The community is now debating a proposal to set a cap on Lido’s maximum shareholding. By staking roughly a third of the total ETH supply, Lido has been suggested as constituting an existential danger to Ethereum once it changes to Proof-of-Stake. Lido Community to Vote on Limiting Protocol's Share of ETH #Ethereum via https://t.co/yUG7vYCbGJ https://t.co/rFEMZGBcbw — Sn Upadhyay (@iamsnup) May 28, 2022 30% of the total ETH Supply The Lido community argues whether the protocol’s maximum ETH token share should be limited. According to Vasiliy Shapovalov’s proposal, there are several reasons to limit Lido’s market share of the total supply of ETH, including the “possibility of Lido’s governance being used to coerce operators into acting as one—to exploit things like multi-block MEV, execute profitable re-org, and censor certain transactions,” as well as Lido posing a systemic threat to Ethereum. The prospect of a KYC-abiding centralized exchange dominating the staking derivative market following Lido’s self-regulation is one of the arguments against the idea. According to the Lido team, one of the main reasons for Lido’s inception was to avoid just such a scenario. Lido is an Ethereum protocol that provides liquid staking services; users risk their ETH with Lido and receive a liquid token called stETH, representing their stake. These tokens can then be utilised to earn or borrow across DeFi, while users continue to receive ETH st...
