Ethereum Stakers Collaborate to Address Centralization Concerns

Introduction

Ethereum, one of the leading blockchain platforms, underwent a significant transition a year ago by adopting a proof of stake (POS) system. This move eliminated the need for energy-intensive calculations to maintain the network, with ethereum stakers now responsible for validating transactions. While this milestone was commendable, it also raised concerns about centralization. A relatively small group holds the majority of staked ethereum. To address this issue, five major ethereum stakers have come together and made an agreement: each will always hold less than 22 percent of all staked ethereum.

Ethereum Stakers Join Forces

Ethereum developer Superphiz broke the news about this positive development. The companies involved in this collaboration are Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance. It appears that other prominent ethereum stakers will also support this initiative. Superphiz expressed optimism about the plan, stating that cooperation and coordination are crucial for the success of the chain, emphasizing the importance of cooperation over individual greed.

“This is how our chain will be successful: coordination over greed. Cooperation instead of ‘winner takes it all’.”

Superphiz’s perspective reflects the significance of collective efforts in creating a sustainable and decentralized ethereum network. The choice of 22 percent is not arbitrary; it ensures that at least four major entities are needed to reach a consensus when 66 percent of all validators need to agree on the network’s state.

Lido Finance Chooses Self-Interest

However, even with this agreement, the centralization problem within Ethereum is not entirely resolved. The largest ethereum staker, Lido Finance, has chosen not to participate in the collaborative plan. At present, Lido represents over 32 percent of all staked ethereum. In a recent vote conducted by Lido in June, it was decided not to implement a self-imposed limit. The second-largest validator, Coinbase, holds 8.7 percent of the staked ethereum.

Some critics label Lido’s stance as “selfish and dirty.” On the other hand, supporters argue that it is a logical choice for an entity in Lido’s position. They argue that everyone acts economically and rationally in their own self-interest. By deciding not to limit their holdings, Lido has prioritized their own interests over the collective goal of decentralization.

Conclusion

The recent collaboration among major ethereum stakers is a significant step in addressing the centralization concerns within the Ethereum network. By committing to hold less than 22 percent of staked ethereum individually, these entities aim to promote decentralization and avoid the concentration of power. However, with Lido Finance opting out of this agreement, the centralization issue persists. It remains to be seen how ethereum and its community will navigate this challenge and work towards a more decentralized future.