40%+ Ethereum PoS nodes are controlled by 2 addresses, Santiment data says

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Analysis of Saniment indicates that 46.15% of Ethereum’s PoS nodes are controlled by just two addresses.

Hours after the merge, the first address has validated approximately 188 blocks or 28.97% of the nodes, and the second has validated 16.18% or 105 blocks. On Twitter, the data became a controversial topic as users discussed the Merge’s impact on the centralization of the world’s largest network.

Ahead of the merger, blockchain analytics platform Nansen released a report in which five entities hold 64% of all Ether staked, with Coinbase, Kraken and Binance accounting for nearly 30% of ETH staked. Reports also revealed that the majority of the 4,653 active Ethereum nodes are owned by centralized web service providers such as Amazon Web Services (AWS).

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“Since the successful completion of the merger, the majority of blocks – somewhere around 40% or more – have been built by two Lido and Coinbase addresses. It’s not ideal to see more than 40% of blocks being handled by two providers, especially one that is a centralized service provider (Coinbase),” explains Ryan Rasmussen, crypto research analyst at Bitwise. He

PoS is often believed to lead to centralization as it favors those with higher token offerings over those with lower amounts. For example, the new consensus mechanism in the Ethereum blockchain relies on validators – not miners – to verify transactions. To run a validator and be rewarded, participants must wager 32 ETH, which is equivalent to approximately $48,225 at the time of writing.

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However, PoS supporters claim that the mechanism is safer and more environmentally friendly than PoW. Ethereum co-founder Vitalik Buterin has predicted that the transition would not only reduce energy consumption by about 95%, but also help scale the network, with transaction processing expected to align with centralized payment processors, features expected to take place in the second half of 2023.

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