From verified sources, it has been revealed that Lido, the decentralized liquid staking protocol for Ethereum, currently controls 30% of Ethereum’s proof-of-stake (PoS) stake through 30 different entities. This information has raised questions and concerns about centralization and the potential impact on the Ethereum network.
Reminder to Proof-of-Work experts:
Foundry controls 40% of Bitcoin PoW hashrate and all its blocks are created by the same entity (the pool operator).
Lido controls 30% of Ethereum PoS stake and its blocks are created by 30 separate entities. None control more than 1.5% each. pic.twitter.com/gafdKQ4gwn
— Eric Wall | Taproot Wizard #2 (@ercwl) February 14, 2023
Lido is a decentralized finance (DeFi) platform that enables users to stake their Ethereum tokens and earn rewards in liquid form. This means that users can continue to trade and use their staked tokens while earning staking rewards. The protocol is a popular choice for users who want to participate in Ethereum’s PoS consensus mechanism but do not have the technical knowledge or resources to run a validator node themselves.
Lido, which launched in 2020, has quickly become one of the most popular liquid staking protocols for Ethereum. According to data from DefiLlama, Lido currently has over $10 billion worth of Ethereum staked on its platform. This represents a significant portion of Ethereum’s total PoS stake, which is currently valued at over $30 billion.
What has raised eyebrows is the fact that Lido’s 30% stake in Ethereum’s PoS mechanism is controlled through 30 different entities. While Lido maintains that these entities are separate and independent, the concentration of control has led to concerns about centralization and the potential for a single entity or group to have too much influence over the network.
Centralization is a well-known issue in the world of cryptocurrency and blockchain. A small group of validators or miners can potentially collude and manipulate the network to their advantage. This can lead to a loss of trust in the network and a decline in its value.
Lido has responded to these concerns by stating that its protocol is designed to be decentralized and that it encourages participation from a diverse group of validators. The protocol also has a governance system that allows token holders to vote on changes and proposals. Lido has pledged to continue working towards decentralization and to ensure that its protocol is secure and transparent.
While the concentration of control is certainly a concern, it is important to note that Lido is not the only protocol that controls a large portion of Ethereum’s PoS stake. According to data from Rated Network, the top 10 staking pools on Ethereum control over 70% of the network’s total stake. This suggests that centralization is a broader issue within the Ethereum network and the cryptocurrency industry as a whole.
In conclusion, Lido’s control of at least 30% of Ethereum’s POS has caused numerous concerns, which raise the question, “Is Ethereum really decentralized?”