{"id":5045,"date":"2023-09-01T05:29:54","date_gmt":"2023-09-01T05:29:54","guid":{"rendered":"https:\/\/prosfunds.com\/markets\/crypto\/major-ethereum-staking-providers-promise-not-to-own-more-than-22-of-validators\/"},"modified":"2023-09-01T05:29:55","modified_gmt":"2023-09-01T05:29:55","slug":"major-ethereum-staking-providers-promise-not-to-own-more-than-22-of-validators","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=5045","title":{"rendered":"Major Ethereum Staking Providers Promise Not to Own More Than 22% of Validators"},"content":{"rendered":"
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In an effort to maintain the decentralized nature of the\u00a0Ethereum (ETH)\u00a0network, several prominent liquid staking providers have implemented or are in the process of implementing a self-limit rule.\u00a0<\/p>\n

The rule ensures that these providers will not own more than 22% of the Ethereum staking market, which could help address concerns over the growing centralization of Ethereum staking.<\/p>\n

Rocket Pool<\/strong>,\u00a0StakeWise<\/strong>,\u00a0Stader Labs<\/strong>,\u00a0Diva Staking<\/strong>, and\u00a0Puffer Finance<\/strong>\u00a0are some of the staking platforms that have already committed to the self-limit, Ethereum core developer Superphiz said in a recent tweet.\u00a0<\/p>\n

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“This is how our chain will be successful: Coordination above greed. Cooperation instead of winner-take-all.”<\/p>\n<\/blockquote>\n

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The commitment to maintaining a balanced distribution of validators within the Ethereum network can be considered a positive step toward reducing the risk of centralized control.<\/p>\n

The decision to set the self-limit at 22% was based on the requirement that 66% of validators need to agree on the state of Ethereum for finality to be achieved.\u00a0<\/p>\n

Keeping the limit below 22% ensures that at least four major entities must collude to potentially jeopardize the finalization process, which is crucial for maintaining trust and preventing transactions from being altered within the blockchain.<\/p>\n

Superphiz initially proposed the idea in May 2022, asking staking pools to prioritize the health of the Ethereum chain over their own profits.\u00a0<\/p>\n

Lido Finance Rejects Self-Limit Rule<\/h2>\n

The largest Ethereum liquid staking provider,\u00a0Lido Finance<\/strong>, has decided not to commit to the self-limit rule.<\/p>\n

Back in June, the project put forward a proposal to impose a limit on Lido\u2019s maximum stake.<\/p>\n

However, less than one half of one percent of the votes cast were in favor of the self-limit rule.\u00a0<\/p>\n

On the other hand, those holding more than 99% of Lido\u2019s governance tokens, LDO, voted for the protocol to not hold back on its growth.<\/p>\n

Lido Finance currently dominates the Ethereum staking market, accounting for 32.4% of all staked Ether.\u00a0<\/p>\n

Coinbase<\/strong>, the second-largest staking provider, holds only an 8.7% market share, according to data from Dune Analytics.<\/p>\n

While some argue that self-limiting staking providers are not necessary for the alignment of Ethereum, others emphasize the need for a more balanced distribution of validators within the network.<\/p>\n

Meanwhile, recent\u00a0data from Dune Analytics reveals\u00a0that over 22% of Ethereum’s supply is currently staked on the network, with the total number of Ether just below 26.3 million.\u00a0<\/p>\n

The increase in staked ETH has also led to a rise in the number of validators, which has surpassed 821,600 at the time of writing.\u00a0<\/p>\n

Since late 2020, there has been a steady increase in the volume of ETH staked on the network, despite concerns raised during the Ethereum network’s Shanghai upgrade, which allowed the withdrawal of staked ETH.<\/p>\n

Notably, the growth in staked ETH\u00a0has been substantial\u00a0since early May, with over 7 million additional ETH being staked and an increase of nearly 230,000 validators.\u00a0<\/p>\n<\/p><\/div>\n