The growth of Ethereum staking following major network upgrades has occurred alongside higher centralization and declining staking yields, according to a new report by JPMorgan.
In a note to investors, JPMorgan analysts pointed out the top 5 Ethereum staking providers now control over 50% of staking on the network. Lido alone accounts for nearly one-third of staking, despite being seen as a decentralized alternative.
The analysts said even decentralized staking platforms involve significant centralization in practice. They cited Lido’s decentralized governance being controlled by just a few wallet addresses.
JPMorgan also noted staking yields have dropped from over 7% pre-Merge to around 5.5% currently. The bank said the increased centralization from staking poses risks of single points of failure on the Ethereum network.
Ethereum co-founder Vitalik Buterin has previously acknowledged centralization challenges, admitting it could take up to 20 years to find solutions. The JPMorgan report illustrates that the Merge and growth of staking, while beneficial, has not come without increased risks of centralized control.
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