Milestone raises concerns about centralization risks as top staking providers control nearly half of staked ETH, impacting governance and community trust.
The Ethereum 2.0 deposit contract has recently surpassed 50 million ETH in value, marking a significant milestone for the Ethereum network. However, this achievement comes with growing concerns about centralization within the staking ecosystem.
Nearly half of the total staked ETH is controlled by the top 11 staking providers. The top four providers—Binance, Kraken, Coinbase, and Lido—collectively hold 36% of the total staked ETH. Lido alone manages a substantial 24% of the total staked ETH. This concentration of staked ETH among a few entities raises significant concerns about the potential risks associated with centralization.
The centralization of staked ETH poses risks to the governance of the Ethereum network. A small group of entities having significant control over staking can lead to governance manipulation. For instance, Lido's governance is significantly influenced by a small group, which undermines the principles of decentralization that Ethereum aims to uphold.
The concentration of staked ETH and the potential for governance manipulation could lead to regulatory scrutiny. This scrutiny may impact the broader Ethereum community, as regulators may take a closer look at the centralization trends within the network. The Ethereum community values decentralization, and any movement towards centralization could undermine the trust and principles that the network is built upon.
