These Ethereum Staking Providers Agree on Self-Limit Rule to Preserve Network Decentralization

Five Ethereum liquid staking providers have implemented or are gearing up to implement a self-imposed restriction, pledging not to own more than 22% of the ETH staking market. This move is aimed at safeguarding the decentralization of the Ethereum network.

According to Ethereum core developer Superphiz, Rocket Pool, StakeWise, Stader Labs, and Diva Staking are the staking providers that have already adopted or are actively pursuing this self-imposed limitation.

  • Superphiz was the first to propose the idea back in May last year, raising the question of whether a staking pool would prioritize the health of the blockchain over its own financial gains.
  • Regarding the rationale behind the 22% self-imposed limit, Superphiz clarified that this figure was chosen because Ethereum requires a consensus of 66% of validators to agree on the network’s state.
  • Setting the limit below 22% would ensure that a minimum of four significant entities would need to come on board together for the chain to achieve finalization.
  • Several other platforms have stepped up to commit to a self-limit plan. These include the Stafi Protocol, which tweeted,

“In our continuous commitment to Ethereum’s decentralized ethos, StaFi intends to self-limit to 22% of all validators to ensure maximal Ethereum alignment.”

  • Another liquid staking service called Puffer Finance joined the bandwagon.
  • Lido Finance’s dominance in the Ethereum staking market has raised many concerns about centralization, but the staking provider decided against self-limiting by an overwhelming majority of 99.81% in the vote.
  • Currently, Lido holds a significant share of 32.4% of all staked Ether, according to data compiled by Dune Analytics.
  • In contrast, Coinbase, which comes next, holds a significantly smaller portion, amounting to just 8.7% of the market. Binance trails behind with 4.52%.

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