As a researcher with years of experience delving into the intricacies of blockchain networks, I find it fascinating to observe the contrast between Ethereum and Polygon’s staking dynamics. The report’s findings underscore the significance of decentralization in maintaining a robust ecosystem, and it’s clear that Ethereum has some work to do in this regard.
There is a stark difference between the staking concentration of Ethereum and Polygon.
The recently released data indicates a higher level of centralization in Ethereum’s staking compared to Polygon, which could potentially be detrimental to both networks’ overall health.
Ethereum Staking Dominated by Few
As reported by Flipside in their “Year-over-Year Proof of Stake Staking Report” (shared with CryptoPotato), over the period from September 2023 to 2024, approximately half – around 47-48% – of all staked Ethereum was consistently managed by the top 10 stakers. This suggests a relatively steady but potentially problematic level of centralization within Ethereum’s staking system.
Failing to progress toward more decentralization might signal concerns about the network’s dependence on a small number of influential entities.
It appears that Ethereum’s staking system has maintained a consistent level of concentration, which might indicate a high level of centralization that could be concerning. Over the last year, there doesn’t seem to have been much progress towards decentralizing the network or further consolidating its control.
As a researcher, I noticed an intriguing development in Polygon’s top 10 stakers during a specific timeframe. The collective share held by these entities expanded from 20.4% to 24%. This growth, primarily fueled by smaller institutions, implies a more equitable distribution of staking power on the Polygon network. This trend appears to be steering us towards a more decentralized control structure within the Polygon ecosystem.
From September 2023 onwards, eight of the top ten Ethereum stakeholders have either kept or increased their Proof-of-Stake ETH holdings. In this timeframe, Lido has continued to be the leading figure in Ethereum’s PoS staking, boosting its ETH stake from 8.8 million to 9.8 million. Even with growing competition and significant outflows of Lido among Polygon stakeholders, the expansion of Lido on Ethereum remains unhindered.
Consistent Inflows for Ethereum
As a crypto investor, I’ve noticed an impressive jump in the total staked Ethereum (ETH) from 27.2 million to 34.7 million between September 2023 and 2024. This growth in staked Ether seems to be tightly connected with the expansion of validators. The most substantial month-on-month surge happened between January and February 2024, where the staked ETH rose from 29.6 million to 31.4 million, representing a 6% increase.
This occurrence happened during increased anticipation about the Securities and Exchange Commission (SEC) potentially approving Ethereum ETFs for futures trading, as well as an uptick in overall market engagement. It’s plausible that this activity surge led more users to join staking activities.
Between May and June 2024, a significant surge in staked ETH was observed, with over a million increase, indicating heightened interest following the successful implementation of the Shanghai update. Flipside pointed out that this upgrade brought about crucial optimizations and lowered fees, probably stimulating the surge in staking engagement.
At that particular time, Ethereum consistently saw an increase in staked Ether, with no major instances of decreases. On a typical basis, monthly net increases were around 600,000 to 1 million ETH, with the peak inflow happening in February 2024.
8 million ETH reached its highest point, indicating a robust confidence among users in Ethereum’s staking rewards and overall attractiveness as a network. The surge in Tether expansion in November 2023, with the minting of 4 billion USDT on Ethereum, seems to have boosted network activity.
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2024-10-16 20:48