Big Companies Dominate Ethereum Validation After Merger

Many of the benefits promised by the Ethereum merger have been realized, including over 99% reduction in energy use and carbon emissions. But analysts who sounded the alarm about increased centralization before the transition remain concerned that relatively few entities dominate the proof-of-stake mechanism that now underpins the blockchain.

“[The] The top 7 controllers with more than 2/3 of the share is very disappointing to see tbh,” tweeted Martin Kopelman, co-founder of DeFi Platform Gnosis.

He published a chart showing that Ethereum affiliate Lido handles over 27 percent validation for Ethereum, followed by crypto exchange Coinbase at over 14 percent.

A recent report by Dune Analytics confirmed that the two largest players in Ethereum currently are Lido with 4.16 million ETH (30.1%) and Coinbase with 2 million ETH (14.5%). The rest of the players categorized as “others” have 3.65 million ETH (26.5%).

Decentralization is the main objective of Cryptocurrency and Web3. The fact that Bitcoin is “decentralized enough” is the main reason why it remains outside the intersection of US regulators.

Security experts note that if participation in Ethereum validation becomes too centralized, the probability of a “51 percent attack” becomes more than just a theory. Moreover, dominant parties can be pressured to censor transactions on the blockchain – although Coinbase CEO Brian Armstrong said such a scenario would force his company out of the betting business.

Unlike Proof of Work, which requires a great deal of hardware and energy to profitably mine and maintain a blockchain network, Proof of Stake is more dependent on users buying, holding, and accumulating large amounts of the network’s cryptocurrency. Some critics described the merger as Move towards central.

Now that Ethereum is based on Proof of Stake, validators with at least 32 ETH can participate or pledge to the network, rather than relying on miners. Smaller groups can create staking pools to consolidate their ETH to become validators or join an exchange offering staking.

“You shouldn’t bet on the exchange,” Mika Zolto, the developer of the Ethereum core, warned in a recent interview. DecryptFor example, “It harms the network rather than helps, and the ROI at the moment may not be worth it.”

Zoltu recommends users to participate in ETH with their Ethereum node, which Ethereum owners can do on a PC. “It can be done by anyone with a good enough computer, electricity and internet,” he said.

Meanwhile, Kopelman noted that the top cryptocurrency Bitcoin also has a centralization problem.

“No, dear Bitcoin fans, I’m not better at Bitcoin,” said chirp. “You actually only need four units to get to >72%.”

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