- Prominent figures in the Ethereum community are expressing worry over the dominance of Lido Finance and its potential impact on Ethereum.
- Observers are highlighting the dangers of Lido’s dominance, along with the dangers it poses to Ethereum’s mission to remain decentralized.
Lido Finance, a popular staking solution, is taking over the Ethereum ecosystem and community members are collectively expressing worry.
As noted by community members, the Liquid staking solution Lido Finance now makes up around a third of all stake Ethereum (ETH). The bone of contention for key players is particularly how Lido’s dominance affected Ethereum’s image.
A handful of Ethereum’s projects have centered on decentralization as the network attempts to push back on the narrative that it is inherently centralized. With Lido gaining this much popularity, community players are worried that Lido’s position could influence Ethereum’s perception as a decentralized platform that it claims to be.
In a recent post shared on X (formerly Twitter), Evan Van Ness shared his thoughts on the situation. The chief decentralization activist of Ethereum branded Lido’s recently attained milestone as an attack on Ethereum’s decentralization. He quizzes the market on its collective silence, implying that the new development is dangerous in the long term.
Van Ness goes on to reference the Bitcoin network as a season to remain cautious. He pointed to the fact that Bitcoin’s block production has reached one of the highest levels of centralization.
70% OF BITCOIN BLOCK PRODUCTION CONTROLLED BY 3 ENTITIES https://t.co/NfhhacjHuk pic.twitter.com/p2SZaqSBXT
— Evan Van Ness 🧉 (@evan_van_ness) April 12, 2023
Ethereum investor speaks on the future of Ethereum and its connection to Lido Finance
According to data shared by Van Ness, Bitcoin’s block production is controlled by 3 entities at present. New York-based crypto-mining service provider Foundry USA, currently controls 33.3 percent of Bitcoin’s block production. On the other hand, Antpool and F2Pool control 21.6 percent and 15.1 percent of Bitcoin’s block production. “We should not let our block production reach Bitcoin levels of centralization.” Evan Van Ness advised.
Lido may be the biggest attack on Ethereum’s decentralization (“credible neutrality”) in our entire history
It’s about to breach 33%. Yet many are staying silent. Why?
Lido may be the biggest attack on Ethereum's decentralization ("credible neutrality") in our entire history
It's about to breach 33%
Yet many are staying silent
Why? pic.twitter.com/O7Y37FZrE0
— Evan Van Ness 🧉 (@evan_van_ness) September 1, 2023
In response to the post, some market players cited that Lido has made significant improvements to its node operations, for the sole purpose of strengthening decentralization. Lido has also outsourced node ops to smaller operators and pushed for node distribution across providers and geographies, he added, concluding that these actions have gone unnoticed by community members.
Ethereum investor, Ryan Berckman seems to be in agreement with Evan Van Ness’ sentiments. He explains that Lido’s uncapped dominance uniquely threatens Ethereum’s reputation, as a decentralized network. Ethereum’s long-term valuation could also be at risk, he stated, adding that Ethereum’s long-term goals will be affected if the issue is not addressed.
If this were to happen, it may affect the order of magnitude of our growth rate and, therefore, Ethereum’s benefit to humanity and the number of zeroes on the long-term ETH valuation,
