Big Firms Dominate Ethereum Validation
As the much-anticipated Ethereum merger finally came to pass and it transitioned from a proof-of-work to a proof-of-stake consensus mechanism, the analysts who had previously warned about an incumbent centralization issue have reiterated their concerns.
Martin Köppelmann, co-founder of Gnosis, tweeted, “Top 7 entities controlling ⅔ of the total Ethereum stake is pretty disappointing to see.” Another analyst who goes by the handle name, @SolanaLegend, tweeted that Ethereum’s Nakamoto Coefficient post-merge is 2, which is even lower than that of Solana, which scored 30. A report by Dune Analytics showed that Lido with 4.16 million ETH (30.1%) and Coinbase with 2 million ETH (14.5%) are currently handling the majority of staked-based Ethereum validation. The remaining stakers have only 3.65 million or 26.5% of the staked supply.
On the other hand, 19 major Ethereum mining pools, including F2Pool, Poolin, AntPool, Nanopool, 2miners and EthwMine, have decided to continue mining the proof-of-work (PoW) version of Ethereum. EthereumPoW, the community supporting ETHPoW, has released its growing list of mining pools that will continue mining the new fork.
Ether Staking Could Trigger Securities Laws
SEC chairman Gary Gensler told reporters on 15 September 2022 that staked cryptocurrencies could be classified as investment contracts or securities under the Howey Test and could be subject to federal securities regulation.
He noted that proof-of-stake blockchains, which pay out rewards to investors who pool their holdings, act similar to investment contracts and may come under the SEC’s purview. Gensler said that allowing holders to stake tokens could be translated into “investing public anticipating profits based on the efforts of others. From his perspective the intermediaries who offer staking services to their customers “look very similar — with some changes of labelling — to lending.”
