In a recent report by JPMorgan, it has been highlighted that the rise of Ethereum staking has led to increased centralization and lower staking yields. The report states that the top five liquid staking providers, including Lido, Coinbase, Figment, Binance, and Kraken, now control more than 50% of staking on the Ethereum network. Lido alone accounts for almost one-third of the staking. While decentralized liquid staking platforms like Lido were seen as alternatives to centralized platforms, JPMorgan’s report suggests that even these platforms involve a high degree of centralization. For example, a single Lido node operator controls a significant portion of the validator sets. The report also highlights the risks associated with centralization, such as a concentrated number of liquidity providers or node operators becoming targets for attacks or colluding to create an oligopoly. Additionally, post-Merge Ethereum has seen a decline in overall staking yields, with standard block rewards and total staking yield decreasing since the Shanghai upgrade. This increase in centralization and decline in yields following the Merge upgrade has been observed by other Ethereum observers as well.
