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Ethereum Staking Services Advocate for Decentralization with a 22% Limit: Here’s the Reason
The Struggle for Decentralization: Major Players Take Action
Among the critical challenges confronting the Ethereum network, decentralization stands out as a chief concern. As a result, several leading Ethereum liquid staking providers have stepped forward. How? By either enforcing or contemplating the implementation of a self-limit regulation. This regulation guarantees they will not possess more than 22% of the Ethereum staking market. Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance are participating in this forward-thinking initiative. But why this particular percentage? Furthermore, why now?
Understanding the 22% Threshold and Its Importance
Interestingly, Superphiz, a distinguished Ethereum core developer, offered an insightful viewpoint on the selected limit. Notably, he underscored that since 66% of validators must reach consensus on the Ethereum state, a ceiling below 22% ensures that at least four key entities must concur for chain finalization. Essentially, finality is the point at which transactions on a blockchain become irreversible, bolstering the integrity of the chain.
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Thus, this action promotes decentralization and safeguards the blockchain against potential exploits. The idea emerged in May 2022 when Superphiz speculated whether staking pools would prioritize the health of the chain over financial gains.
Nonetheless, not everyone is in agreement. Unexpectedly, Lido Finance, the most powerful player in Ethereum’s liquid staking arena, chose not to implement self-limitation. With an astonishing 32.4% of all staked Ether, their influence is significant, far exceeding that of their nearest rival, Coinbase, which holds 8.7%.
Community Divisions: Striking a Balance Between Innovation and Control
Furthermore, the Ethereum community seems divided on this matter. Some, like “Mippo”, contend that the self-limit proposal does not align with the principles of Ethereum. They argue that those advocating for it might change their stance if they were in a dominant position like Lido. On the other hand, some fervent critics view Lido’s substantial share as harmful to the overarching aim of decentralization.
As the Ethereum ecosystem progresses, this self-imposed limit emerges as a pivotal point for discussions surrounding centralization, profit, and the principles of blockchain technology. Will additional entities follow this example? Only time will reveal. But one thing is certain: the pursuit of a more decentralized Ethereum is underway.
The post Ethereum Staking Providers Champion Decentralization with a 22% Cap: Here’s Why appeared first on BitcoinWorld.
