Ethereum Upgrade

Ethereum merge consequences , Shows increase in Centralisation of Blockchain

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Over 40% of the network’s blocks were added in the hours after Ethereum’s long-awaited merge on Thursday. This was just two entities: Coinbase, and Lido.

as we have previously write in our news article that this merge will increase the centralisation to the ethereum blockchain same is happening , even Big exchanges staking programs are increasing the Centralisation in Ethereum blockchain .

Developers envisioned the shift from proof of-work to proof-of stake (PoS), as a way to eliminate centralization on the second largest blockchain network. It would make it more difficult for individuals to alter the Ethereum ledger. However, early signs of network consolidation raise concerns that these hopes may not come true.

Martin Koppelmann, cofounder of Gnosis, an Ethereum infrastructure company, tweeted , “Out of the 1,000 blocks, only 420 have been constructed by Lido and Coinbase.”

Koppelmann stated in his thread that only seven people own more than two thirds of Ethereum’s proof of stake network. This is the key measure for network power under the new miner free system. Lido (a community-led stake collective) and Coinbase, which is the third-largest cryptocurrency exchange in the world, hold 27.5% and 14.5%, respectively.

At 6:42 UTC Thursday morning, Ethereum’s long-awaited Merge To PoS was completed. Validators are invited to stake 32 Ethereum with the platform. They will be able to confirm and write transactions to the Ethereum ledger. Due to the high capital requirement ($50,000 as of press time) and technical difficulties in setting up a validator system only a handful of people can become validators.

As a result, ETH is flowing to Coinbase, Lido and other staking pool services that allow users become validators – earning rewards for doing so – with minimal hassle.

There are concerns about the amount of money that is going to so few services. If one entity controls more than 66%, it can make it harder for other entities to write transactions to Ethereum’s ledger.

After U.S. sanctions, fears of centralization in validator control grew. This raised concerns that validators could be forced to block transactions from certain addresses. Some U.S.-based validators announced that they would begin to ignore transactions from sanctioned Tornado Crashes program. This could make it more difficult for these transactions to be included in Ethereum’s decentralized ledger.

“This is consolidation. Consolidation = centralization. This is extremely dangerous. Why? Because exchanges are subject to government control. The Ethereum blockchain is subject to transaction censorship,” Chris Terry, an executive from SmartFi, a crypto lending platform said to CoinDesk.

Some have compared ETH under PoS with the centralized fiat currencies that blockchains were trying to avoid because they fear centralization.

In a Tweet Max Gagliardi, cofounder of Ancova wrote that “ETH is now only created digitally by setting parameters under the control its central planners.”

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