In the first hours after Ethereum’s long-awaited Merge was completed, over 40% of the network’s blocks were added by two entities: Coinbase and Lido. The move to Proof-of-Stake was partly framed as a way to improve the decentralization of the network.
The co-founder of Gnosis, Martin Köppelmann, pointed out on social media that at one point, out of the last 1,000 blocks on Ethereum 420 had been built by Lido and Coinbase, with seven payers accounting for more than two-thirds of the stake on Ethereum’s network.
Lido is a decentralized protocol that users liquid staking services. Whenever users stake ETH through Lido, they receive stETH, a token representing their staked ETH they can use elsewhere in the cryptocurrency space.
Coinbase is the world’s third-largest cryptocurrency exchange and allows its users to stake ETH through its platform. Using Coinbase’s services, users can stake any amount of tokens, instead of having to meet the 32 ETH threshold to become a validator on Ethereum.
If a single entity controls more than 66% of the network’s staked ether, it could be able to make it more difficult for other to write transactions on the cryptocurrency’s ledger.