[ad_1]
Before The Merge, Ethereum had dozens and dozens of mining pools dedicating hashrate to the blockchain network. Everything has changed and most miners have switched or are planning to switch to other Ethash compatible coins like Ethereum Classic, ERGO and the new ETHW fork. Now Ethereum blocks are verified by validators and at the time of writing there are 429,278 validators. However, a large portion of the 13.7 million Ethereum staked is held by four well-known providers.
Bitcoin.com News reported that Lido owned 30% of the ether staked four days ago. On September 15, the Twitter account Checkmate, the principal on-chain analyst at Glassnode, wrote about the entities currently holding the lion’s share of today’s staked ETH. “We have profiled a few additional entities”, Checkmate wrote to someone discussing Lido holdings. Checkmate said the data shows there are 13.7 million ETH staked and 10 million Ether held by known vendors. This equates to 73% of ETH staked, and the top four providers hold 8.13 million ETH, or 59.3% of the total.
“4.17M at Lido, 1.92M at Coinbase, 1.14M at Kraken, [and] 0.9 million in Binance,” Checkmate said. The tweet shared by Glassnode’s onchain analyst was discussed in more detail by popular bitcoiner Tuur Demeester, editor of satoshipapers.org. “44% of ETH is held by only 2 entities, Lido [and] Coinbase. Add Kraken, and it jumps to 52% of total ETH staked by 3 entities,” Demeester wrote. The editor too mocked a tweet written by Vitalik Buterin that talks about the idea of having the system validated by average users.
In addition to bitcoiners like Demeester and Checkmate, US Securities and Exchange Commission Chairman Gary Gensler recently spoke about the Howey test and coin staking. The Wall Street Journal (WSJ) reported that Gensler said, “From a coin perspective…this is another clue that according to the Howey test, the investing public is anticipating profits based on the efforts of others. .” While the WSJ said Gensler pointed out that he was not referring to any particular cryptocurrency, many crypto enthusiasts assumed the SEC Chairman was discussing Ethereum (ETH) and PoS coins.
BREAKING: Gary Gensler says using proof of stake could trigger securities laws.
—Dennis Porter (@Dennis_Porter_) September 15, 2022
In mid-August, Coinbase co-founder and CEO Brian Armstrong was asked if the exchange would be censored 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 Ethereum protocol level [the] protocol level (B) Stop the staking service and preserve network integrity,” the user asked.
amstrong replied three days later and said: “It’s a hypothesis that we hope not to face. But if we did, we’d go with (B), I think. I have to focus on the big picture. There may be a better option (C) or a legal challenge that could help achieve a better result.
A number of people think it’s entirely possible that well-known validators will be forced to comply with regulatory policy and censorship. With four centralized entities staking the most ethereum (ETH) today, people are wondering whether or not validators will be centralized and censor transactions. On September 14, Twitter co-founder Jack Dorsey share an editorial published on substack.com that criticizes PoS. The substack.com article is written by Scott Sullivan and he claims that “to be a Validator is to live each day by stepping on [eggshells]” and “PoS is an authorized system.”
Meanwhile, most of the criticism comes from bitcoiners, some of whom are labeled as bitcoin maximalists. Ethereum proponents think the idea is absurd and one proponent noted that they would simply switch to an ETH chain that does not censor transactions. “Guys,” tweeted Ryan Adams, “[the U.S. government] don’t try to censor [ethereum] validators right now. Let’s not rush. But… if they ever do… I will be on the Ethereum fork which does not censor transactions. As simple as that. Layer 0 is our security layer,” Adams added.
Bitcoin supporter and blogger, Eric Wall, published a Twitter thread on September 16 which details in the case of the Lido staking, “The Lido isn’t even a swimming pool.” Wall further remarks in his thread that “Lido cannot decide what blocks mine from any of its underlying node operators”. The wall makes disclose that he is an LDO investor, because lido dao (LDO) is the native governance token of the Lido Finance project.
“Lido also cannot fire any of its node operators or withdraw their participation as things stand. No more than 13.1% of Lido validators are based in a single country. The geographic spread here is actually quite impressive,” Wall’s Twitter thread adds.
What do you think of the criticisms against Ethereum and validators censoring transactions? Let us know what you think about this topic in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons, Banteg, Alex Svanevik, Checkmate, Twitter,
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
[ad_2]
Source link
The post Proof-of-Work Proponents Question Validator Censorship As 59% Of Staked Ethereum Is Held By 4 Companies appeared first on Crypto New Coins.
Proof-of-Work Proponents Question Validator Censorship As 59% Of Staked Ethereum Is Held By 4 Companies
×Get updates delivered right to your inbox!
