Top Ethereum stakers control 48% of ETH staked in ‘potentially unhealthy’ centralization: Flipside

There is a big difference between the staking concentration of Ethereum and Polygon.

A new report suggests that Ethereum’s staking activity remains considerably more concentrated than Polygon’s in what it sees as “potentially unhealthy” for the ecosystem.

Ethereum betting dominated by few

According to Flipside’s “YoY PoS Staking Report” shared with CryptoPotato, from September 2023 to 2024, the top 10 Ethereum stakers consistently controlled almost half, around 47-48%, of the total ETH staked, which reflects a stable but worrying level of centralization of its rethinking ecosystem.

This lack of movement toward greater decentralization could raise red flags about the network’s reliance on a few dominant players.

“The stable concentration in Ethereum’s stake ecosystem suggests that the chain remains centralized to a (potentially unhealthy) degree and that there have been no significant moves towards decentralization or consolidation over the past year” .

Polygon, on the other hand, saw its top 10 stakers increase their share from 20.4% to 24% over the same period. This increase, driven by smaller institutions, indicates a healthier distribution of participatory power at Polygon and suggests a trend toward more decentralized control.

Since September 2023, 8 of the top 10 Ethereum stakers have maintained or increased their ETH PoS holdings. Meanwhile, Lido remains the dominant player in Ethereum’s PoS share, increasing its share from 8.8 million to 9.8 million ETH during this period. Despite increased competition and notable Lido exits among Polygon participants, Lido’s growth on Ethereum has remained unchanged.

Consistent inputs for Ethereum

Ethereum’s total staked ETH saw a significant increase from 27.2 million to 34.7 million between September 2023 and 2024, with growth in staked ether closely aligned with validator expansion. The largest month-on-month increase occurred between January and February 2024, when ETH staked rose from 29.6 million to 31.4 million, a 6% increase.

This increase coincided with increased speculation about potential SEC approval of Ethereum futures ETFs and increased market activity, which likely prompted more users to get involved.

Another notable period of growth occurred between May and June 2024, where ETH staked increased by one million, reflecting the enthusiasm following the successful Shanghai upgrade. Flipside noted that this update introduced key optimizations and reduced fees, which likely contributed to the boost in staking activity.

Ethereum also experienced consistent net inflows of ETH staked at the time with no significant periods of net outflows. On average, monthly net inflows ranged from 600,000 to 1 million ETH, with the highest inflow recorded in February 2024.

The numbers peaked at 1.8 million ETH. This steady growth reflects strong user confidence in Ethereum’s staking rewards and the overall appeal of the network. Tether’s expansion in November 2023, when 4 billion USDT were minted into Ethereum, likely contributed to increased network activity.

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