A notable amount of Ethereum staking providers are committing to self-limit, and own nothing more than 22 percent of the Ethereum staking market. 
While some community members agree that the move will strengthen decentralization, others argue that the move is not being made in good faith. 

A new development championed by Ethereum liquid staking providers is bound to bring change to the Ethereum network. Per a recent announcement, about five Ethereum liquid staking providers are creating self-limit rules in the staking ecosystem.

These staking providers are choosing to own nothing more than 22 percent of the Ethereum staking market. The new development comes as staking providers look towards decentralization.

The move is an attempt at keeping the Ethereum network as decentralized as possible. Superphiz, an Ethereum core developer, has revealed that Rocket Pool, StakeWise, Stader Labs and Diva Staking, are some of the Ethereum staking providers looking to make this commitment.

These providers are committed (or are in the process of committing) to self-limit to <22% of Ethereum validators. This is how our chain will be successful: Coordination above greed. Cooperation instead of winner-take-all.@Rocket_Pool @stakewise_io @staderlabs @divastaking

— superphiz.eth (@superphiz) August 30, 2023

Superphiz goes on to explain that the move will serve the Ethereum network in many ways, explaining that the chain will become even more successful than it already is, with more coordination and less greed. A “Cooperation instead of winner-take-all” will be a game changing move for Ethereum staking.

The reaction from Ethereum community members have been mostly positive, as they seem to be extremely receptive of the new development.

While some observers mentioned that a few other Ethereum staking providers were not on the list, others explained that the majority might not follow their counterparts.

One user also noted that Lido, a popular multi-platform staking solution, was not on the list. The core developer responded that Lido voted by a 99.81 percent majority not to self-limit. It appears that they have also “expressed an intention to control the majority of validators on the beacon chain.” He added.

Market pundit insists that staking providers have an ulterior motive

Breaking down the finalization process, Superphiz explains that 66 percent of validators are required to agree on a chain in order to come to a finalization stage. Setting a self-limit below 22 percent simply means that at least entities must collude in order to finalize a rogue chain. While the developer asserts that the move is a low bar, he maintains that it is a good start, regardless.

Meanwhile, some market observers are pushing back on the narrative that the move is centered around championing decentralization on the Ethereum market.

According to Mippo, a prominent figure in the Ethereum community, the move is not being made in good faith, and has little to nothing to do with aligning the Ethereum community.

He insists that none of the aforementioned Ethereum staking providers would attempt to self-limit if they were in Lido’s position. He asserted;

Yeah because they have way less market share than that now… easy to chirp from the cheap seats. This has nothing to do with “Ethereum alignment.” None of these teams would self limit were they in Lido’s place. Everyone is doing the economically selfish and rational thing here… .

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Filed under: Bitcoin - @ September 1, 2023 11:20 am