According to the statement made by JPMorgan, recent updates have made the Ethereum network more centralized.
In the report prepared yesterday by JPMorgan analysts “The increase in staking in Ethereum after the Merge and Shanghai updates led to the Ethereum network becoming more centralized, and the total return on staking decreased.” The expression was used.
With the Merge update in September 2022, Ethereum switched from the proof-of-work algorithm to the proof-of-stake algorithm and the staking era began. Thanks to this year’s Shanghai update, validators on the network will be able to unlock the ETH they have locked. to be able to pull they started.
Liquid staking providers Its popularity has resulted in the growth of staking on the Ethereum network. JPMorgan analysts, “Total staking on the Ethereum network more than 50%the current top 5 liquid staking providers control and specifically Lido alone accounts for a third of this. “represents.” he emphasized.
Platforms like Lido “highly central” Stating that it contains elements, JPMorgan analysts made the following warning about the risks in the Ethereum network:
Centralization arising from any formation or protocol is not a problem for the Ethereum network. will create multiple risks It goes without saying, because in that case some of the liquidity providers or node operators who come together may become the breaking point of the chain, become the target of attacks, or conspire to become a monopoly that pursues their own interests at the expense of the interests of the community (e.g. they may censor some transactions).
JPMorgan analysts think that some methods applied for staking also pose risks. An example of this is the use of some liquidity tokens as collateral in more than one DeFi protocol at the same time.
According to analysts, if there is a sharp drop in the value of a staked asset or a hack attack, this to successive liquidations may cause.