A minimum of five Ethereum liquid staking service providers have implemented or are in the process of implementing a self-imposed restriction, vowing not to exceed 22% ownership of the Ethereum staking market. This action is seen as an effort to maintain the decentralized nature of the Ethereum network.
Notable among these Ethereum staking service providers that have already committed to or are in the process of committing to the self-limit rule are Rocket Pool, StakeWise, Stader Labs, and Diva Staking. These actions have been confirmed by Ethereum core developer Superphiz.
Additionally, Puffer Finance, another liquid staking service, has also publicly announced its commitment to adhering to the self-imposed limitation.
The proposition’s apparent objective is to tackle apprehensions surrounding the increasing centralization of Ethereum staking.
Regarding the rationale behind proposing a self-imposed cap at 22%, Superphiz clarified that since Ethereum’s state requires agreement from 66% of validators, setting the limit below 22% mandates that a minimum of four major entities must collaborate for the chain to achieve finalization.
Finality is the crucial point at which transactions on a blockchain become immutable, ostensibly ensuring that transactions within a block remain unaltered.
The concept originated from Superphiz in May 2022 when he questioned whether a staking pool would prioritize the network’s health over its own profits.
Interestingly, the largest Ethereum liquid staking provider, Lido Finance, decided against self-imposing a limit with a majority vote of 99.81% back in June.
“They have expressed an intention to control the majority of validators on the beacon chain,” Superphiz stated in a post on August 31.
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Presently, Lido holds a commanding position in the Ethereum staking sector, commanding 32.4% of the total staked Ether. In contrast, the subsequent contender, Coinbase, only holds 8.7% of the market share, as per data provided by Dune Analytics.
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Divided Opinions in the Ethereum Community: Who Holds the Right Perspective?
On August 31, a prominent industry analyst known as “Mippo” clarified that the self-limit proposal is not related to “Ethereum alignment,” a concept recognized for fostering impartiality and open innovation on the Ethereum platform.
Mippo contended that those advocating for the proposal would likely not adopt the same stance if they were situated similarly to Lido.
“Everyone is doing the economically selfish and rational thing here,” Mippo concluded.
“Individuals within the ETH community should refrain from condemning user-friendly solutions as being driven solely by greed,” expressed another onlooker.
Nevertheless, some individuals were more cautious about the looming concerns of centralization, characterizing Lido’s prevailing market share as “disturbing and self-serving.”