Ethereum (ETH) has recently launched two major upgrades, the Merge and the Shanghai Upgrade, to transition from Proof of Work to the Proof of Stake consensus mechanism and improve scalability, usability, and security. However, a recent research report from JPMorgan (JPM) has confirmed that the transition to PoS puts Ethereum’s decentralized nature at risk, as three validators – Lido, Coinbase, and Binance – control over 85 percent of liquid staking validation of the network.The report also states that the total staking yield has reduced from 7.3 percent before the Shanghai Upgrade to 5.5 percent. This is due to the rise of liquid staking, which creates a risk called rehypothecation when liquidity tokens are reused as collateral on several DeFi protocols. Rehypothecation could then result in a cascade of liquidations if a staked asset drops sharply in value or is hacked or slashed due to malicious attack or a protocol error.Danny Ryan of the Ethereum Foundation has admitted that Lido, Coinbase, and Binance are the three validators that now control more than 85 percent of the liquid staking validation of the network. Mohak Agarwal, the founder of ClayStack, has also stated that the present challenge faced by Ethereum has nothing to do with where a stake is deposited, but rather “who controls it.”Ethereum is currently trading at $1,633.93 as of press time and is down by 1.9 percent in the last seven days. In the last 24 hours, the asset has fallen by 0.9 percent. Investors can buy Binance Coin (BNB) quickly and securely with PayPal, credit card or bank transfer at eToro.
This News Article was automatically generated by Bob the Bot (AI)
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇺🇸 🇨🇾 🇬🇧 |
| Sentiment | neutral |
| Relevance Score | 8 |
| People | Nikolaos Panigirtzoglou, Mohak Agarwal, Danny Ryan, Vitalik Buterin, Coinbase. |
| Companies | SEC, ClayStack, Coinbase, FCA, Binance, Ethereum Foundation, CySEC, Lido, FINRA |
| Currencies | US Dollar, Ethereum, COIN, Bitcoin, Euro |
| Securities | None |
