- Ethereum staking providers are limiting their influence at 22% to maintain the decentralized nature of the network.
- This decision is influenced by Ethereum’s consensus mechanism, which requires 66% of validators to make changes.
- Rocket Pool, StakeWise, Stader Labs, and Diva Staking are among the players considering this voluntary restriction.
- Puffer Finance, a liquid staking service, has also pledged to adhere to this limit.
Several Ethereum staking providers have taken steps to ensure they don’t gain excessive control over the Ethereum staking market, capping their influence at 22%. This decision is driven by the desire to maintain the decentralized nature of the Ethereum network.
Notable players embracing or contemplating this voluntary restriction include Rocket Pool, StakeWise, Stader Labs, and Diva Staking, as highlighted by Ethereum core developer Superphiz. Puffer Finance, a liquid staking service, has also pledged to adhere to this limit in an effort to combat growing concerns about the increasing centralization of Ethereum staking.
The choice of setting the cap at 22% stems from Ethereum’s consensus mechanism, which necessitates agreement from 66% of validators to make changes to the network. By keeping the limit below 22%, it ensures that at least four major entities must cooperate for the blockchain to achieve finality.
Finality is a crucial point where transactions on the blockchain become unalterable, ensuring the integrity of transactions within a block. Superphiz introduced this idea in May 2022, raising questions about whether staking pools would prioritize the network’s health over their own profits.
Interestingly, the largest Ethereum liquid staking provider, Lido Finance, strongly opposed (with a 99.81% majority) the idea of self-imposing limits back in June. Superphiz expressed concerns, suggesting that Lido seemed determined to control the majority of validators on the beacon chain.
Lido currently dominates the Ethereum staking market, holding a substantial 32.4% share of all staked Ether. In contrast, the next-largest player, Coinbase, possesses a significantly smaller 8.7% market share.