EthStakeCap Initiative

Martin Walker
Sep 2, 2023 at 01:44 pm

Five Ethereum liquid staking service providers have either recently implemented or are currently in the process of rolling out a voluntary, self-imposed restriction, firmly pledging not to acquire a market share exceeding the 22% mark within the Ethereum staking ecosystem. This strategic maneuver serves as a proactive measure to safeguard and fortify the cherished tenets of decentralization that underpin the very essence of the Ethereum network.

As articulated by Ethereum's esteemed core developer, Superphiz, among the prominent proponents and implementers of this visionary limitation are Rocket Pool, StakeWise, Stader Labs, and Diva Staking, all of whom have wholeheartedly embraced or are diligently pursuing the adoption of this prudent limitation.

The genesis of this innovative concept can be traced back to the fertile ground of May last year when Superphiz first introduced it, thereby catalyzing a thought-provoking discourse around the pivotal question of whether a staking pool's fiduciary interests could be harmonized with the overarching well-being of the blockchain it actively supports.

Delving into the rationale underpinning the selection of the 22% self-imposed threshold, Superphiz elucidated that this specific numerical value was meticulously chosen owing to Ethereum's inherent requirement of securing consensus from a robust 66% majority of validators in order to ascertain the network's precise state. By opting for a limit set just below the 22% threshold, this proactive measure would effectively necessitate the cohesive involvement of at least four influential entities in unison to facilitate the realization of blockchain finalization.

Beyond the aforementioned pioneers, several other platforms have heeded the call of commitment to this judicious self-imposed limit plan. For instance, the Stafi Protocol, in a display of unwavering dedication to Ethereum's core principles of decentralization, took to Twitter to assert its intention to self-impose a cap at 22% of all validators, a move calculated to ensure the highest degree of alignment with Ethereum's deeply ingrained ethos.

Adding to this growing momentum, Puffer Finance, a prominent player in the liquid staking arena, has also enthusiastically joined the ranks of advocates championing this cause. Nevertheless, the narrative takes a divergent turn with Lido Finance, whose commanding presence in the Ethereum staking arena has precipitated concerns over centralization. In a majority vote, Lido Finance opted against the notion of self-imposing limits, with an astonishing 99.81% of the electorate casting their dissenting votes.

As matters presently stand, Lido Finance commands a substantial slice, amounting to 32.4%, of the overall staked Ether market share, as reported by data meticulously compiled by Dune Analytics. In stark contrast, Coinbase, the immediate runner-up in this domain, holds a markedly less substantial portion, tallying up to a mere 8.7% of the market, while Binance trails behind with a comparably modest share of 4.52%.

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