- Lido and Coinbase (NASDAQ:COIN) dominate post-Merge Ethereum validation.
- Lido operates 27.50% of stake-based Ethereum validation, while Coinbase has 30.1%.
- Top cryptocurrency, Bitcoin, also has a centralization problem.
Following the completion of the much-awaited Merge, wherein Ethereum sees a massive energy use and carbon footprint reduction, analysts now question the network’s decentralization after big companies top the list of Ethereum validators.
Less than 12 hours after Ethereum’s shift to proof of stake, Gnosis co-founder Martin Köppelmann observed that 420 blocks out of the last 1,000 at the time were built by “just Lido and Coinbase.”
Out of the last 1000 blocks, 420 have been built by just Lido and Coinbase.— Martin Köppelmann (@koeppelmann) September 15, 2022
“[The] top 7 entities controlling >2/3 of the stake is pretty disappointing to see tbh,” says Köppelmann.
The Gnosis co-founder shared a spreadsheet that shows Ethereum’s biggest staking service, Lido, operates 27.50% of stake-based Ethereum validation. Meanwhile, Coinbase handles the second highest number of validation at 14.50%.
According to the data available on Dune, Lido and Coinbase are indeed the network’s largest validators post-Merge. Lido leads with more than 4.16 million ETH (30.1%), followed by Coinbase with over 2 million ETH (14.5%). The remaining stakers are labeled “others” with 3.65 million ETH (26.5%).
The decentralization narrative makes cryptocurrency, blockchain, and web3 attractive to some people. However, experts note that if participation in Ethereum validation becomes too centralized, the so-called “51% attack” becomes more possible.
On the same thread, Köppelmann also mentioned Bitcoin’s centralization issue. “And no, dear Bitcoin fans, it is not better in Bitcoin,” he clarifies. “In fact, you need only 4 entities to come to >72%.”
And no, dear Bitcoin fans, it is not better in Bitcoin. In fact you need only 4 entities to come to >72% pic.twitter.com/EdGDN3Mr6S— Martin Köppelmann (@koeppelmann) September 15, 2022
In related news, Bitcoin proponent and JAN3 CEO Samson Mow sarcastically congratulates Ethereum co-founder Vitalik Buterin for bearish crypto events post-merge. Mow attributed ETH’s price slump, heightened SEC alert against digital assets, and centralization problems to the network’s update.
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