{"id":21797,"date":"2023-09-01T06:36:36","date_gmt":"2023-09-01T06:36:36","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/crypto\/ethereum-staking-services-agree-to-22-limit-of-all-validators\/"},"modified":"2023-09-01T06:36:39","modified_gmt":"2023-09-01T06:36:39","slug":"ethereum-staking-services-agree-to-22-limit-of-all-validators","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/crypto\/ethereum-staking-services-agree-to-22-limit-of-all-validators\/","title":{"rendered":"Ethereum staking services agree to 22% limit of all validators"},"content":{"rendered":"
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At least five Ethereum liquid staking providers have either imposed or are working to impose a self-limit rule in which they promise not to own more than 22% of the Ethereum staking market \u2014 seen as a move to ensure the Ethereum network remains decentralized.<\/p>\n

Among the Ethereum staking providers either already committed or are working to commit to the self-limit rule include Rocket Pool<\/a>,\u00a0StakeWise,<\/a> Stader Labs and Diva Staking,\u00a0according to Ethereum core developer Superphiz. <\/p>\n

Puffer Finance, another liquid staking service, also announced<\/a> its commitment to the self-limit.\u00a0<\/p>\n

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These providers are committed (or are in the process of committing) to self-limit to @Rocket_Pool @stakewise_io<\/a> @staderlabs<\/a> @divastaking<\/a><\/p>\n

\u2014 superphiz.eth \ufe0f (@superphiz) August 30, 2023<\/a><\/p><\/blockquote>\n

The proposal presumably aims to address concerns of Ethereum staking becoming increasingly centralized. <\/p>\n

As to why the self-limit was proposed at 22%, Superphiz explained<\/a> that because 66% of validators need to agree on the state of Ethereum, setting the limit below 22% means at least four major entities must collude in order for the chain to reach finalization. <\/p>\n

Finality is the point where transactions on a blockchain are considered immutable, supposedly ensuring that transactions within a block cannot be altered.<\/p>\n

The idea was proposed<\/a> by Superphiz in May 2022 when he questioned whether a staking pool would be willing to put the health of the chain before its own profits.<\/p>\n

Interestingly, the largest Ethereum liquid staking provider, Lido Finance, voted by a 99.81% majority not to self-limit back in June.<\/p>\n

\u201cThey have expressed an intention to control the majority of validators on the beacon chain,\u201d Superphiz said<\/a> in an Aug. 31 post.<\/p>\n

Votes casted from Lido (LDO) token holders on the self-limiting proposal. Source: Snapshot<\/figcaption><\/figure>\n

Lido currently dominates the Ethereum staking market, accounting 32.4% of all staked Ether, while the next entity, Coinbase, accounts for only 8.7% of the market, according to data from Dune Analytics.<\/p>\n

Ethereum stakers by staking amount and market share, showing that Lido is the only one above the 22% threshold. Source: Dune Analytics<\/em><\/figcaption><\/figure>\n

Who\u2019s in the right? Mixed reactions from the Ethereum community <\/h3>\n

One industry pundit, \u201cMippo,\u201d explained<\/a> on Aug. 31 that the self-limit proposal has nothing to do with \u201cEthereum alignment\u201d \u2014 a principle understood to enable credible neutrality and permissionless innovation on Ethereum.<\/p>\n

Mippo claimed those trying to push the proposal wouldn\u2019t make way if they were in Lido\u2019s position.<\/p>\n

Related: <\/em><\/strong>Ethereum is about to get crushed by liquid staking tokens<\/em><\/strong><\/p>\n

\u201cEveryone is doing the economically selfish and rational thing here,\u201d Mippo concluded.<\/p>\n

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Yeah because they have way less market share than that now\u2026 easy to chirp from the cheap seats.<\/p>\n

This has nothing to do with \u201cEthereum alignment.\u201d None of these teams would self limit were they in Lido\u2019s place.<\/p>\n

Everyone is doing the economically selfish and rational thing\u2026<\/p>\n

\u2014 Mippo (@MikeIppolito_) August 31, 2023<\/a><\/p><\/blockquote>\n

\u201cFolks in the ETH community should not shame more user-friendly solutions as greedy products,\u201d said<\/a> another observer.<\/p>\n

However, others were more wary of the potential centralization issues at hand, describing<\/a> Lido\u2019s market share dominance as \u201cdisgusting and selfish.\u201d<\/p>\n

Magazine: <\/em><\/strong>DeFi Dad, Hall of Flame: Ethereum is \u2018woefully undervalued\u2019 but growing more powerful<\/em><\/strong><\/p>\n<\/div>\n