A recent report from JPMorgan suggests a decrease in the concentration of staked ETH, particularly in relation to the stake held by the platform Lido, which has been a focal point of centralization concerns.
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Diminishing influence of Lido
Is ETH a security?
Ethereum’s Cancun upgrade and market position
The report indicates that Lido’s share of staked ETH has decreased from around one-third a year ago to approximately one-quarter currently.
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This decline is seen as a positive change in reducing the centralization of Ethereum, which is crucial for the future regulatory handling of ETH. The diminishing influence of Lido may help alleviate concerns about a controlling entity potentially affecting Ethereum’s autonomy.
According to investigations by Chain News, the chart below shows that Lido’s inflow of ETH has been surpassed by other protocols that offer vertical pairing and re-staking rewards, and Lido’s outflow of ETH has also increased significantly.
(The discussion on the security status of ETH is closely linked to the regulatory environment, especially after the insights provided by the Hinman document released in June last year. These documents revealed the U.S. Securities and Exchange Commission’s (SEC) stance on cryptocurrencies, emphasizing the importance of decentralization. The SEC previously stated that tokens operating on a fully decentralized network may not be considered securities because they lack the centralized control group defined by the Howey test.
(In these discussions, Ethereum has also implemented the Cancun upgrade, aimed at addressing scalability issues that previously hindered its performance. According to JPMorgan, this upgrade can not only improve Ethereum’s functionality but also help it regain market share and enhance its position against other L1 blockchains.
(As Ethereum continues to evolve, reducing centralization and improving scalability, the prospect of ETH escaping the security definition becomes clearer. This will be an important milestone in Ethereum’s journey, potentially transforming its regulatory landscape and strengthening its market position. JPMorgan’s analysis is optimistic about Ethereum’s future, and continued decentralization efforts may significantly alleviate concerns related to regulatory classification.
ETH
Lido
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JPMorgan
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