The recent buzz in the crypto universe is centered around a blog post by Ethereum’s co-founder Vitalik Buterin. He shed light on significant changes potentially coming to Ethereum’s staking system. Buterin assessed several protocols in detail including ERC-4337, ZK-EVMs, liquid staking, private mempools, and code precompiles. On one hand, he expressed a stronger leaning towards incorporating particular protocols such as ERC-4337, while holding a reserved standpoint on others, like private mempools.
Buterin’s focus wasn’t contained within the technicalities of the protocols though. He voiced concerns regarding the proliferation of power among Ethereum’s liquid staking providers. Echoing the sentiments, he pinpointed Lido, a significant liquid staking provider that currently grasps over 32% of the total staked ether on Ethereum. The need for robust safety measures and decentralization of liquid staking became pertinent, as these could potentially hurl the Ethereum ecosystem to a more resilient front.
Diving further into decentralization debates, Buterin proposed an exploration of additional mechanisms that might fortify the safety and decentralization of liquid staking. He proffered measures such as revising RocketPool’s existing procedures or bestowing enhanced governance privileges to a randomly chosen committee of minor stakeholders. Instead of merely using moral persuasion to encourage stakeholders to diversify their choice of staking providers, these moves could offer more tangible and direct solutions.
Many prominent liquid staking providers have recognized these concerns about Ethereum’s growing centralization. Providers such as Rocket Pool, StakeWise, Stader Labs, Diva Staking and Puffer Finance have committed to a self-limit rule. This rule ensures their ownership doesn’t exceed 22% of the Ethereum staking market, working towards maintaining Ethereum’s decentralized ethos.
Lido Finance, however, has chosen not to commit to the self-limit norm. Back in June, they proposed a cap on Lido’s maximum stake, which was shot down by a landslide vote against it. The considerable voting power of those holding Lido’s governance tokens, LDO, resulted in an overwhelming majority favoring unrestricted growth.
In the grand scheme, Coinbase, the world’s second-largest staking provider lays claim to only 8.7% of the market. The Ethereum ecosystem stands at a fascinating intersection, with everything having its advantages and potential caveats – it remains malleable and ever-evolving, just as the crypto universe itself.
Source: Cryptonews
