The emergence of the Coinbase as the largest operator of the Ethereum Network node node increases concerns about network centralization that may worsen as the institution’s adoption accelerates, industry executives said cointelegraph.
On March 19, Coinbase published a Report It is announced that the US cryptocurrency exchange is controlled by more than 11% of staked ether (Eth) More than any other Ethereum node operator.
According to Karan Siresai, CEO of the Web3 Startup Mira Network, Coinbase’s growing dominance features “a systematic issue with Ethereum architecture.”
“We create a system where a number of major players control an outsized part of network security, overthrowing the basic commitment of decentralization,” Sirdesai told cointelegraph.
According to the report, Coinbase controls 3.84 million ETH staked in 120,000 validators, representing 11.42% of the staked ether on March 4.
Lido Lido’s Liquid Staking Protocol controls a larger part of the staked ether in general – approximately 9.4 million ETH, According to On Lido’s website.
However, Lido’s staked ether is distributed to twelve -two independent node operators, Anthony Sassano, host of Daily Gwei, Says In a post on March 19 on the Platform of X.
To limit the risks, the coinbase of staking operations spreads in five countries and uses many clouds, Ethereum clients, and relays, according to its report. “Different network level and the overall health of the network is always a priority for us. That’s why we will soon review network distribution,” the exchange said.
Coinbase is the largest operator of the Ethereum node. Source: Coinbase
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The risks to centralization
Concentration in the Ethereum network may worsen if funds exchanged by the US exchange (ETF) allowed to start staking-A priority for asset managers such as blackrock.
Coinbase is the largest career for us with crypto ETFs and holds eth on behalf of eight of nine US spot ether funds, the exchange Says In January.
“This type of network integration leads to increased risk of censorship and reduced network stability,” Temujin Louie, CEO of Wanchain, said a blockchain interoperability protocol, in cointelegraph.
For example, high staking concentrations “represent potential pressure regulatory points … (and) these large staking entities are likely to prioritize compliance with the network censorship regulation when facing difficult options,” Sirdesai said.
Meanwhile, the new US regulation guide allows banks to act as validators for blockchain networks increases with centralization risksMany Executive Executives said.
“If excess stakes are combined under regulated entities such as Coinbase and US Banks, Ethereum will be similar to traditional financial systems,” Louie said.
In contrast, more institutional validators can really improve staking concentrations. Cryptocurrency Exchange Robinhood is especially properly positioned to evaluate Coinbase’s dominance, according to Sirsesai.
Robinhood already has “the crypto infrastructure, user base, and technical capabilities to switch to fast -faster. They can realistic to challenge Coinbase’s position faster than any traditional bank,” Sirdaya said.
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