The increase in Ethereum staking since major network upgrades like Merge and Shanghai has come at the cost of higher centralization. and declining returns from staking, according to a new report by JPMorgan.
JPMorgan analysts, led by senior managing director Nikolaos Panigirtzoglou, issued a new investor note on Oct. 5, warning about the risks posed by increased centralization. Ethereum
The top five staking providers with liquidity include Lido, Coinbase, Figment, Binance and Kraken, controlling more than 50% of staking on the Ethereum network. JPMorgan analysts noted in a report that Lido alone is It’s almost a third.
These node operators are selected by Lido’s Decentralized Autonomous Organization (DAO), which is controlled by a handful of wallet addresses. The report also mentions Lido’s DAO rejecting a proposal to limit stakes to 22% of Ethereum’s total stakes to avoid. Centralized
“Lido is not participating in this initiative, as its DAO rejected the proposal with a 99% majority,” JPMorgan analysts wrote.
In addition to higher centralization, Ethereum from The Merge has also been associated with a decline in overall yields, JPMorgan noted. The standard block reward has decreased from 4.3% before Shanghai’s upgrade to 3.5% today, and the total yield has decreased from 7.3% before Shanghai’s upgrade to around 5.5% today.
refer : cointelegraph
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