Prominent crypto exchange Coinbase has emerged as the second largest entity for ETH staking based on a recent survey spoon by Chinese reporter Colin Wu. This development comes amid growing concerns over network centralization regarding Lido’s dominance of the ETH staking market.
Coinbase is responsible for 14.1% of ETH staking activity – report
According to Wu, a report from Dragonfly data scientist Hildobby reveals based on data from Dune Analytics that Coinbase currently has 3.873 million ETH staked, representing 14.1% of all ETH.
Coinbase’s dominance in ETH staking is surpassed only by that of liquid staking platform Lido DAO, which accounts for a third of all ETH staked.
Other platforms with a significant stake rate include the Binance and Kraken exchanges, with a market share of 4.2% and 3.0% respectively. Meanwhile, Figment’s betting pool ranks third with a market dominance of 4.9%.
Notably, Coinbase has experienced a 44% increase in ETH stakes activity over the past six months. Coincidentally, this development falls within the period when the Ethereum Shanghai upgrade was active.
Contrary to fears that the latest update to the Ethereum network could cause a drop in ETH stakes due to the possibility of finally withdrawing asset stakes, the Shanghai upgrade has so far boosted the confidence of has increased the stakes, resulting in a net positive flow of 7.84 million ETH since its implementation in April.
At the time of writing, the total amount of ETH is 27.42 million ETH, which amounts to 22.81 of the circulating supply of ETH.
Lido’s growing dominance is raising concerns about centralization
In other news, Wu stated that there are concerns within the community about centralization regarding Lido’s dominance in the ETH staking space. Thanks to the Proof-of-Stake Consensus model, a greater amount of ETH staked translates into greater voting power during governance processes.
Data from Dune Analytics shows that Lido is responsible for 8.80 million ETH, representing 32.11% of the ETH staking market. The liquid staking platform in particular saw a 55% increase in staking activity over the past six months.
According to information from Ethereum’s official blogThe concerns about centralization are entirely valid, as any validator controlling at least 33% of the staked ETH can prevent the network from finalizing a block even if there is a 66% majority.
Furthermore, if a validator acquires 55% of the staked ETH, they could theoretically split the Ethereum chain into two forks. This is all speculation as there is no evidence that Lido DAO has any malicious intentions towards the Ethereum network.
At the time of writing, ETH is trading at $1,620.18, down 1.36% on the last day, based on data from CoinMarketCap. At the same time, the token’s daily trading volume has fallen by 36.41% and is valued at $2.86 billion.
ETH trading at $1,619.24 on the hourly chart | Source: ETHUSDT chart on Tradingview.com
Featured image of Ebunker, chart from Tradingview