In a spirited attempt to preserve the decentralized ethos of the Ethereum (ETH) ecosystem, several leading liquid staking providers are taking a self-limiting stance. With an intent to own no more than 22% of the Ethereum staking market, these behemoths aim to prevent the increasing centralization of Ethereum staking.
Prominent platforms such as Rocket Pool, StakeWise, Stader Labs, Puffer Finance, and Diva Staking have already pledged commitment towards this cause. This move aligns with Ethereum’s core developer Superphiz’s proposition that the success of the chain lies in “Coordination over greed. Cooperation instead of winner-take-all”.
The choice of the 22% self-limit stems from the necessity that 66% of validators must concur on Ethereum’s state to achieve finality. Maintaining the limit under 22% ensures a minimum of four significant entities would be needed to derail the finalization process potentially, a critical measure for ensuring trust and searing transaction immutability onto the blockchain.
However, not all agree with the self-limiting approach. Lido Finance, the largest Ethereum liquid staking provider, decided to bypass this self-limit rule. Despite proposing a limit on Lido’s maximum stake, the rule garnered less than a minimal percentage of votes in favor, with over 99% of Lido’s governance tokens, LDO, opting for unrestricted growth. Positioned dominantly in the Ethereum staking market, Lido Finance is at 32.4%, dwarfing Coinbase at an 8.7% market share.
Another fact contributing to the spectacle—is the Ethereum network’s increasing attraction for staking. Beyond 22% of Ethereum’s supply is now committed to the network, with just under 26.3 million Ether at play. The ascendance in staked ETH has catalyzed a rise in validator numbers, topping 821,600 currently. A consistent uptick in the quantity of staked ETH on the network has been noted since late 2020, with gains intensifying since May. Over 7 million additional ETH staked and a surge of nearly 230,000 validators illustrate the trend.
In sum, the situation reflects a dichotomous ambiance within the Ethereum staking landscape. On one side, there’s an initiative to limit staking power, ensuring a balanced distribution of validators and guarding against centralization. On the other hand, entities like Lido Finance advocate for growth, dismissing the need for self-limitation, indicating eating the Ethereum staking pie shouldn’t be a game of restraint, but one of voracious ambition.
Source: Cryptonews
