Lido DAO token holders have begun voting to determine if the DeFi platform should reduce its staking pool. Voting is a follow-up to the Governance Proposal announced on June 24th.
The voting process is the result of a month of deliberation on Lido’s betting advantage and whether it should be restricted in itself to limit the risk of potential centralization.
Lido currently owns 31% of all Ethereum bet on the Beacon chain, Ethereum’s proof of stake blockchain. Domination of gambling raises fear within the Ethereum community, and critics fear it may threaten the decentralization of Ethereum.
Voting is expected to end on July 1st, and the results will determine whether Lido is self-limiting. If the majority of voters vote in favor, another vote will be held on how the self-limitation process works.
Concerns about the superiority of stETH
In a governance proposal, Lido said that when the beacon chain goes live, its betting advantage gives it more voting rights. As a platform that has begun to compete with centralized exchanges, he argued that such centralized voting rights pose an existential threat to the blockchain.
The Ethereum community has raised similar concerns about centralizing voting rights. The DeFi platform currently has about one-third of all bet Ether and can be leveraged for voting once the transition to the Beacon chain is complete.
Ethereum co-founder Vitalik Buterin argued that a single protocol should not be the majority in ETH staking. He stated that such domination, combined with Lido’s governing structure, was a potentially dangerous point of centralization.
In addition, the proposal presupposes the belief that other liquid staking protocols also limit their exposure. This allows you to effectively fill supply shortages with smaller protocols.
What is the advantage of lid staking for ETH 2.0?
The move to Ethereum’s PoS blockchain means relying on validators to validate transactions on the blockchain. Unlike the PoW blockchain, where miners need to consume extra energy to solve complex mathematical problems.
However, the user must deposit 32 ETH to operate the validator node. This is an advantage for many users. Meanwhile, as a staking service provider, Lido will allow users to bypass this requirement and earn staking rewards.
According to Ethereum data, ETH 2.0 is betting about 12.6 million ETH, which is equivalent to 10.6% of the ETH circulation supply.Approximately of the 12.6 million ETH bet 4.2 million Bet through Lido by 73,369 stackers, Lido has become Ethereum’s most used staking pool.
This means that if Ethereum moves to the PoS blockchain and Lido still occupies most of the staking advantage, it can overwhelm the DeFi platform for transaction validation and pose a risk to many. It means that you have sex. Some concerns include validator reductions, governance attacks, and smart contract abuse.
Lido’s betting advantage, on the other hand, can help prevent acquisitions by centralized exchanges and ensure that the blockchain remains decentralized.
stETH remains depegged
The bet Ethereum, which is to be pegged by ETH, remains depegated after a major wave of sales. There is speculation about the security of tokens and whether their depegging can further disrupt the crypto ecosystem.
On June 16, Alameda Capital, one of the largest holders of stETH, dumped its $ 57 million holdings in stETH. This is linked to the ongoing financial problems of Celsius and Three Arrows Capital, both large holders of stETH.
At the time of the press, stETH is not comparable to ETH and is trading at $ 1,173.
