There were dozens and dozens of Ethereum mining pools dedicated to hashrate towards the blockchain network before The Merge. This has changed, with most miners switching to Ethash-compatible coins such as ethereum classical, ERGO and the new fork ETHW. Validators now verify Ethereum blocks and there are at this writing 429 278 validators. Four providers are responsible for a large portion of the 13.7 Million Ethereum staked.
4 Providers Possess 59% of Staked Ethereum Today
Bitcoin.com News reported that Lido held 30% of staked Ethereum four days prior. The Twitter account was shut down on September 15. Checkmate, the lead onchain analyst at Glassnode, wrote about the entities currently holding the lion’s share of today’s staked ETH. “We profiled a few more entities,” Checkmate wrote to someone discussing Lido’s holdings. Checkmate said data shows that there’s 13.7 million staked ETH and 10 million ether is held by known providers. This equates with 73% staked ETH and 8.13 million ETH is held by the four top providers, or 59.3%.
“4.17M in Lido, 1.92M in Coinbase, 1.14M in Kraken, [and] 0.9M in Binance,” Checkmate said. Tuur Demeester (editor at satoshipapers.org), shared the tweet from the Glassnode onchain analyst. “44% of ETH is staked by just 2 entities, Lido [and] Coinbase. Add Kraken, and it jumps to 52% of total ETH staked by 3 entities,” Demeester wrote. Editor also mockedVitalik Buterin tweeted about how average users could validate the system.
SEC Chair Gensler suggests a Second Look at Staking Coins. Jack Dorsey shares anti-PoS Editorial. Ethereum proponents believe people are getting ahead of themselves
Gary Gensler from the U.S Securities and Exchange Commission spoke recently about Bitcoiners, such as Checkmate and Demeester, and the Howey test and the possibility of staking. The Wall Street Journal (WSJ) reported that Gensler said: “From the coin’s perspective … that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others.” While the WSJ said Gensler remarked that he wasn’t referring to any cryptocurrency in particular, many crypto enthusiasts assumed the SEC chair was discussing ethereum (ETH) and PoS coins.
BREAKING: Gary Gensler believes that Proof-of-Stake may be used in order to invoke securities laws.
— Dennis Porter (@Dennis_Porter_) September 15, 2022
Brian Armstrong, Coinbase’s co-founder and CEO was asked in mid-August whether the exchange would allow validators to censor transactions at the ethereum protocols level. “If regulators ask you to censor at the ethereum protocol level with your validators will you: (A) Comply and censor at [the] protocol level (B) Shut down the staking service and preserve network integrity,” the user asked.
Armstrong responded three days later and said: “It’s a hypothetical we hopefully won’t actually face. But if we did we’d go with (B), I think. You need to look at the big picture. There may be some better option (C) or a legal challenge as well that could help reach a better outcome.”
A number of people believe that it’s quite possible that known validators could be forced to comply with regulatory policy and censorship. Four centralized entities currently own the majority of ether (ETH), so people are concerned about how validators could be centralized and whether they will censor transactions. Jack Dorsey (co-founder of Twitter) died September 14th. sharedA substack.com editorial criticizing PoS. The substack.com article is written by Scott Sullivan and it claims that “to be a validator is to live every day walking on [eggshells]” and “PoS is a permissioned system.”
Nevertheless, the majority of criticism is directed at bitcoiners. Ethereum proponents think the idea is absurd and one supporter noted that he would simply jump to an ETH chain that doesn’t censor transactions. “Guys,” Ryan Adams tweeted, “[the U.S. government] isn’t trying to censor [ethereum]Validators are available right now. Let’s not get ahead of ourselves. But … if they ever do … I’ll be on the fork of Ethereum that doesn’t censor transactions. This is it. Layer 0 is our security layer,” Adams added.
Eric Wall, a Bitcoin advocate and blogger. published a Twitter thread on September 16 that details in the case of Lido staking, “Lido isn’t even a pool.” Wall further remarks in his thread that “Lido can’t decide what blocks anyone of their underlying node operators mine.” Wall does disclose that he’s an LDO investor, as lido dao (LDO) is the native governance token for the Lido Finance project.
“Lido also can’t fire any of their node operators or remove stake from them as it currently stands. Only 13.1% are Lido validaters based within one country. The geographic distribution here is actually quite impressive,” Wall’s Twitter thread adds.
How do you feel about Ethereum’s criticism and validators’ censorship of transactions? Comment below and let us know how you feel about the subject.
Image creditShutterstock. Pixabay. Wiki Commons. Banteg. Alex Svanevik. Checkmate. Twitter.
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