User blocking is disruptive.
GenesisAria
Blocking, which causes the blocked user or the user that blocks you to become completely invisible to each party is highly socially disruptive.
For example if you are in a group of people having a conversation, and one petty individual has you blocked, now you are missing a piece of the conversation, plus while trying to talk you or they may talk over eachother, which makes it difficult for everyone else to follow.
Just as if you were in the same room where 2 others blocked eachother, you now have to deal with them standing inside eachother, talking over eachother and so on, resulting in disrupted interaction.
This also opens avenues for contention where people start opening bad-mouthing the blocked person because of whatever reasons, forcing everyone else to listen to the toxicity. I see these kinds of things a lot, as people often abuse the block system because someone looked at them funny or used an avatar they didn't like (instead of hiding their avatar), or said something they disagreed with once, or because their buddies gossiped about said person.
People arguing/fighting over such things once in a while is not as bad as hindering peoples' ability to interact with entire groups of people because one single individual decides to block them -- that gives too much power to one individual to damage another's social circle. --
There needs to be a rework of the blocking system, perhaps showing a placeholder and some kind of indicator that they are talking, even if the username is not shown (perhaps replacing their username with "Blocked User").
Ideas for additions that could replace the use-cases: add an option to hide username, and force them to see you as a robot or placeholder.
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GenesisAria
That said, having thorough systems for hiding avatars and muting, i personally find having a full block is counterproductive in a VR social environment. That or have full block temporary and reset every time you restart vrchat, like the volume does, making people rely on avatar hiding and muting etc for long term blocking solutions, to reduce social detriment.