Staking providers on Ethereum agreed on a 22 percent cap for all validators

By: Henry Felix

Staking providers on Ethereum agreed on a 22 percent cap for all validators

September 1, 2023 5:20 AM

The 22% self-limit rule ensures at least four large staking entities would need to cooperate for the chain to reach finalization.

To maintain Ethereum's decentralized nature, at least five staking providers have imposed or are seeking to impose a self-limit regulation in which they commit to owning no more than 22% of the Ethereum staking market.

According to Superphiz, an Ethereum core developer, many Ethereum staking providers, including Rocket Pool, StakeWise, Stader Labs, and Diva Staking, have already agreed to or are striving to commit to the self-limit rule.

Another liquid staking service, Puffer Finance, has also declared→ its support for the self-limit. 


The suggestion is probably meant to address worries that staking on Ethereum would become too concentrated.

Superphiz elaborated→ on why he advocated a self-limit of 22%, noting that if the limit were lower, at least four important groups would need to collude for the chain to attain finalization.

When a blockchain reaches finality, transactions within a block are purportedly guaranteed to remain unchangeable.

In May 2022, Superphiz introduced the notion when he questioned whether a staking pool would prioritize the chain's health over its earnings.

In June, Lido Finance, the largest Ethereum liquid staking service, voted against imposing a self-limit by a margin of 99.81 percent.

"They showed their desire to control a significant number of validators that make up the beacon chain," Superphiz wrote→ on August 31.


Holders of Lido (LDO) tokens voted on the proposal to put

limits on their tokens' growth. Source: Snapshot.

According to data provided→ by Dune Analytics, Lido presently holds a 32.4% share of the Ethereum staking market, with Coinbase trailing far behind at just 8.7%.


Ranking Ethereum staking pools by market share reveals that only Lido has

a stake value of over 22%. Source: Dune Analytics

The Ethereum community is experiencing conflicting reactions

The self-limit suggestion is unrelated to "Ethereum alignment," a premise thought to allow for credible neutrality and permissionless innovation on Ethereum, as one industry expert named "Mippo" explained on August 31.

Mippo argued that if they were in Lido's shoes, people attempting to push the idea would not make way.

According to Mippo, "everyone is acting in their own self-interest and rationality from a purely economic standpoint."

"People in the Ethereum community should not stigmatize more user-friendly alternatives as greedy products," another observer noted→.

Others, on the other hand, were more concerned→ about the prospect of centralization, calling Lido's market share dominance "disgusting and selfish."