Ethereum is often seen as the mainstay of decentralization. But what if I told you that Ethereum's decentralization is an illusion? That there is a group of players with disproportionate power over your network?
Let's get to the facts:
75% of validation is concentrated in a few giant stakers: Centralized exchanges like Binance, Coinbase, and Kraken control a significant portion of the validators. This means that these corporations have a bigger say in the governance of the network than you might think.
MEV (Miner Extractable Value) is corrupting the system: Large validators maximize their profits by exploiting arbitrage in transactions, while ordinary users pay the price. It is a system that benefits the few and punishes the many.
Merge has increased centralism: Since Ethereum migrated to Proof of Stake, whoever has more ETH has more power. This creates a crypto elite where the rich get richer.
Why does this matter?
If decisions on the Ethereum network are made by big players, how can we trust that it serves decentralization? Who can guarantee that these validators will not be pressured by governments, hacked, or motivated by their own interests?
Ethereum, which was supposed to be the foundation of a decentralized internet, may be heading towards centralized control in the hands of a few.
What does this mean for 2024?
The concentration of staking and the impact of SEM will explode as a bigger problem. This can lead to:
Heavy government regulation.
Distrust in sensitive smart contracts.
The emergence of alternative blockchains to compete with Ethereum.
If you are an Ethereum enthusiast or investor, you need to ask yourself: Who is in control of the network you trust?
Do you believe that Ethereum is still truly decentralized? Leave your opinion in the comments. In the meantime, follow our analysis to learn how to protect your assets in the crypto world.
