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Coinbase Ranks As Second Largest ETH Staking Entity As Lido’s Dominance Raises Concerns

Prominent crypto exchange Coinbase has emerged as the second largest ETH staking entity based on a recent scoop by Chinese reporter Colin Wu. This development comes amidst growing concerns about network centralization in regard to Lido’s dominance in the ETH staking market. 

Coinbase Accounts For 14.1% Of ETH Staking Activity – Report

According to Wu, a report from Dragonfly data scientist hildobby, using data from Dune analytics, reveals that Coinbase presently has 3.873 million staked ETH, representing 14.1% of all staked ETH. 

Coinbase dominance in the ETH staking sphere is only superseded by that of the liquid staking platform, Lido DAO, which accounts for one-third of all staked ETH. 

Other platforms with a significant staking percentage include the Binance and Kraken exchanges, with a 4.2% and 3.0% market share, respectively. Meanwhile, the Figment staking pool comes third with a 4.9% market dominance. 

Notably, Coinbase experienced a 44% increase in ETH staking activity over the last six months. Coincidentally, this development falls within the period during which the Ethereum Shanghai upgrade has been active.

Contrary to fears that the last Ethereum network update may induce a decline in staked ETH due to the ability to finally withdraw staked assets, the Shanghai upgrade has so far boosted stakers confidence, resulting in a net positive flow of 7.84 million ETH since its implementation in April.

At the time of writing, the total amount of staked ETH stands at 27.42 million ETH, representing 22.81 of ETH’s circulating supply. 

Lido’s Growing Dominance Sparks Centralization Concerns

In other news, Wu stated there are community concerns about centralization in regard to Lido’s ETH staking dominance. Due to the Proof-of-Stake Consensus model, a higher amount of staked ETH translates to a higher voting power during governance processes. 

Data from Dune Analytics shows that Lido accounts for 8.80 million staked ETH, representing 32.11% of the ETH staking market. Notably, the liquid staking platform experienced a 55% rise in staking activity over the last six months. 

According to information from Ethereum’s official blog, concerns about centralization are quite valid, as any validator controlling a minimum of 33% of staked ETH can prevent the network from finalizing any block, even in the presence of a 66% majority.

Moreover, if a validator acquires 55% of the staked ETH, they could theoretically split the Ethereum chain into two forks. All these are speculations, as there is no evidence indicating that Lido DAO has any malicious intentions toward the Ethereum network. 

At press time, ETH trades at $1,620.18, with a 1.36% decline in the last day, based on data from CoinMarketCap. In tandem, the token’s daily trading volume is down by 36.41% and valued at $2.86 billion.

ETH Staking

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Shanghai Upgrade Drives 25% Boost In ETH Staking Activity

The Shanghai upgrade was one of the most anticipated blockchain events of 2023, expected to introduce a higher level of speed and scalability to the Ethereum network.

However, the most important feature of the Shanghai upgrade was allowing validators and stakers to finally withdraw their staked ETH from the Ethereum Beacon Chain.

To explain, the Beacon Chain was created to aid the smooth transition of Ethereum from a Proof-of-Work consensus model to a Proof-of-Stake mechanism, i.e., ETH 2.0. Since its launch in 2020, many users have been staking their ETH tokens on the Beacon chain to facilitate network security and earn rewards. Albeit, those assets and the rewards they generate were inaccessible until after the Shanghai upgrade in 2023. 

Prior to this network upgrade which occurred on April 12, 2023, the total number of staked ETH stood at 18.1 million, according to data by Dune Analytics.

Four months later, the token analytics website Token Unlocks has offered more insight into how the Shanghai Upgrade has impacted the ETH staking activity so far.

Shanghai Upgrade Sparks Confidence In ETH Staking 

On August 10, Token Unlocks posted on social media platform X that the Ethereum Shanghai upgrade has yielded a positive result on ETH staking, with a significant rise in demand for LSD protocols – a liquid staking aggregator project designed to promote maximum yields for ETH stakers. 

According to the report by Token Unlocks, there are currently 22.99 million staked ETH on the Ethereum network, accounting for about 18.86% of ETH’s circulating supply.

The report also highlights that 25% of this currently staked ETH was staked after the Shanghai upgrade in April. This means that about 5.84 million ETH, constituting about 4.8% of ETH circulating supply, has been staked in the last four months.

To emphasize the impact of the Shanghai upgrade on ETH staking, Token Unlocks noted that the net ETH staking ratio is up by 147%, with about 9.82 million ETH deposited and only 3.97 million ETH withdrawn post-upgrade.

It is worth stating that there were some speculations that the Shanghai upgrade would lead to a large-scale withdrawal of ETH, which could negatively affect the crypto market.

Interestingly, the report above paints a different reality, with many users now willing to stake ETH as they have the freedom to withdraw at will. 

Shanghai upgrade

ETH Elites Strengthen Grip On Coin Supply

In other news, on-chain analytics firm Santiment reports a wealth accumulation trend in the ETH market. According to Santiment, the top 10 ETH addresses have significantly increased their ETH holdings in the last five years.

Within this period, the market intelligence firm notes that these wallets have acquired 27.86 million ETH, increasing their holdings from 11.2% to 34.6% of the token’s supply.

Related Reading: Ethereum Price Prints Bullish Technical Pattern, Why Close Above $1,880 Is Critical

At the time of writing, ETH is trading at $1,855.86, with a 0.68% decline in the last 24 hours based on data from CoinMarketCap. With a market cap of $222.18 billion, the Ethereum native token remains the 2nd largest cryptocurrency in the market.

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Ethereum (ETH) Drops 11%, Sheds All Gains From Shanghai Rally

Ethereum, the world’s second-largest cryptocurrency, has seen its recent rally come to a screeching halt as Ethereum (ETH) has erased all of its gains in the wake of the highly anticipated Shanghai upgrade. 

While many had high hopes for this upgrade, which promised to improve the network’s speed and scalability, the market seems to have reacted negatively to the news. 

This sudden drop in price has left investors wondering what the future holds for Ethereum, and whether or not it can recover from this setback.

Crypto Market Downturn Drags Ethereum Lower

At the time of writing, the price of Ethereum stands at $1,860.72 according to CoinMarketCap, but the past 24 hours have not been kind to the cryptocurrency, as it has seen a slump of 4.05%. 

The past week has been even more unforgiving, with Ethereum experiencing a significant drop of 11.02%. The once high-flying cryptocurrency is now left to wonder what caused this downturn and whether it can regain its vigor in the days and weeks ahead.

In recent days, the cryptocurrency markets have been displaying signs of fragility, largely due to anxieties about persistently high inflation, fluctuations in the stock market, and the looming threat of an economic recession, which have all contributed to dragging prices downward. 

Against this backdrop, Ethereum has been experiencing a steady decline since Tuesday, a trend that has been mirrored in the wider cryptocurrency market. 

Bitcoin, for instance, has suffered a drop of over 3% in the past 24 hours alone and has fallen by more than 10% from its recent peak above $30,000, currently trading at just around $27,346.

ETH Price False Breakout Of Local Support Level: Potential Bounce-Back?

Despite a recent fall, the price of ETH experienced a false breakout of the local support level at $1,896. However, a daily closure far from the $1,900 mark may trigger a bounce back toward the $1,920-$1,930 zone tomorrow.

On a larger time frame, the situation for Ethereum remains bearish, with the bar on the verge of closing below yesterday’s low at $1,913.60. If this happens, there is a high likelihood of further decline towards the next significant support level at $1,846, a scenario that may play out until the end of the week.

Looking ahead from a midterm perspective, Ethereum’s price has retreated to the middle of a wide channel, with sellers taking control as the price remains below the crucial $2,000 mark. 

This indicates that the cryptocurrency may face continued pressure and struggle to regain its bullish momentum.

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