The next big leap for Ethereum liquid staking: The staking landscape

cointelegraph.com:

Imagine a world where everyone, regardless of their background, can easily access and participate in the revolutionary world of Ethereum. A world where decentralized applications empower individuals, and the potential for innovation knows no bounds. Against a highly equivocal and chaotic macroeconomic landscape, this is the world that the prophets of Ethereum dream of.

But little do they know this world is like an unrealized dream. Why? Let’s dig deeper.

Centralized liquid staking protocols are at the forefront of the liquid staking revolution on Ethereum, and it shouldn’t come as a surprise. Why? Because they are highly scalable — thanks to the centralized validator set that they have. The biggest liquid staking protocol on Ethereum currently has a limited node operator set of 29 operators. It must then be a no-brainer that they hold a hegemony over the network. Any protocol claiming to be decentralized but running its operations as a business is also able to offer much higher standards of composability. While this composability that is offered to users is a feature, it can be counter-productive as well — primarily because of the systemic risks this can cause.

On the flip side, decentralized protocols do exist, but they are highly unscalable. And thus, they have a fraction of ETH staked in them compared to what is often staked via the centralized ones.

While decentralized protocols have attempted to reduce the minimum capital required to run a validator node from 32 to 8 ETH, that is still a sizeable amount for the wider ecosystem. Admittedly, this does open up opportunities for a wide number of stakers to start staking on the network, however, we contend that 8 ETH is still a sizeable amount. This reintroduces the problem