Biggest Ether staking service has a centralisation problem

economictimes.indiatimes.com:

Ethereum blockchain is coming under criticism for potentially taking too much control of the network as it undergoes a closely-watched software upgrade. The DeFi, or decentralized finance, platform Lido Finance has become the largest provider of staking services for Ethereum, a practice that allows owners of the Ether cryptocurrency to earn passive income without having to sell their tokens. The staked coins are used to help validate transactions and secure the network in exchange for rewards, based in part on the amount of new tokens minted and fees collected. The practice is also popular among users of leading exchanges such as Coinbase, Kraken and Binance. With more than 4 million Ether deposited through Lido, or 32% of the total amount of the token being staked, the concentration is raising red flags. One entity holding a huge amount of Ether could raise security risks for the network, critics say. Ethereum is moving to what’s billed as a less-energy intensive process known as proof-of-stake from its current proof-of-work mechanism. Under the system upgrade known as the Merge, so-called solo-staking requires setting up dedicated hardware and holding a minimum amount of 32 Ether, valued at about $54,000, based on current prices. Staking services like Lido don’t have those requirements and make staking easier for small investors.

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Lido’s dominance in staking could lead to a centralized attack of the network, when it switches to proof-of-stake consensus because the majority of staking power would be too concentrated, Danny Ryan, a researcher