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Ethereum Merge Displays Initial Signs Of Unease

16-Sep-2022 By: Rohit Tripathi
Ethereum Merge Displ

Ethereum Merge switched to proof-of-stake.

There seem to be some unsettling characteristics present already. According to available data, only two addresses control close to 50% of all Ethereum PoS nodes. This finding has sparked some recent worries about centralization.

Following the Merge, two Ethereum addresses control up to 45.18% of all nodes.

Immediately following The Merge on Thursday, the development was announced on Twitter by the cryptocurrency market intelligence site Santiment. The post-Merge inflation dashboard from Santiment shows that two addresses are in charge of over 45% of all Ethereum nodes that are used for block validation, transaction processing, and PoS data storage.

At the time of reporting, the first address had validated 188 blocks, or around 28.97% of the total. With 105 blocks validated, the second address has contributed 16.18%, or 105 blocks. Together, these two addresses account for 45.18% of all nodes.

Reactions to the revelation have been mixed, with some supporters noting that it supports their fears about a centralised Ethereum PoS chain. Despite the promise of a greener strategy, the community has expressed some opposition to Ethereum's migration to PoS.

Lido holds 31% ownership in all ETH staked.

Since nodes would be managed by a small number of chosen individuals, some pundits have already expressed worries about centralization. This would go counter to the decentralised nature of blockchain technology. However, Ethereum co-founder Vitalik Buterin and other Ethereum engineers frequently dispute such assertions.

Earlier, the blockchain analytics company Nansen issued a report outlining the breakdown of the 13 million+ ETH that are now staked. According to the paper, only five entities account for up to 64% of the 13.4 million ETH staked. Lido, a liquid staking service, has the largest proportion of these five, accounting for 31% of the total.

Concerns about centralization have also been highlighted by the fact that a sizable portion of staked ETH originates from a single company. In the past, there have also been worries raised about the Ethereum network's increased vulnerability to censorship as a result of this centralization. This is mostly because OFAC recently imposed sanctions on cryptocurrency mixer Tornado Cash.

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