Although the recent Merge allowing Ethereum blockchain to move from Proof-of-Work to Proof-of-Stake consensus is good news for electricity consumption and ETH inflation rate, it is bad news for Ethereum decentralization.
According to Leland Lee, one of the developers of the Nakamoto Coefficient:
The move from Proof-of-Work to Proof-of-Stake lowers the Nakamoto Coefficient, which is the percentage of colluding groups it would take to successfully attack the chain. With the Proof-of-Work mechanism, the percentage is 51%. Under Proof-of-Stake, the number drops dramatically to one third
As 31% of ETH is staked through Lido, and 15% through Coinbase, it means that the current Lido coefficient of Ethereum is 2, which is the lowest value of all the big chains:
Therefore, Ethereum is more centralized than Solana, Avalanche, BINANCE Chain, Cosmos... And even more centralized than Polygon, which is only a sidechain of Ethereum...
Furthermore, as most of validators are in the US, there are significant regulatory risks, since a US court used this point in Balina case.
Therefore, it could be less risky today to hodl assets on Binance chain or Polygon than on Ethereum mainnet, and it is also cheaper.
Although this situation might evolve, this could divide the blockchain world into two groups:
- Large VCs using Ethereum mainnet.
- Smaller hodlers using other chains.
Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.
Please find below a few links to earn a few coins...
