A group of Ethereum staking services have agreed to self-limit their share of the network’s validators to 22%. The move is intended to help ensure the network remains decentralized and prevent any single entity from gaining too much control.
Thank you for reading this post, don't forget to subscribe!The services that have agreed to the self-limit include Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance. Together, these services currently control around 15% of the network’s validators.
The self-limit will be implemented in two phases. In the first phase, the services will commit to not owning more than 20% of the network’s validators. In the second phase, they will commit to not owning more than 18%.
The self-limit is being implemented in response to concerns about the concentration of power in the Ethereum staking ecosystem. As more and more people stake their ETH, a small number of large staking services could end up controlling a majority of the network’s validators. This could give them the power to influence the network’s consensus rules or even censor transactions.
The self-limit is a voluntary measure, but it is seen as an important step to protect the decentralization of the Ethereum network. The move has been welcomed by the Ethereum community, and it is expected to be followed by other staking services.
The self-limit was proposed by Superphiz in May 2022. Superphiz explained that the 22% limit was chosen because it would require at least four major entities to collude in order to reach finality. Finality is the point where transactions on a blockchain are considered immutable, supposedly ensuring that transactions within a block cannot be altered.
Interestingly, the largest Ethereum liquid staking provider, Lido Finance, voted by a 99.81% majority not to self-limit back in June. Lido Finance argued that the self-limit would be harmful to its users and that it would not be effective in preventing centralization.
The decision of whether or not to self-limit is a complex one, and there are valid arguments on both sides. Ultimately, the decision of whether or not to self-limit is up to each individual staking provider. However, the fact that a number of major staking providers have agreed to self-limit is a positive sign for the future of the Ethereum network.
