/cdn.vox-cdn.com/uploads/chorus_asset/file/23962442/acastro_STK067__03.jpg)
/cdn.vox-cdn.com/uploads/chorus_asset/file/24247717/lp_logo_3.0.jpg){kind=logo}
/cdn.vox-cdn.com/uploads/chorus_asset/file/24016885/STK093_Google_04.jpg)
/cdn.vox-cdn.com/uploads/chorus_asset/file/24808816/Starfield__The_Settled_Systems___Supra_Et_Ultra_____Starfield__The_Settled_Systems___Su)
[ad_1]
Lido, the Liquidity Staking protocol that supports staking, is now live under some Ethereum community members. crosshair, There are fears that the platform is centralizing Ethereum and could make the blockchain fragile.
As of June 1, Lido is the largest decentralized finance protocol. defilama data shows That platform manages $13.2 billion in staking assets.
At this stage, Lido’s Total Value Locked (TVL) is almost double that of MakerDAO, one of the original decentralized currency markets in the region.
MakerDAO has $6.29 billion in TVL and serves only Ethereum.
Lido Is Ethereum’s Weak Point?
Critics are concerned not only about Lido’s dominance in terms of TVL, but also about the number of validators using the protocol.
according to on-chain statisticsOver 19 million Ethereum have been staked in the Beacon Chain, ie the Proof-of-Stake network.
However, out of this amount, 6 million Ethereum has been staked through Lido. This translates to approximately 36% of all staked Ethereum passing through the Liquidity staking protocol.
In addition, parallel data shows 32% of all Ethereum validators use the Lido infrastructure.
In Ethereum’s proof-of-stake system, validators are needed to verify transactions and secure the network against external attacks.
The distribution of validators, who no longer need to run energy-consuming and expensive rigs, is key to decentralizing the Ethereum network.
The global distribution of Ethereum validators will translate into a robust platform where users and operators of the protocol, currently managing over $26 billion in assets, do not have to worry about majority attacks.
It is this level of centralization that is emerging in Lido that some Ethereum community members may find destabilizing the network.
In the past, client operator Prism lost a significant portion of its market share when it was revealed that more than 66% of all Ethereum proof-of-work nodes were using their software.
Could this same intervention be needed to suppress the expansion of lido?
According to critics, the current community lacks educational material and initiative to act when problems emerge.
So far, with 32% of all validators using LidoDAO’s infrastructure, this is more than double the limit set by Ethereum co-founder Vitalik Buterin. recommended For each entity that wishes to host the network’s validators.
LDO prices may drop
With centralization questions emerging, LidoDAO may be forced to decentralize, even breaking into multiple entities.
However, for LDO holders, any action to break the dominance of the protocol could have a huge impact on the price.
As of June 1, LDO, the governance token of LDO, is one of the top performers.
LDO is up 125% in spot rates from December 2022 lows as more ETH holders opt to stake through the Lido finance infrastructure to earn annual rewards from the Ethereum Proof-of-Stake network.
Feature image from Canva, chart from TradingView
