Ethereum staking ecosystem has reached a new milestone, with over 35 million ETH—about 28,3% of the total supply—now locked in staking contracts. This surge, valued at approximately $84 billion, marks a significant step in Ethereum’s evolution toward a proof-of-stake model, but it also brings renewed scrutiny over the network’s decentralization.
The Rise of Staking—and Centralization
Staking has become a mainstream strategy for both retail and institutional investors, especially after recent regulatory clarity in the US. The number of active validators has surpassed 1,5 million, reflecting growing participation and confidence in Ethereum’s long-term prospects.
However, the distribution of validator power is increasingly concentrated. Lido, the leading liquid staking platform, controls about 25% of all staked ETH (roughly 8,7 million coins). Binance and Coinbase, two of the largest centralized exchanges, each manage around 7,5% of the staking market. Together, these three entities are responsible for nearly 40% of all validator balances.
“A censorship or outage event affecting Lido, Binance, and Coinbase would now hit over 40% of new blocks,” warns blockchain analytics firm Sentora.
What Does This Mean for Ethereum?
This concentration of staking power has reignited debates about Ethereum’s decentralization. While the network was designed to be open and distributed, the dominance of a few platforms raises questions about governance, resilience, and the risk of coordinated disruptions.
At the same time, the surge in staking and long-term holdings is reducing the liquid supply of ETH available for trading. Liquidity has dropped to its lowest point since the Merge, leading to thinner order books and increased price volatility. DeFi lending platforms are also feeling the impact, with borrowing rates for liquid staking tokens like stETH, rETH, and frxETH on the rise as collateral becomes scarcer.
Looking Ahead
Ethereum’s transition to proof-of-stake has unlocked new opportunities for investors and institutions, but the network’s future will depend on how it addresses the challenges of centralization. As new staking protocols and upgrades like Pectra aim to diversify validator participation and improve efficiency, the coming months will be crucial for Ethereum’s long-term health and decentralization.
