Sentiment Analysis noticed that 46.15% of Ethereum PoS nodes are controlled by just two addresses.
A few hours after the Merge upgrade, the first launch validated about 188 blocks, or 28.97% of the nodes, while the second validated 16.18%, or 105 blocks. On Twitter, the data has become a point of contention, with users discussing the impact of the upgrade on the world’s largest network’s centralization.
According to our #Ethereum Post-Merger inflation dashboard, 46.15% of the #proof invited nodes to store data, process transactions, and add new ones #blockchain blocks can be attributed to only two addresses. This heavy dominance at these addresses is something to behold. pic.twitter.com/KQdFNgGloD
— Santiment (@santimentfeed) September 15, 2022
According to our #Ethereum Post Merge Inflation Dashboard, 46.15% of #proofofstake nodes for storing data, processing transactions, and new #blockchain blocks can be attributed to just two addresses. The strong dominance of these addresses should be monitored. pic.twitter.com/KQdFNgGloD
— Santiment (@santimentfeed) September 15, 2022
Before the upgrade, blockchain analytics platform Nansen released a report showing that five entities held 64% of all ETH at stake, with Coinbase, Kraken, and Binance accounting for nearly 30% of ETH at stake. It also showed that most of the 4,653 Ethereums were active. Nodes are in the hands of centralized web service providers such as Amazon Web Services (AWS).
“Since the successful completion of the Merge upgrade, the majority of blocks, around 40% or more, have been taken by two addresses owned by Lido and Coinbase. It’s not great to see more than 40% of the blocks being settled by two providers, especially a centralized service provider (Coinbase),” explained Ryan Rasmussen, crypto research analyst at Bitwise.
This is not ideal. However, I think Lido will struggle to maintain this market share as more betting service providers and Lido’s competitors enter the space and solutions like Rocket Pool become more popular. https://t.co/A5s9FeICLD
— Ryan Rasmussen (@RasterlyRock) September 15, 2022
It is not ideal. However, I think Lido will struggle to maintain this market share as other betting service providers and Lido’s competitors enter the space and solutions like Rocket Pool become more popular. https://t.co/A5s9FeICLD — Ryan Rasmussen (@RasterlyRock) September 15, 2022
PoS is often thought to lead to centralization since it favors those with higher token supply over those with lower amounts. For example, the Ethereum blockchain’s new consensus mechanism relies on collectors, not miners, to verify transactions. To run a validator and get rewarded, participants need to take 32 ETH, which is about $48,225 at the time of writing.
Proponents of PoS, however, claim that this mechanism is more secure and greener than PoW. The co-founder of Ethereum, Vitalik Buterin, predicted that the move would not only reduce power consumption by about 95%, but also the scale of the network, and transaction processing is expected to reach the level of centralized payment processors, which is expected to happen in the second half. of 2023.
