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Ethereum's Decentralization After Merge Could Be in Danger as Cardano Remains Mostly Community-Owned

Fri, 06/03/2022 - 12:52
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Arman Shirinyan
Ethereum may lose large part of its decentralization with upcoming Merge and associated updates like PBS and Soulbound tokens
Ethereum's Decentralization After Merge Could Be in Danger as Cardano Remains Mostly Community-Owned
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The long-awaited Merge event of Ethereum mainnet with the Beacon chain will bring a new consensus algorithm to the blockchain, but there is a big issue with the decentralization of the network as the biggest validators on it are exchange-owned addresses, in contrast to Cardano.

As the Beacon chain validator rating suggests, Lido Finance, Coinbase and Kraken penetrate around 55% of the network. The majority of ETH 2.0 validators are ‌exchanges or custodians, which directly affect the decentralization of the network.

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Alternatively, networks like Cardano offer more diversity, as the chain's top SPOs are community members. The metric, which measures the network's opportunity to withstand the 51% attack, called the "Minimum Attack Vector," is on a significantly higher level for Cardano than for Ethereum: 23 and 3, respectively.

Ethereum Validators data

Previously, users started to actively question Ethereum's intentions to remain decentralized in the future as the co-founder of the network, Vitalik Buterin, suggested centralized block production with decentralized validation.

In addition to Proposer-Builder Separation, Buterin has recently described the concept of "soulbound tokens" as an alternative to NFTs. SBF tokens would be issued by a centralized entity and will not be transferable as an alternative to the type of items presented in MMORPGs like World of Warcraft.

Despite questionable decisions that will soon be realized on the network, Ether still remains one of the most profitable assets on the market, which is hard to say about Cardano that has lost more than 80% of its value since the all-time high.

At press time, Ethereum trades around $1,768, while ADA is losing another 5% of its value and failing to break the local resistance, while trading at $0.55.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.