Ethereum Got More Centralized Says JPMorgan

the Merge and Shanghai Upgrades

According to JPMorgan, Ethereum has become more centralized because more people are staking their ether after certain upgrades. Staking means locking up your ether to support the network and earn rewards. However, this has made the network more centralized, meaning a few big players have much control.

JPMorgan thinks this is a problem because having too much control in one place can be risky. They mention a platform called Lido as a decentralized alternative, but even that has some issues. If things are too centralized, it could lead to problems like attacks or manipulation that hurt the whole Ethereum community.

They also talk about the risk of “rehypothecation,” a fancy word for reusing tokens as collateral in different places. If the value of staked assets drops suddenly or there’s a security issue, it could cause a chain reaction of problems in the decentralized finance world.

Lastly, staking has become less attractive for people looking to make money because the overall rewards have dropped from 7.3% to about 5.5% after the upgrades. So, JPMorgan points out some concerns about how Ethereum’s changes might not be all positive.

Table of Contents

Share This Article:

Chi Do
Chi Do
Chi Do is a content writer at CoinMinutes, responsible for creating most of the content on the website, including news related to Bitcoin (BTC), Ethereum (ETH), Blockchain, Decentralized Finance (DeFi), and more. With a keen interest in cryptocurrencies since the 2020s, Chi has acquired extensive experience and knowledge in this field. Chi holds a Bachelor's degree in communication from Academy of Journalism and Communication in Vietnam.

Related Post