Cryptocurrency

Osmosis co-founder questions the effectiveness of ETH staking post-merge

Zegex

Osmosis co-founder Sunny Aggarwal questions the effectiveness of Ethereum’s staking model.

Current, 13.7 million ETH staked on the beacon chain. According to the PoS design, the assets will remain locked until the Shanghai update is published in the future.

In a comment published on crypto slate, Aggarwal said the inability of users to withdraw their staked ETH contributes to the widening deviation of Lido’s stETH price from the underlying ETH.

Aggarwal added that if users can withdraw their staked ETH, they can profit from the price difference through arbitrage. Over time, trading will help bring his stETH and ETH back to his desired 1:1 peg.

Post-merge security concerns

After the merger, Ethereum could be safer in the short term than in the long term, Aggarwal said.

he explained:

PoS is very secure on short timeframes due to its fast finality. But longer timeframes are not safe. This is because after the debonding period, they may be subject to so-called “long-range attacks”.

Aggarwal added that while PoS makes it easy to change blocks that are more than a year old, it is nearly impossible for PoW chains like Bitcoin.

Decentralization under attack

Market intelligence platform Santiment has revealed that 46.15% of PoS nodes are controlled by two addresses identified as belonging to Lido Finance and Coinbase.

according to Dune analysisLido currently holds 4.16 million stake ETH (30.1%) and Coinbase owns 2 million stake ETH (14.5%).

expressed by many concern That the centralized allocation of staked ETH could undermine Ethereum’s ethos about decentralization.

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