Ethereum (ETH) co-founder Anthony Di Iorio was a recent guest on the Kitco News channel. During the interview, Iorio raised concerns regarding the possibility of the ETH network being controlled by a few holders. he noted that PoS (Proof-of-Stake) did not seem like a perfect system to him, at the moment.
Iorio highlights the power of platforms, such as crypto exchanges, in having a lot of control over the Ethereum network.
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.”
Nonetheless, he was positive that decentralization would be achieved in the future.
The Ethereum co-founder further pointed out that the current situation did not align with ETH’s initial goal of having more people participate in the asset’s governance. Moreover, he said that if the trend continues, it would affect businesses and regulations.
“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.”
Will Ethereum really become a centralized project?
This is not the first time ETH’s possible centralization is being called. Coby Morgan, a former FBI analyst, also brought up the question of ETH being more prone to censorship after moving to a PoS system. Morgan is currently a lead investigator at Merkle Science, crypto compliance and forensics firm.
According to Morgan, the high costs associated with becoming a validator would let big firms take control of the network.
Even Vitalik Buterin, current chief and co-founder of Ethereum stated that there could be some censorship on the ETH network. The censorship, he clarified, would simply be a passing measure. Sanctioned transactions could get censored, but if some validators violate the sanction, the transaction would go through. However, that is a big “if.”
Fears of Ethereum becoming a centralized project might be coming true sooner than some may think. As per a recent report by Nansen, 64% of all staked ETH is controlled by five firms. Lido Finance itself owns 31% of the chunk. Furthermore, 46% of ETH’s nodes were controlled by two addresses. Thus the fear of centralization is very real.
At press time, ETH was trading at $1,322.75, up by 3.2% in the last 24 hours.