. 13, users sent in about 11,000 ETH (so this figure went down week-over-week) and sent out … 49,852 ETH. Tornado was sanctioned on Aug. 8, meaning the week-over-week figure nearly doubled. And it’s not that Aug. 7 (the night before the sanctions were announced) was particularly busy: According to Nansen, the inflow amounted to 2,738 ETH, and the outflow was about 1,400 ETH, so not a lot (relatively speaking). The outflow on Aug. 8 was 13,800, a full order of magnitude greater than the day before. It only gets stranger. Between Sunday and 20:00 UTC on Monday, the outflow topped 15,000 ETH. A single (new) wallet alone accounted for around 9,500 ETH, with someone withdrawing about 100 ETH at a time in a series of transactions spanning about six hours on Monday. And again, this is happening while DeFi front-ends are blocking addresses, although several loosened some of the blocks later on. This kind of goes to the heart of what’s happening in this whole ecosystem. The argument is that Tornado Cash is a protocol, one whose developers cannot control and which is able to operate autonomously. While U.S.-based entities, or entities doing business in the U.S., can and should make every effort to avoid engaging with Tornado Cash addresses, it doesn’t seem like anyone can easily force everyone to stop engaging with Tornado Cash now. By the same token, those who really cannot access Tornado Cash include people in the U.S. who used Tornado prior to last week for legitimate purposes. Their funds are stuck, possibly forever, unless the Treasury allows them to make withdrawals. Continue reading here... | 