- There is evidence that Ethereum 2.0 will be truly decentralized
- A vast amount of ETH was withdrawn from exchanges due to accumulation
- ETH users have become more technically proficient
Ethereum News Today – as we approach the launch of the initial phase of the Ethereum 2.0 protocol, some analysts have been concerned over the centralization of staking validators. The most important aspect of the coming ETH upgrade is the launch of staking on the Blockchain. Meanwhile, holders can use about 32 ETH to validate blocks and earn rewards of about 5%-12% per annum.
As a result of concerns about the electricity usage of the Ethereum network and the ability to get consensus, staking on the will replace mining on the Blockchain. One key issue that many in the space have identified in this ETH upgrade, is the centralization of validators on ETH2. How can the issue be tackled?
A Vast Amount of ETH was Withdrawn From Exchanges Due to Accumulation
Most holders currently lack the technical expertise to initiate their staking node. The yields on Ethereum deposits through decentralized finance are higher than the yields proposed for ETH2, which could centralize ETH2. According to the CIO and CEO of Three Arrows Capital, Su Zhu, the recent fundamental and on-chain trends indicate centralization isn’t caused for concern. Earlier in the week, the Blockchain analytics firm Santiment indicated that a vast sum of ETH has been withdrawn from exchanges which suggest accumulation:
“ETH/USD total supply held on exchanges has continued to rise. It has currently risen by 3.63% since reaching bottom on March 24, after Black Thursday. The top 100 non-exchange addresses rose by 8.2% in 35 days. The two metrics pointed out here are bullish signals.”
The chart showing ETH supply on exchanges & the overall balance of the top-100 non-exchange addresses given by blockchain analytics firm Santiment shows that the ground is bullish for Ethereum staking.
ETH Users Have Become More Technically Proficient
Su Zhu remarked that the fact that a large amount of ETH is withdrawn off exchanges shows that users have gradually started becoming more technically proficient. This implies that there should be a rise in staking after ETH2 has been launched. Here is how Zhu put it:
“The fact that large sums of ETH/USD is getting withdrawn from exchanges and used onchain in DeFi, increases the average user’s proficiency levels greatly. This situation is bullish for decentralized staking.”
Regarding the concern over high returns drawing in capital to DeFi solutions as opposed to the staking protocol which secures the Blockchain, the investor added that he is not worried. He referenced a sentiment shared by a certain Ethereum commentator. The analyst noted that because there’s a higher demand for ETH in DeFi makes it bullish for staking.