After the successful Merge upgrade that transitioned Ethereum (ETH) to the Proof-of-Stake (PoS) protocol, the second-ranked crypto by market cap is projected to grow in terms of value and adoption. However, during the initial days of the upgrade, there are emerging concerns about the centralization of the network.
In this line, Ethereum co-founder Anthony Di Iorio has raised concerns regarding the dominance of few holders on the Ethereum network, noting that at the moment, PoS does not seem to be the perfect system, he said during an interview with Kitco News on September 29.
Iorio specifically pointed out the strength of platforms like crypto exchanges in dominating the Ethereum network. However, he expressed optimism that decentralization will be achieved in the future.
“I’m concerned with the centralization risks of proof-of-stake. I think right now, it’s been shown that there are only two addresses that are accounting for almost 50% of all validating. <…> I’m concerned with entities such as exchanges that are having a lot of the strength and the validating that’s going on right now, so it’s not a perfect system, and who knows, there could be things that come out that weren’t thought about that might lead to bigger risks,” Iorio said.
Ethereum’s original decentralization goal
At the same time, Iorio pointed out that the centralization being witnessed at the moment is not aligning with the initial dream of Ethereum of having more people participate in the asset’s governance. He noted that if the concerns persist, it might impact businesses and the regulatory outlook.
“What you want with decentralized networks is robust nodes; you want many, someone that’s running a technology people do anywhere in the world to participate and help strengthen the ecosystem to be rewarded for doing so. but it doesn’t help when you only have a few, and it becomes more and more centralized,” he added.
Only two wallets dominate ETH validation
As per a Finbold report on September 15, the Ethereum post-Merge inflation analysis showed over 46% of the cryptocurrency’s PoS nodes were under the control of two addresses.
The two wallets accounted for most of Ethereum’s transaction processing, storing of data, and adding new blockchain blocks.
Watch the full interview below: