Coinbase Exchange is the biggest crypto trading platform in the United States and the biggest Ethereum validator. The firm has over 3.84 million ETH staked.
Global leading exchange Coinbase Inc. is now the largest individual node operator on the Ethereum network. The firm now handles 3.84 million staked ETH, representing 11.42% of all Ethereum.
While its latest validator report reveals strong security, some community members raise concerns about centralization.
Coinbase Staking Performance and Expanding Role
Recently, Coinbase Global operates 120,000 validators with a 99.75% participation rate and uptime.
Per the report, this ensures that every staked ETH continues generating rewards. Coinbase has also reported no incidents of slashing or double-signing, keeping user funds secure.
To minimize risks, Coinbase prioritizes avoiding slashing penalties over maximizing uptime. While this may slightly lower returns, it prevents penalties that could affect stakers.
The company also distributes its validators across multiple countries and cloud providers, including AWS and GCP, to reduce service disruptions.
Another key focus is client diversity. By using multiple execution and consensus clients, Coinbase intends to prevent single points of failure. Despite these measures, concerns remain about its growing control over the network.
While Coinbase’s stake increases, so do worries about its influence. Some crypto community members argue that a single entity controlling such a large share could impact Ethereum’s governance.
Concerns Over Centralization Grow
Speaking of the above, a member of X (formerly Twitter) stated that transparency is important, but decentralization is even more critical. In other words, this would prevent Ethereum From sustaining its decentralized nature.
In addition, Ethereum educator Sassal noted that while Coinbase is the largest node operator, Lido remains the largest staking entity. However, Lido’s stake is distributed across multiple operators.
Notably, this recent event coincides with Coinbase’s expansion plans. It recently launched Verified Liquidity Pools for traders and secured a legal win after the SEC dropped a lawsuit against it. As its role in Ethereum staking grows, concerns over decentralization will likely continue.
In related news, last month, popular asset management company Ark Invest sold off its Bitcoin ETF shares and bought more than 41,000 COIN shares as the market faces unhealthy consolidation led by BTC and ETH.
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