What the Network Means by the New Ethereum Stakers Self-Limit Rule


Large Ethereum stakers have voluntarily committed to a self-limit rule that would cap the extent of their network staking operations at a predetermined threshold in an effort to safeguard decentralization and promote responsible and sustainable blockchain growth.

Stakers of Ethereum Agree to a 22% Self-Limit Rule

Superphiz.eth, an advisor on community health for the Ethereum Beacon Chain, revealed that four significant Ethereum staking providers have committed to a self-limit rule or are actively working toward it in a post on X (formerly Twitter) on Thursday, August 31. The staking provider’s staking limit would be lowered to less than 22% under this self-limit rule.

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The self-limit rule has been endorsed by a number of staking service providers, including Rocket Pool, Stader Labs, Diva Staking, and StakeWise. After this, a few other staking companies are anticipated to offer comparable guarantees regarding Ethereum staking.

The self-limit commitment is viewed as a proactive measure to prevent overcentralization in the Ethereum ecosystem while preserving the blockchain’s long-term viability.

In 2022, Superphiz.eth initially suggested the self-limit rule, stating that the rule’s 22% cap was put in place to protect the network’s decentralization. This is so that a rogue chain cannot be “finalized” without 66% of validators controlling more than 2/3 of the blockchain’s staking power. So it becomes more difficult for one validator to control the entire network.

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According to the Ethereum supporter, the chain will remain successful by encouraging trust and unity over possessiveness thanks to the Ethereum staking providers’ demonstrated accountability and commitment.

Superphiz stated that these providers “are committed (or are in the process of committing) to self-limit to approximately 22% of Ethereum validators.” “We’ll succeed as a chain if we do these things: Above all, put cooperation. collaborative efforts as opposed to winner-take-all.

Highlighting Verbal Commitment’s Uncertainty in the Community

Several members of the Ethereum community have highlighted the lack of reliability that results from a verbal commitment to the self-limit rule in response to Superphiz.eth’s announcement regarding the self-imposed limit on Ethereum staking providers.

Making verbal pledges, according to one member of the community, is simple, especially when the groups subject to the self-limit regulation stake much less than the 22% maximum.

When it appears that the majority of them will probably never achieve 22% market share of Liquid staking on Ethereum, it is simple to commit to self-limitation. People in the ETH community shouldn’t disparage more usable solutions as opportunistic goods, he said.

With a total of 32.4% staked Ethereum, Lido Finance currently leads the market with one of the highest staking rates. The self-limit on ETH staking was previously opposed by 99.81% of the platform’s stakeholders.

After that, Superphiz.eth highlighted how crucial it was to stop Lido from acquiring further holdings and obtaining a 33% part of the market. According to him, penalties could be imposed to safeguard the blockchain from a power imbalance that could significantly affect Ethereum’s consensus process if they eventually reach 33% of all ETH invested.

“I believe preventing them from getting 33% is the first step. If they gain 33%, I’d look into protocol-level sanctions; if not, who knows what might come next? As mentioned by Superphiz.eth.CRYPTOCASTER® - DECENTRALIZED FREEDOM!

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