While multiple Ethereum staking services are pledging to limit their market share to 22%, Lido Finance takes a different path, sparking debates on centralisation and community values.
The top five companies that offer ether staking pools for individuals have stated that they won’t control more than 22% of all ETH currently staked.
This is a way to make sure that no single company has too much power over the Ethereum network, keeping it open and fair for everyone.
Companies like Rocket Pool, StakeWise, Stader Labs, and Diva Staking are either already following this rule or planning to do so, says Superphiz, a key Ethereum developer.
Puffer Finance, another such company, has also said they’ll stick to this limit.
Lido doesn’t obey the 22% of ether staked limit
Superphiz explains that to make any big changes to the Ethereum network, 66% of the participants have to agree.
By setting a limit of 22%, it ensures that at least four big companies would have to work together to push through any major updates. This makes the network safer and more secure.
When talking about blockchain transactions, the finality of a transaction is the moment when transactions are locked in place and can’t be changed.
Superphiz, a leading Ethereum developer, brought up an important question last May:
Would a company that helps people stake Ethereum be willing to put the network’s well-being over its own profits?
Interestingly, Lido Finance, the biggest company of this kind, decided not to follow the 22% self-limit rule. Almost all of their members (99.81%, to be exact) voted against it back in June.
Superphiz mentioned in a post at the end of August that Lido aims to control most of the deciding power in the Ethereum network.
To give you an idea of how big Lido is, they control 32.4% of all Ethereum that’s currently being staked.
That’s a big deal, especially when you consider that the next largest, Coinbase, only has an 8.7% share, according to data from Dune Analytics.
Source: Dune Analytics
What’s the right thing to do?
Well, the Ethereum community has different opinions on that.
One expert named Mippo commented at the end of August that the 22% self-limit rule isn’t really about staying true to Ethereum’s ideals, which are about open access and innovation for everyone.
Mippo thinks that those advocating for the self-limit would probably not stick to it if they were in the dominant position like Lido Finance. In his view, everyone is just acting in their own best interest.
Another person argued that user-friendly services shouldn’t be criticised as greedy.
On the flip side, some people are really concerned that a few big companies could end up controlling too much of the Ethereum network. They see Lido’s large market share as a problem, even calling it “selfish and disgusting.”
Why is Lido Finance the top staker on Ethereum?
Lido ticks all the boxes when it comes to staking services.
They support multiple types of digital money and make it super easy for anyone to use their platform.
Their fees are fair, and they even offer nice rewards if you refer people to their service. On top of that, they make a lot of different cryptocurrencies more available for trading and are backed by some big names in the decentralised finance world.
What’s cool is that when you stake your digital tokens with Lido, you get back tokens that are tied to the value of what you staked. You can then use these for more ways to earn money in the DeFi world.
Lido has become a top pick for people looking to stake their digital assets thanks to some standout features.
First off, staking is a breeze; you can earn daily rewards by simply staking your tokens, and there’s no minimum amount you need to start.
Want to make even more from your tokens?
Lido allows you to use them for things like loans, yield farming, and other money-making activities. This can give your earnings a nice boost.
They also have their own digital token, called LDO, that you can trade on popular exchanges like SushiSwap, Uniswap, and many more.
When it comes to security, you can rest assured. Lido’s smart contracts have been thoroughly checked by reputable firms like Quantstamp and Sigma Prime.
Although Lido doesn’t offer its own wallet, you can still use popular ones like TrustWallet and MetaMask to manage your assets.