At least five liquid stake providers for Ethereum have committed to or are working towards a self-imposed rule of not owning more than 22% of the Ethereum stake market, seen as a move to ensure the decentralization of the Ethereum network.
ETH Stake Rates
According to Ethereum core developer Superphiz, the current stakeholders that have committed or are working towards the self-imposed rule include Rocket Pool, StakeWise, Stader Labs, and Diva Staking.
Another liquid staking service, Puffer Finance, has also announced its commitment to self-imposed limitations. The proposal aims to address concerns about the increasing centralization of Ethereum staking.
Superphiz explained why the 22% limit was suggested, stating that since 66% of validators need to agree on the state of Ethereum, setting the limit below 22% means that at least four major organizations would have to collaborate for the chain to finalize.
Finality is the point at which transactions in a blockchain are considered immutable, guaranteeing that transactions within a so-called block cannot be altered.
This idea was proposed by Superphiz in May 2022 when questioning whether a stake pool would be willing to prioritize the chain’s health over its own profit. Interestingly, the largest Ethereum liquid stake provider, Lido Finance, voted overwhelmingly in favor of not self-imposing limitations with a majority of 99.81% in June.
Superphiz stated in a post on August 31:
They expressed their intentions to control the majority of validators on the beacon chain.
According to data from Dune Analytics, Lido currently dominates the Ethereum stake market, accounting for 32.4% of all staked ETH, while the next asset, Coinbase, only represents 8.7% of the market.
Who Is Right in the Ethereum Community?
An industry expert named “Mippo” stated on August 31 that the self-imposed limitation proposal has nothing to do with the principle of “Ethereum alignment,” which seems to enable reliable neutrality and permissionless innovation in Ethereum.
Mippo claimed that those trying to force the proposal wouldn’t bother if they were in Lido’s position and used the following words:
Here, everyone is doing what is economically selfish and rational.
Another cryptocurrency observer stated that people in the Ethereum community should not shame user-friendly solutions as greedy products. However, others were more cautious against the potential centralization issues, describing Lido’s market dominance as “disgusting and selfish.”
