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Ethereum Is Now in Control of Only Two Entities

Ethereum Is Now in Control of Only Two Entities

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Arman Shirinyan

Ethereum Decentralization Is At Risk After Core Update

Content

  • Coinbase and Lido dominate
  • Bad price of ETH

Decentralization has always been key to the entire blockchain and cryptocurrency industry, and with the Merge update, the industry’s second largest network has potentially become more centralized.

Coinbase and Lido dominate

According to the network’s stake classification, only two entities control almost 50% of the entire network, which is an unhealthy redistribution of stake power. The only positive thing about the investment is that the largest shareholder of Ethereum is the Decentralized Autonomous Organization Lido.

Ethereum Stake
Source: Ethereum Explorer

Lido allows anyone to join its DAO and become part of the largest entity of the Ethereum network, making the largest Ethereum holder technically decentralized. The second largest owner is the Coinbase exchange with a share of more than 14 percent.

Technically, 14% shouldn’t be enough to cause serious decentralization issues in the network. However, the distribution of funds among centralized exchanges raises many questions about the stability of the proposed PoS model.

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Six centralized exchanges have a relatively large amount of dominance in the Ethereum network. As exchanges remain relatively low today, the proportion of controlled Ethereum is lower than during periods like the 2021 bull run.

Bad price of ETH

Potential problems with regulators and issues related to decentralization could be the main reasons behind the latest short-term crash, which resulted in a 10% loss in the last 24 hours. As stated by SEC Chairman Gary Gensler, Ethereum now has a structure similar to a security with its shareholders.

The staking mechanism allows the SEC to apply security laws to Ethereum, creating additional risks for investors.

Source: https://u.today/ethereum-is-now-in-control-of-only-two-entities

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