Proof-of-Work Proponents Question Validator Censorship as 59% of Staked Ethereum Is Held by 4 Companies

Prior to The Merge, Ethereum used dozens and hundreds of mining pools that dedicated their hash rates to the blockchain network. However, that situation has changed and most miners have migrated or will migrate to other ethereum-compatible coins such as Ethereum Classic, ERGO, and the new fork ETHW. Currently, Ethereum blocks are validated by validators, and at the time of this writing there are 429,278 validators. However, the majority of the 13.7 million stakes of Ethereum are held by four known providers.

Four known providers hold 59% of today’s staked Ethereum

Bitcoin.com News reported four days ago that Lido holds 30% of staked ether; on September 15, the Twitter accountis the lead-on-chain analyst for CheckmateandGlassnodethe lead on-chain analyst for Checkmate, wrote about the entities that currently hold the majority of today’s staked, writing about ETH, “We are currently holding 30% of the stakedentities, and we are working on a number of new ones,” he said. “We profiled a few more entities,” Checkmatewrote to someone discussing Lido holdings. Checkmate indicated that according to the data, there are 13.7 million stakedETHand 10 million stakedETH, with ETHand 10 million ethers held by known providers. This equates to 73% of the stakedETH. And the top four providers hold 8.13 millionether, or 59.3% of theETH, or 59.3% of the total.

“4.17M on Lido, 1.92M on Coinbase, 1.14M on Kraken, (and) 0.9M on Binance,” said Checkmate, a tweet shared by Glassnode’s on-chain analyst further discussed by popular bitcoiner Tuur Demeester, editor of satoshipapers.org.” 44% ofETHis staked by just two entities, Lido [and] Coinbase; add Kraken and it jumps to 52% of totalETHis staked by three entities.” Demeester wrote. The editor alsomocked a tweetwritten by Vitalik Buterin that talks about the idea of letting average users validate the system.

SEC Chair Gensler hints at another look at staking coins, Jack Dorsey shares anti-PoS editorial, Ethereum proponents think people are getting ahead of themselves

In addition to bitcoiners like Demeester and Checkmate, Gary Gensler, chairman of the U.S. Securities and Exchange Commission, recently spoke about talking about the Howey test and staking coins. The Wall Street Journal (WSJ)reported Gensler’s remarks.” From a coin perspective … It’s another indicator under the Howey test that investors expect gains based on the efforts of others.” The WSJ remarked that Gensler did not specifically mention cryptocurrencies, but many crypto enthusiasts assumed the SEC chairman was discussing Ethereum (ETH) and PoS coins.

In mid-August, Coinbase co-founder and CEO Brian Armstrong was asked if exchanges would use validators to censor at the Ethereum protocol level.” The user asked, “If regulators ask you to censor at the Ethereum protocol level using your validator, would you:(A) comply and censor at the [protocol] level (B) maintain network integrity by shutting down staking services.

Armstrongrespondedthree days later, saying, ” That is an assumption we hope we never actually face. But if we were faced with it, I think we would choose (b). We need to look at the big picture. There may be a better option (C) or a legal challenge to get a better outcome.”

Many believe there is a good chance that known validators will be forced to follow regulatory policies and censorship. Today, with four centralized entities putting up the most ethereum (ETH), people are concerned about whether validators will become centralized and censor transactions On September 14, Jack Dorsey, co-founder of Twittershared aeditorialon substack.com that criticized PoS. substack.com’s article was written by Scott Sullivan, who argued that “to be a validator is to live on (egg) shells every day” and that “PoS is permission-based .” and argues that “it is.

Meanwhile, most of the criticism has come from bitcoiners, some of whom have been labeled bitcoin maximizers. Ethereum supporters consider the idea absurd, with one advocate noting that they would simply jump to an ETHchain that does not censor. One supporter noted that they would simply jump to an ETHchain that does not censor transactions.” Guys,” Ryan Adams tweeted.” （The (US government) is not trying to censor (Ethereum’s) validators now. Let’s not get ahead of ourselves. But …… If they do: …… I am on a fork of Ethereum that does not censor transactions. It’s simple. Layer 0 is our security layer,” Adams added.

Bitcoin advocate andblogger, Eric Wall,published a Twitter thread on September 16,detailing that in the case of Lido staking, “Lido is not even a pool.” Wall further stated in that thread that “Lido cannot decide which blocks to mine by any of its underlying node operators.”While Wallclarified that he is an investor in LDO,Lido Dao (LDO)is aclarifies that it is an investor in the LDO because it is a native governance token. Lido Financeis the native govt. token for the project.

“Lido also cannot currently fire or unfund node operators. No more than 13.1% of Lido validators are based in a single country. This geographic distribution is actually quite impressive,” Wall’s Twitter thread adds.

Image credits: Shutterstock, Pixabay, Wiki Commons, Banteg, Alex Svanevik, Checkmate, Twitter,