Saturday, May 25, 2024

Major Ethereum Staking Providers Promise Not to Own More Than 22% of Validators

Several well-known liquid staking providers have implemented or are in the process of adopting a self-limit rule in an effort to preserve the decentralized nature of the Ethereum (ETH) network.

Concerns about the increasing centralization of Ethereum staking may be allayed by the rule, which guarantees that these providers will not hold more than 22% of the market.

Rocket PoolStakeWiseStader LabsDiva Staking, and Puffer Finance are some of the staking platforms that have already committed to the self-limit, Ethereum core developer Superphiz said in a recent tweet.

One step in the right direction toward lessening the danger of centralized control is the dedication to preserving an even distribution of validators across the Ethereum network.

Given that 66% of validators must concur on Ethereum’s current state in order for finality to be reached, the self-limit was set at 22%.

Maintaining confidence and preventing transactions from being altered within the blockchain are dependent on at least four large entities cooperating, which is ensured when the limit is kept below 22%.

Superphiz first put up the proposal in May 2022, requesting that staking pools put the Ethereum chain’s stability above of their own financial interests.

Lido Finance Rejects Self-Limit Rule

Lido Finance, the biggest Ethereum liquid staking service, has chosen not to adhere to the self-limit regulation.

The initiative proposed limiting Lido’s maximum shareholding back in June.

Nonetheless, the self-limit rule received less than 0.5 percent of the total votes.

Conversely, the majority of Lido’s governance token holders—LDO—voted in favor of the protocol continuing to grow.

With 32.4% of all ETH staked, Lido Finance presently holds a dominant position in the Ethereum staking industry.

Dune Analytics research indicates that Coinbase, the second-largest staking service, has a mere 8.7% market share.

While some contend that Ethereum’s alignment can function without self-limiting staking providers, others stress that the network needs a more evenly distributed pool of validators.

Recent data from Dune Analytics shows that there are currently slightly less than 26.3 million Ether in circulation overall, and that over 22% of Ethereum’s supply is staked on the network.

At the time of writing, the number of validators has topped 821,600, reflecting both the increase in staked ETH and the increase in staked ETH.

Notwithstanding worries expressed during the Ethereum network’s Shanghai upgrade, which permitted the withdrawal of staked ETH, the volume of ETH staked on the network has been steadily rising since late 2020.

Significantly, since early May, there has been a rise in the amount of ETH staked—more than 7 million extra ETH and around 230,000 more validators.

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