Lido Considers Introducing Limits To The Protocol Share Of ETH

LIDO considers introducing limits to the protocol share of ETH because the growing amount of the staked ETH Is creating some centralization issues so let’s read more today in our latest cryptocurrency news.

Lido considers introducing limits on how much of the ETH market share It can stake and the proposal came over the concerns that the protocol could come to pose an existential threat to the Ethereum network. More than 30% of the total ETH supply is staked via LIDO. The proposal to impose a limit on the Lido maximum stake is being debated by the community and has been suggested that LIDO stakes a third of the ETH total supply could start posing an existing threat to Ethereum after it shifts to the Proof of Stake. The Lido community debated whether to limit the protocol’s share of ETH tokens.

According to the proposal by Vasiliy Shapovalov, the reasons to limit LIDO’s market share of the ETH total supply include the possibility of LIDO’s governance that is used to coerce operations in acting as one and exploit things like multi-block MEV that are executed profitable re-org and Lido posing as a systematic threat to Ethereum. The arguments for opposing the proposal include the risk of KYC abiding, the centralized exchange dominating the staking market after the self-regulation of Lido. The team also stated that a core reason behind its existence was to prevent such as scenario.

Lido is an ETH protocol that offers liquid staking services so when the users stake their ETH with LIDO they get a liqudity token representative of the stake. The tokens can be used to earn or borrow on DEFI while users keep receiving benefits from staking their ETH. Over 30% of the total ETH supply is staked via LIDO and double that from March. The growth rate prompted concerns about ETH centralization before the proposal was published on the Lido board.

The ETH creator Vitalik Buterin showed support for the proposal on Twitter and said the price gouging by pool providers, should be legitimized and argued that if the pool controls over 15% of the supply it can be expected to keep increasing its free rate until it drops below 15%. crypto analyst Degen Spartan came out against the limitation and argued that plenty of pool operators are operating under a unified liquid staking protocol banner that was different from the single entity that had complete contrl over the ETH staking pool. Showing some uncertainty towards Lido’s total eTH marekt share has been a timeline for the impending transaction from PoW to PoS or “the merge.”