Following the successful transition of ETH to the POS network, the issue of centralization has risen. This transition solves the global issue of energy consumption. However, would ETH lose its decentralization?

Will Ethereum Lose Its Decentralization?

Big companies have accounted for the largest population of validators on the Ethereum network.

Co-founder of Gnosis, Martin Koppelman, tweeted that 420 out of 1000 blocks were built by centralized networks, Lido and Coinbase.

He was disappointed by the top seven holders holding the largest validators’ percentage. Lido accounted for 27.50% of the stake, while Coinbase controlled 14.50. The remaining percentage was shared significantly amongst the others.

Martin further went on to dissuade traders from thinking Bitcoin was any different. He stated that top four centralized entities with the highest percentage were running the Bitcoin mining pool.

Statistical data on Dune regarding both Lido and Coinbase confirmed they are the largest validators on the network. Lido with a percentage of 30.1 and 4.16million ETH, followed closely by Coinbase with 14.5% and 2 million ETH.

This statistic questions the whole concept of decentralization in Blockchain and Web3. With centralized companies having a majority of stakes, this would rule out the subject of decentralization. Experts also noted that with this centralized power, the concept of a “51%” system hack is not far-fetched.

Is Lido A Threat To Ethereum’s Decentralization?

So many opinions have erupted to counter these statistics. The question, “is it safe to have two centralized organizations with the most stakes” only affects Coinbase, they said.

Many defended Lido as a DAO with various entities and not a single central power. “Lido isn’t a single node operator, but 22. I want more decentralization, but presenting them as a single entity is wrong,” one said.

However, another did not support this logic and called out people for claiming Ethereum was becoming more centralized when they failed to be validators. “You cannot claim that you care about decentralization but act as if it was someone else’s responsibility.”

Many comments were thrown into the loop, redirecting this centralization to Coinbase, not Lido. “Coinbase is the issue; Lido Finance is not one,” he explained,” Lido has 28 independent and different node operators running the infrastructure, among which is Kiln Finance.”

Another speculated that this was always going to happen; There’s an incentive to centralize. The Ethereum Network transitioned to POS to solve the environmental goal. Whereas this transition removed what made ETH different from other chains.

No Comments.