ETH staking service providers’ dominance is concerning, here’s why

AmbcryptoPublicado a 2023-01-24Actualizado a 2023-01-24

Resumen

70% of Ethereum staked is controlled by staking services, which has raised concerns about decentralization. Revenue generated by Ethereum has increased despite a decline in trading activity.

According to data provided by glassnode, it was observed that 70.86% of all Ethereum staked on the beacon chain was being staked by staking services such as Lido, Coinbase, Kraken, and Binance.

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This concentration of staking services on the beacon chain has the potential to impact the overall decentralization of the Ethereum network. At press time, Lido made up 29.3% of the overall staked ETH, followed by Coinbase (12.8%), Kraken (7.6%), and Binance (6.3%).

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This suggests that a relatively small number of entities hold a significant portion of the staked ETH and that the network is less decentralized than it could be.

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Despite this, the number of validators on the Ethereum network continued to grow.

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Ethereum gets validation

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Based on data provided by Staking Rewards, the number of validators on the Ethereum network grew by 2.53% over the last month. Along with that, the revenue generated by the stakers grew as well.

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This implied that an increasing number of people are becoming interested in staking their ETH and earning rewards for validating transactions on the network.

Source: Staking Rewards

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Large ETH addresses flee

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Although validators showed interest in ETH, it was observed that large addresses shied away from holding Ethereum, despite growing prices. According to glassnode’s data, the number of addresses holding 10k+ coins reached a 1-month low of 1,199 at press time. This suggested that large holders of ETH were not as confident in the long-term prospects of the token as they once were.

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One of the reasons for the same could be the growing number of Ethereum addresses in profit. At the time of writing, more than 60% of addresses holding Ethereum were in profit.

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If this number continues to grow, it could incentivize addresses to sell their holdings for a profit which could impact ETH’s price negatively.

Source: glassnode

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Another cause of concern for Ethereum would be the decline in the number of Ethereum trades. Based on Santiment’s data, the number of trades on the Ethereum network declined materially.

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This also impacted the overall gas spent on the network, which decreased sharply over the past few days.

Source: Santiment

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Furthermore, according to token terminals data, the revenue generated by Ethereum increased by 39.6% over the last month. During press time the cumulative revenue accumulated by Ethereum was $79.3 million.

However, it is yet to be determined how all these factors could come together and impact Ethereum’s price.

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