Bitcoin maximalists have been up in arms about these revelations. They argue that this proves Ethereum is becoming more centralized, and censorship resistance is at risk.
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Ethereum's new Proof-of-Stake blockchain is facing unwelcome scrutiny after it emerged that staking rewards are being dominated by a small number of centralized players.
According to Gnosis co-founder Martin Köppelmann, Lido currently controls 27.5% of staking, while Coinbase is in second place on 14.5%.
Overall, he claims the top seven entities control over two-thirds of block verification — a fact that he described as "pretty disappointing." Köppelmann added:
"Out of the last 1,000 blocks, 420 have been built by just Lido and Coinbase."
He subsequently launched a poll to ask followers how they felt about this. While 25% said it was fine, 75% argued that this needs to change.
Bitcoin maximalists have been up in arms about these revelations. They argue that this proves Ethereum is becoming more centralized, and censorship resistance is at risk.
But Köppelmann argues things are even worse in Bitcoin, as just four entities currently receive 72% of mining rewards.
Some responding to his tweets argued that Köppelmann was missing the wider issue.
"It does not matter how many entities are in control of the most blocks. 1, 1,000, 1 million. It does not matter. What matters is that nearly 90% of all nodes are running on AWS."
Validators are required to lock up 32 ETH in order to run their own node, but this is unaffordable to many. Staking through exchanges has become particularly popular because it caters to crypto enthusiasts on lower budgets — and eliminates some of the technical barriers to entry.
Last month, Coinbase's CEO Brian Armstrong was asked on Twitter what he would do if regulators asked his trading platform to censor transactions.
He revealed that he would rather shut down the staking service altogether "and preserve network integrity" than comply — but stressed this was a "hypothetical scenario we hopefully won't face," and a legal challenge could be possible.
In other developments, Ether's price has fallen rather disproportionately — indicating The Merge may have been a "sell the news" event.
The latest CoinMarketCap data reveals ETH has plunged by 8.54% over the past 24 hours — with losses widening to 13.64% on a seven-day timeframe.
By comparison, Bitcoin is down 1.68% on the day and 4.44% on the week.
