Lido, the liquid staking service, put forward a governance proposal last week focused on confining the amount of Ethereum that the users can stake after witnessing criticism from the crypto community.
Ethereum’s Beacon Chain community manager Superphiz recently tweeted asking who will be the first staking provider to publicly commit to restraining themselves from running over 22% of validators on the chain?
Lido is basically a liquid staking service that enables the users to deposit assets such as Ethereum, Polygon, Solana, and others to earn yield. The platform’s staking service has become immensely favored lately, which has led to concerns that a considerable amount of Ethereum is concentrated in one staking pool currently.
Apart from these centralization concerns, voting for this recent proposal has by far been quite one-sided, with roughly 99.8% of the Lido community voting against limiting the amount of Ethereum Lido can service. The votes in favor of the proposal have been below 0.2%. The voting is ending today.
Ironically, these concerns are being raised just two months prior to the Ethereum’s Merge upgrade. The ETH staked on Lido is added to the Proof-of-Stake version of the original Ethereum blockchain, Ethereum Beacon Chain. After the upgrade event, all of the Ethereum would be shifted to the Beacon Chain.
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As of now, several validators stake about 12.9 Million on the Ethereum Beacon Chain. According to data by Dune Analytics, Lido accounts for 31.80% of this total or about 4.126 million ETH. And then comes the other large depositors such as Binance, Kraken, etc. But Lido’s superiority is a primary concern for the decentralization maximalists.
The Ethereum co-founder Vitalik Buterin tweeted that speculative controversial take, they should legitimize price gouging by top stake pool providers. If a stake pool controls over 15%, it should be accepted and expected for the pool to keep surging until its rate falls back under 15%.
Regarding the concerns, Lido also had a say here as it Tweeted that Lido was initiated with two simple focuses first, to democratize access to staking, and second to prevent centralized exchanges from accessing the lion’s share of staked Ethereum. Overall, to keep Ethereum (ETH) decentralized.
