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Ethereum Staking Pools: Who Runs The Largest Ones?

Ethereum Staking Pools: Who Runs The Largest Ones?

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Ethereum staking pools have been a popular, if somewhat controversial, way for investors without the funds or know-how to get a share of the network’s validator rewards.

And there has been plenty of time to be involved. The merger, which starts next week, has been in the works for years.

The merger will move Ethereum’s current proof-of-work mining model – which requires a lot of power to run the mining rigs that process transactions – to a proof-of-stake consensus system, which is expected to consume more than 99% less energy. The Ethereum Foundation.

When Ethereum Maint makes this transition, validators, not miners, validate the transactions and add them to the blockchain. Like miners, these validators earn rewards for securing the network.

However, becoming a validator has high entry fees and a lot of risks. Investors need to deposit 32 ETH (worth about $52,000) to become a validator and maintain the hardware and software to avoid downtime.

It has resulted in contributions.

To participate, people lock their Ethereum to a third party like Lido Finance or Coinbase. These entities use funds to set up validators and manage the overhead of running nodes. In return, they take a cut of the fees and pass the rest on to depositors.

As of Friday afternoon, the Beacon Chain has more than 422,000 unique validators holding $22.3 billion worth of Ethereum (13.5 million ETH), according to blockchain analytics firm Nansen. Lido Finance controls 30 percent of ETH, Coinbase 15 percent, Kraken 8 percent, and Binance 7 percent.

Overall, more than 60% of the stake in Ethereum is sitting on four entities.

To understand the implications, think of staking pools as real estate investment trusts. A REIT allows people to get investment property without having to buy it themselves and share the income.

But if four REITs controlled 60 percent of all apartments, it’s easy to imagine what it would do to the market if even one of them decided to prevent certain people from buying and renting apartments.

That’s why betting pools have drew so much attention Before the Ethereum merger – individual entities controlling large groups of validators undermine the idea of ​​security by decentralization.

Here’s a closer look at the biggest Ethereum staking pools on September 2nd:

Lido Finance, 4.2 million ETH

Lido Finance and its Staked ETH (stETH) have been by far the most popular staking pool. Lido launched a liquid staking token in late 2020, just before the creation of the Beacon Chain. The liquid nature of the token means that ETH depositors receive stETH and can sell, trade or lend stETH while their ETH remains locked with Lido.

stETH is held by more than 98,000 unique wallets Etherescan.

Coinbase, 2 million ETH

Coinbase has offered Ethereum staking since TKTK. But two weeks ago, the company introduced a liquid staking option: Coinbase Wrapped Staked ETH (cbETH). It behaves similarly to stETH and can be used as collateral in connection with a decentralized financial lending protocol. As of Friday, cbETH has a market capitalization of $936 million, according to CoinMarketCap, and is being held 880 unique wallets.

Kraken, 1.1 million ETH

In December 2020, when the proof-of-stake Beacon Chain was launched, Kraken announced that its customers had staked 100,000 ETH before the merger. The amount has increased tenfold. Unlike Lido, Coinbase and Binance, Kraken does not offer a liquid staking option. In fact, it now has a warning at the top Frequently asked Questions the page tells users that they cannot release their Ethereum until after the merge. But Kraken’s exposure to the staking pool is actually larger than 1.1 million ETH suggests. In December 2021Kraken acquired Staked, whose US branch Staked.US is responsible for 405,600 ETH.

Binance, 904,608 ETH

It was published by Binance Binance Beacon ETH (bETH) in late 2021 and has issued it to Ethereum depositors who have joined its staking pool. bETH tokens allow liquid staking, which means users can use it on Binance’s Ethereum sidechain, Binance Smart Chain, the same way they would otherwise use Ethereum. It is currently held in 8,939 unique wallets BscScan.

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