TL;DR
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If you want to get paid to process transactions on the Ethereum network, you need to deposit (wager) 32 ETH (~$60,000) and have a bunch of specific hardware/technical know-how.
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With LSDs, people can skip all that by setting up the hardware and getting everything to work – then have others contribute an amount of ETH to their staking pools, earning them ~4% a year.
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Here comes the ‘cartel’ part of the story: there is one company (Lido) that makes up 74% of the liquid staking market!
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This centralization opens up Ethereum to regulatory oversight.
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The solution? Make solo stakeout easier. Lower the 32 ETH barrier and make the installation process idiot proof.
Full story
You know that episode or Community, where Abed gets a job in the cafeteria so he and his friends can get their first bites of chicken fingers?
Yes, well, there is a concern that something similar is happening with Ethereum.
With liquid staking derivatives (LSDs) specifically – and before you scroll away – it’s not as complicated as the name suggests!
Basically, if you want to get paid to process transactions on the Ethereum network, you need to deposit (wager) a minimum of 32 ETH (~$60k) and have a ton of specific hardware/technical know-how to get started.
Then you can start processing / earning transactions – and the more ETH you stake, the more you earn per year.
LSDs make people skip all that noise.
They set up all the hardware and make sure everything works – then have others contribute an amount of ETH to their staking pools, where they earn ~4% returns per year.
Here comes the “cartel” part of the story:
There is one company (Lido) that makes up 74% of the liquid staking market!
That’s a dominant position that would be celebrated in most business circles, but in crypto it’s a big concern.
Because if Lido were to be hit with lawsuits from government agencies saying they should stop processing certain transactions for certain people, then crypto would start to look a lot like the banking system.
But here’s the real problem:
You know who else doesn’t like centralization in the cryptocurrency space? The US government.
Cryptocurrencies that cannot prove themselves decentralized enough have a high chance of being regulated into oblivion. Not good.
The solution?
People much smarter than us suggest this:
Make solo stakeout easier. Lower the 32 ETH barrier and make the installation process idiot proof.
Sounds good to us.