Staking pools from Ethereum voluntarily limit market shares

Staking pools from Ethereum voluntarily limit market shares

Agree some staking pools to limit their share in staking in a certain threshold. The two biggest pools, Lido and Coinbase are not there. So the initiative is only eyewash?

On 31. August explained the Ethereum developer Superphiz that four staking pools have now agreed to a self-limitation for which he has been lobbying for more than a year: Rocket Pool, Stakewise. Stader Labs and Diva Staking.

“This is how our chain is successful: coordination about greed, cooperation instead of everything for the winner.»

Superphiz has been committed since May 2022 that each pool remains below 22 percent of the total staking rate. The number is not accidental. 66 percent of all validators must agree to a transaction finalized. If all pools stay below 22 percent, at least four pools have to cooperate to cheat. «This is still a deep threshold, but it’s a beginning».

The first pool, which agreed, was Stakewise, shortly afterwards Rocket Pool. On 3. July followed Puffer Finance, and on 9. August said Stader to join this in order to support a decentralized, diverse and strong ecosystem of staking.

But how relevant are these pools in general? There are several charts to distribute the staking deposits that are not entirely identical.

At Beaconcha.In almost 62 percent of the stakers are unknown, followed by Lido with 16.3 and coin base with 4.3 percent. Everyone else comes to a maximum of three percent. Rocket Pool has 3.03 percent, Stakewise 0.29, and the other mentioned cannot be found here.

A chart to Dune Analytics, on the other hand, assigns Lido 31.7 percent of the deposits and prescribes 29.5 percent of the unknown stakers. Coinbase comes to 9.4 percent here, Rocket Pool is about three. Another chart on Dune Analytics goes in this direction, Rocket Pool is 2.6 percent and Stakewise well below one percent, while Lido, Coinbase and the unknown stakers dominate the action.

Regardless of these differences, the charts unanimously show that the pool that is committed to the 22 percent limit are far from reaching it ever. That makes the commitment easy. If I were a billionaire, I would also like to pay a wealth tax of 70 percent.

The lido-dao, on the other hand, decided with 99.81 percent not to limit itself. «They show the intention of controlling the majority of the Beacon Chain validators,» comments Supherphiz this decision. The party in which it would be the most necessary, so it refuses to commit a commitment?

Not quite. Because Lido is not a classic staking pool and not a single entity. Instead, Lido is a «coordination layer between a variety of stakers and node operators,» explains Arthur of Defiance Capital.

Strictly speaking, Lido is a smart contract. Users can insert their ether here and in return Steth: token that represent the ether and are interest as if they are staking themselves. The real ether accumulated in the smart contract, on the other hand, are evenly distributed to 28 validators. Even if Lido reaches a share of 66 or more percent of the total clocked ether, there is no instance that can take advantage of this market power, since Lido itself is decentralized.

However, the dominance of Lido is not completely harmless. The majority of the validators make themselves dependent on a smart contract. What if he has a mistake? This Ethereum will plunge into an existential crisis? Or will the developers be forced to fork, to undo the error?

Apart from these currently hypothetical fears, the staking landscape of Ethereum is exemplary decentralized, to a much greater extent than in Bitcoin or other proof-of work systems. In view of this, the self -obligation of some pools to 22 percent is nice, but also unnecessary.