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

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


Prior to The Merge, Ethereum used to have dozens upon dozens of mining pools dedicating hashrate towards the blockchain network. That has all changed and most of the miners transitioned or plan on transitioning to other Ethash compatible coins like ethereum classic, ERGO, and the new fork ETHW. Now Ethereum blocks are verified by validators and at the time of writing, there are 429,278 validators. However, a great deal of the 13.7 million staked ethereum is held by four known providers.

4 Known Providers Hold 59% of the Staked Ethereum Today News reported on Lido possessing 30% of the staked ether four days ago. On September 15, the Twitter account checkmatethe lead onchain analyst at Glassnodewrote about the entities currently holding the lion’s share of today’s staked ETH. “We profiled a few more entities,” Checkmate wrote to someone discussing Lido’s holdings. Checkmate said data shows that there’s 13.7 million staked ETH and 10 million ether is held by known providers. That equals to 73% of the staked ETHand the top four providers hold 8.13 million ETH or 59.3% of the aggregate.

Proof-of-Work Proponents Question Validator Censorship as 59% of Staked Ethereum Is Held by 4 Companies
Glassnode chart shared by the firm’s lead onchain analyst Checkmate.

“4.17M in Lido, 1.92M in Coinbase, 1.14M in Kraken, [and] 0.9M in Binance,” Checkmate said. The tweet shared by the onchain analyst at Glassnode was further discussed by the popular bitcoiner Tuur Demeester, the editor at “44% of ETH is staked by just 2 entities, Lido [and] Coinbase. Add Kraken, and it jumps to 52% of total ETH staked by 3 entities,” Demeester wrote. The editor also mocked a tweet written by Vitalik Buterin which talks about the idea of ​​having average users validate the system.

Proof-of-Work Proponents Question Validator Censorship as 59% of Staked Ethereum Is Held by 4 Companies
Screenshot image shared by editor Tuur Demeester.

SEC Chair Gensler Hints at Taking Another Look at Staking Coins, Jack Dorsey Shares Anti-PoS Editorial, Ethereum Proponents Believe People Are Getting Ahead of Themselves

In addition to bitcoiners like Demeester and Checkmate, the US Securities and Exchange Commission chair, Gary Gensler, recently talked about talking about the Howey test and staking coins. The Wall Street Journal (WSJ) reported that Gensler said: “From the coin’s perspective … that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others.” While the WSJ said Gensler remarked that he wasn’t referring to any cryptocurrency in particular, many crypto enthusiasts assumed the SEC chair was discussing ethereum (ETH) and PoS coins.

In mid-August, Coinbase co-founder and CEO Brian Armstrong was asked if the exchange would censor at the ethereum protocol level with validators. “If regulators ask you to censor at the ethereum protocol level with your validators will you: (A) Comply and censor at [the] protocol level (B) Shut down the staking service and preserve network integrity,” the user asked.

Armstrong responded three days later and said: “It’s a hypothetical we hopefully won’t actually face. But if we did we’d go with (B), I think. Got to focus on the bigger picture. There may be some better option (C) or a legal challenge as well that could help reach a better outcome.”

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

A number of people believe that it’s quite possible that known validators could be forced to comply with regulatory policy and censorship. With four centralized entities staking the most ethereum (ETH) today, people have concerns about whether or not validators will be centralized and censor transactions. On September 14, Twitter co-founder Jack Dorsey shared an editorial published on that criticizes PoS. The article is written by Scott Sullivan and it claims that “to be a validator is to live every day walking on [eggshells]” and “PoS is a permissioned system.”

Meanwhile, most of the criticism stems from bitcoiners, some of whom are labeled as bitcoin maximalists. Ethereum proponents think the idea is absurd and one supporter noted that he would simply jump to an ETH chain that doesn’t censor transactions. “Guys,” Ryan Adams tweeted, “[the U.S. government] isn’t trying to censor [ethereum] validators right now. Let’s not get ahead of ourselves. But … if they ever do … I’ll be on the fork of Ethereum that doesn’t censor transactions. Simple as that. Layer 0 is our security layer,” Adams added.

Proof-of-Work Proponents Question Validator Censorship as 59% of Staked Ethereum Is Held by 4 Companies
Images shared by Eric Wall on September 16, 2022. The image on the left was originally shared by Banteg, and the image on the right was originally shared by Alex Svanevik.

bitcoin support and bloggerEric Wall, published a Twitter thread on September 16 that details in the case of Lido staking, “Lido isn’t even a pool.” Wall further remarks in his thread that “Lido can’t decide what blocks anyone of their underlying node operators mine.” wall does disclose that he’s an LDO investor, as lido dao (LDO) is the native governance token for the Lido Finance project.

“Lido also can’t fire any of their node operators or remove stake from them as it currently stands. Not more than 13.1% of Lido validators are based in a single country. The geographic distribution here is actually quite impressive,” Wall’s Twitter thread adds.

Tags in this story

Binance, Bitcoiners, Brian Armstrong, censorship, Centralization, checkmate, Coinbase, Gary Gensler, glassnode, Glassnode Data, Jack Dorsey, Kraken, Lido, Lido 30%, Major Exchanges, Maximalists, PoS, PoW, proof-of-stake, Proof of Work (PoW), Ryan Adams, sec chair, Stake Ether, tuur demeester, Validator, Validators

What do you think about the criticism against Ethereum and the validators censoring transactions? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for News about the disruptive protocols today emerging.

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

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