The Lido Community will Vote on Limiting the Protocol's ETH Share

30% of the total ETH Supply

The Lido community argues whether the protocol's maximum ETH token share should be limited. According to Vasiliy Shapovalov's proposal, there are several reasons to limit Lido's market share of the total supply of ETH, including the "possibility of Lido's governance being used to coerce operators into acting as one—to exploit things like multi-block MEV, execute profitable re-org, and censor certain transactions," as well as Lido posing a systemic threat to Ethereum.

The prospect of a KYC-abiding centralized exchange dominating the staking derivative market following Lido's self-regulation is one of the arguments against the idea. According to the Lido team, one of the main reasons for Lido's inception was to avoid just such a scenario. Lido is an Ethereum protocol that provides liquid staking services; users risk their ETH with Lido and receive a liquid token called stETH, representing their stake. These tokens can then be utilised to earn or borrow across DeFi, while users continue to receive ETH staking rewards.

Lido Now Has Slightly More Than 30%

Lido now has slightly more than 30% of the total ETH supply, about double what it did in March. Even before the proposal was published on the Lido board, the rate of increase raised concerns about ETH centralization. Lido is an Ethereum protocol that allows users to stake their ETH and get a liquid token called stETH, reflecting their stake. Users can then utilise these tokens to earn or borrow throughout DeFi, while still receiving ETH staking incentives. Lido controls almost a third of the total ETH supply, up from approximately a quarter in March. The rate of rising aroused concerns about ETH centralization even before the proposal was put on the Lido board.