Ethereum Merge Shows First Signs Of Concern

Ethereum Merge just completed transitioning to proof-of-stake. It appears there are some disturbing attributes already. Evidence suggests that only two addresses run almost 50% of all the Ethereum PoS nodes. This discovery has aroused some fresh concerns of centralisation.

Two Ethereum addresses run up to 45.18% of all nodes post-Merge

Crypto market intelligence platform Santiment revealed the development through Twitter on Thursday, shortly after The Merge. Santiment shared its post-Merge inflation dashboard which indicates that two addresses are responsible for running over 45% of the total Ethereum nodes for block validation, processing transactions and storing data on PoS.

The first address has validated about 188 blocks at the time of reporting, which is a 28.97% contribution. The second address has validated 105 blocks, representing a 16.18% contribution. These two addresses have a combined share of 45.18% of all nodes.

This heavy dominance by these addresses is something to watch,

Santiment said in the tweet.

The discovery has sparked reactions, with some proponents noting that it confirms the concerns of a centralized Ethereum PoS chain. Despite the promise of a greener approach, Ethereum’s switch to PoS has received some backlash from the community.

Lido has a 31% share of all staked ETH

Some pundits have in the past raised concerns of centralization, noting that nodes will be run by a few select individuals. This would contradict the underlying nature of blockchain technology – decentralization. Notwithstanding, Co-founder of Ethereum, Vitalik Buterin and other Ethereum developers have oftentimes refuted such claims.

Previously, blockchain analytics platform Nansen published an article detailing the share of the 13M+ currently staked ETH. Per the article, only five entities contribute up to 64% of the 13.4M staked ETH. Out of these five, liquid staking service Lido takes the biggest chunk, having a share of 31%.

The fact that such a huge share of staked ETH comes from one single entity has also raised centralisation concerns. Additionally, concerns of the Ethereum network being more vulnerable to censorship as a result of this centralisation have surfaced in the past. This is due in large part to OFAC’s recent sanctions on crypto mixer Tornado Cash.