Coinbase Ranks As Second Largest ETH Staking Entity As Lido’s Dominance Raises Concerns
October 08 2023 - 8:40AM
NEWSBTC
Prominent crypto exchange Coinbase has emerged as the second
largest ETH staking entity based on a recent scoop by Chinese
reporter Colin Wu. This development comes amidst growing
concerns about network centralization in regard to Lido’s dominance
in the ETH staking market. Related Reading: Is Ethereum’s
Staking Boom A Ticking Time Bomb? JPMorgan Weighs In Coinbase
Accounts For 14.1% Of ETH Staking Activity – Report According to
Wu, a report from Dragonfly data scientist hildobby, using data
from Dune analytics, reveals that Coinbase presently has 3.873
million staked ETH, representing 14.1% of all staked ETH.
Coinbase dominance in the ETH staking sphere is only superseded by
that of the liquid staking platform, Lido DAO, which accounts for
one-third of all staked ETH. Other platforms with a
significant staking percentage include the Binance and Kraken
exchanges, with a 4.2% and 3.0% market share, respectively.
Meanwhile, the Figment staking pool comes third with a 4.9% market
dominance. Notably, Coinbase experienced a 44% increase in
ETH staking activity over the last six months. Coincidentally, this
development falls within the period during which the Ethereum
Shanghai upgrade has been active. Contrary to fears that the last
Ethereum network update may induce a decline in staked ETH due to
the ability to finally withdraw staked assets, the Shanghai upgrade
has so far boosted stakers confidence, resulting in a net positive
flow of 7.84 million ETH since its implementation in April. At the
time of writing, the total amount of staked ETH stands at 27.42
million ETH, representing 22.81 of ETH’s circulating supply.
Related Reading: SSV Network Unveils Plan For Decentralized ETH
Staking Infrastructure Lido’s Growing Dominance Sparks
Centralization Concerns In other news, Wu stated there are
community concerns about centralization in regard to Lido’s ETH
staking dominance. Due to the Proof-of-Stake Consensus model, a
higher amount of staked ETH translates to a higher voting power
during governance processes. Data from Dune Analytics shows
that Lido accounts for 8.80 million staked ETH, representing 32.11%
of the ETH staking market. Notably, the liquid staking platform
experienced a 55% rise in staking activity over the last six
months. According to information from Ethereum’s official
blog, concerns about centralization are quite valid, as any
validator controlling a minimum of 33% of staked ETH can prevent
the network from finalizing any block, even in the presence of a
66% majority. Moreover, if a validator acquires 55% of the staked
ETH, they could theoretically split the Ethereum chain into two
forks. All these are speculations, as there is no evidence
indicating that Lido DAO has any malicious intentions toward the
Ethereum network. At press time, ETH trades at $1,620.18,
with a 1.36% decline in the last day, based on data from
CoinMarketCap. In tandem, the token’s daily trading volume is down
by 36.41% and valued at $2.86 billion. ETH trading at $1,619.24 on
the hourly chart | Source: ETHUSDT chart on Tradingview.com
Featured image from Ebunker, chart from Tradingview
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