A minimum of five Ethereum liquid staking providers have either implemented or are in the process of implementing a self-imposed limit, pledging not to control more than 22% of the Ethereum staking market. This initiative is perceived as an effort to maintain the decentralization of the Ethereum network.
Rocket Pool, StakeWise, Stader Labs, and Diva Staking are among the Ethereum staking providers that have either already committed or are planning to commit to this self-limit rule, as reported by Ethereum core developer Superphiz. Puffer Finance, another liquid staking service, has also publicly declared its commitment to the self-limit. This proposal is presumably intended to address the growing concerns about the increasing centralization of Ethereum staking.
Superphiz explained the rationale behind the 22% self-limit by stating that 66% of validators need to concur on the state of Ethereum, thus setting the limit below 22% ensures that at least four major entities would need to collude to achieve chain finalization.
Finality refers to the stage at which transactions on a blockchain are deemed irreversible, ostensibly guaranteeing that the transactions within a block cannot be modified.
Superphiz initially proposed this idea in May 2022, when he pondered whether a staking pool would prioritize the well-being of the chain over its own financial gains.
Notably, Lido Finance, the largest Ethereum liquid staking provider, decided by a 99.81% majority not to adhere to the self-limit in June.
Superphiz mentioned in a post on August 31 that Lido has indicated a desire to control the majority of validators on the beacon chain. According to Dune Analytics, Lido currently holds a commanding position in the Ethereum staking market, representing 32.4% of all staked Ether, whereas the next largest entity, Coinbase, only accounts for 8.7% of the market.
An industry commentator, “Mippo,” opined on August 31 that the self-limit proposal is unrelated to “Ethereum alignment” — a principle believed to facilitate credible neutrality and permissionless innovation on Ethereum.
Mippo argued that those advocating for the proposal would not concede if they were in Lido’s position.
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