Around 5 liquid staking providers of Ethereum are on the verge of imposing a self-limitation. Through this, they have assured that they will not own more than 22% of its staking market. Some providers have already done so.
The move by the Ethereum liquid staking providers presumably is meant to address concerns that Ethereum staking was becoming alarmingly centralized. This step is strongly expected to ensure that the network stays decentralized. The ETH liquid staking providers who are preparing to, or have already committed to this self-limiting rule include StakeWise, Rocket Pool, Diva Staking, and Stader Labs. This was revealed by Superphiz, which is Ethereum’s core developer.
Limiting Ethereum Staking Provider Market To Help Prevent Collusion
A sixth Ethereum staking service, Puffer Finance, has also declared that it would adhere to this self-limit. This step has been accepted as the right move. Superphiz, one of the liquid staking providers, has stated that a majority of over two-thirds of validators have to concur on this ETH state. Bringing down the limit to less than 22% ensures that at least 4 major players must plan so that the chain reaches finalization.
Finally, there is the fact that blockchain transactions are deemed immutable. This is presumed to ensure that all transactions within blocks cannot be altered. Superphiz first proposed this concept back in May 2022. He said a staking pool should willingly come forward to ensure the strength of the Ethereum chain even though it might initially hurt its profits.
But the biggest staking provider of ETH, Lido Finance, chose by a 99.81% majority to block self-limit in June. This expressed their intention to retain control over most beacon chain validators. This was revealed by Superphiz on August 31 in a post. At present, the liquid staking market of Ethereum is dominated by Lido. They alone account for 32.4% of the staked Ether. Coinbase is next, but far behind at 8.7% of the market according to data released by Dune Analytics.