Top Ethereum Staker Controls 48% of Staked ETH in ‘Potentially Unhealthy’ Centralization: Flipside

There is a striking difference between Ethereum and Polygon staking concentrations.

A new report shows that Ethereum staking activity is still much more concentrated than Polygon as it is considered “potentially unhealthy” for the ecosystem.

Ethereum Staking is Dominated by a Few People

According to Flipside’s “YoY PoS Staking Report” shared CryptoPotatofrom September 2023 to 2024, Ethereum’s top 10 stakeholders consistently controlled nearly half – around 47-48% – of the total ETH staked, reflecting a steady but concerning level of centralization in its staking ecosystem.

The lack of movement toward greater decentralization could raise red flags regarding the network’s dependence on a few dominant players.

“The steady concentration in the Ethereum staking ecosystem suggests that the chain remains centralized to a (potentially unhealthy) degree and there has been no significant movement towards further decentralization or consolidation over the past year or so.”

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

Since September 2023, 8 of Ethereum’s top 10 stakeholders have maintained or expanded their PoS ETH holdings. Meanwhile, Lido remains the dominant player in PoS Ethereum staking, increasing its holdings from 8.8 million to 9.8 million ETH during this period. Despite increased competition and significant Lido outflows among Polygon shareholders, Lido’s growth on Ethereum remains unaffected.

Consistent Inflow 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 the growth of staked ether in line with validator expansion. The biggest month-on-month spike occurred between January and February 2024, when staked ETH rose from 29.6 million to 31.4 million – an increase of 6%.

This surge coincides with increased speculation regarding potential SEC approval of an Ethereum futures ETF and increased market activity, likely encouraging more users to participate in staking.

Another notable growth period occurred between May and June 2024, when staked ETH increased by one million, reflecting the enthusiasm following the success of the Shanghai upgrade. Flipside notes that this upgrade introduces major optimizations and fee reductions, which likely contributed to the increase in staking activity.

Ethereum also experienced steady net inflows of staked ETH at that time without periods of significant net outflows. On average, monthly net inflows range from 600 thousand to 1 million ETH, with the highest inflows recorded in February 2024.

The figure peaked at 1.8 million ETH. This consistent growth reflects users’ strong confidence in Ethereum staking rewards and the overall attractiveness of the network. Tether’s expansion in November 2023, when 4 billion USDT was minted in Ethereum, likely contributed to the increase in network activity.