Ethereum

Ethereum 2.0

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 <p class="is-style-lead">JPMorgan Chase &amp;. Co. has shed light on how the Ethereum network decentralization has decreased significantly since the Merge event and Shanghai upgrade went live.</p>
 <h2 class="wp-block-heading" id="the-rise-of-staking-and-centralization">The rise of staking and centralization</h2>
 <p>Since implementing the Merge and Shanghai upgrades, Ethereum has seen a substantial uptick in staking activities.</p>
 <p>Staking, a process where users lock up their crypto assets to support network operations, has its merits. According to a CoinDesk report citing JPMorgan research, this surge in staking activity comes at a cost: <a rel="noopener noreferrer nofollow" title="centralization" href="https://thebittimes.com/tag/centralization.html">centralization</a>.</p>
 <p>Traditionally, many in the crypto community prefer decentralized liquid staking platforms like Lido over their centralized counterparts.&nbsp;</p>
 <p>Lido’s approach included adding more node operators to ensure no single entity controlled a significant portion of staked Ether (ETH). The aim was to address centralization concerns.</p>
 <p>However, <a rel="noopener noreferrer nofollow" title="centralization" href="https://thebittimes.com/tag/centralization.html">centralization</a> remains a risk. A concentration of liquidity providers or node operators could act as a single point of failure or even collude to create an oligopoly, potentially undermining the interests of the broader Ethereum community.</p>
 <p>Ethereum, the world’s second-largest crypto, has become more centralized since the Merge and Shanghai upgrades. And JPMorgan is highlighting concerns over a decline in staking yields.&nbsp;</p>
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 <h2 class="wp-block-heading" id="the-menace-of-rehypothecation">The menace of rehypothecation</h2>
 <p>Another highlight from the report is rehypothecation. This complex term refers to the practice of reusing liquidity tokens as collateral across multiple decentralized finance (DeFi) protocols simultaneously.&nbsp;</p>
 <p>DeFi encompasses lending, trading, and other financial activities carried out on the blockchain.</p>
 <p>The problem arises when a staked asset’s value sharply declines or faces a security breach or protocol error.&nbsp;</p>
 <p>In such scenarios, rehypothecation could trigger a cascade of liquidations, jeopardizing the stability of the DeFi ecosystem.</p>
 <p>Furthermore, the report points out that the increase in staking has diminished the appeal of Ethereum from a yield perspective.</p>
 <p>This shift is especially noticeable amid rising yields in traditional financial assets. The total staking yield has fallen from 7.3% before the Shanghai <a rel="noopener noreferrer nofollow" title="upgrade" href="https://thebittimes.com/tag/upgrade.html">upgrade</a> to approximately 5.5%.</p>
 <p>From a different perspective, the research data presented in December following Ethereum’s Merge <a rel="noopener noreferrer nofollow" title="upgrade" href="https://thebittimes.com/tag/upgrade.html">upgrade</a> in September 2022 reveals a significant reduction in the network’s energy consumption, akin to the energy usage of entire countries such as Ireland and Austria.</p>
 <p>&nbsp;This decrease in power consumption positively contributes to environmental sustainability, aligning with broader global efforts to reduce the carbon footprint associated with blockchain technologies.</p>
 <p>Ethereum’s core developers have introduced an Ethereum Improvement Proposal (EIP-7514) as part of the upcoming Dencun <a rel="noopener noreferrer nofollow" title="upgrade" href="https://thebittimes.com/tag/upgrade.html">upgrade</a>, scheduled for activation in October 2023.</p>
 <p>&nbsp;This proposal aims to slow down the rate of Ether staking. The intention is to provide the Ethereum community with more time to devise a practical reward scheme for stakers on the network.</p>
 <h2 class="wp-block-heading" id="eth-price-analysis">ETH price analysis</h2>
 <p>As of the time of writing, the price of Ethereum (ETH) stands at $1,629, representing a 3.4%&nbsp; decline on the weekly timeframe.</p>
 <p>Ethereum’s Relative Strength Index (RSI) is currently sitting at 40.4.</p>
 <p>&nbsp;The price of ETH is struggling to maintain the $1600 level after facing rejection at the $1700 resistance level. A failure to hold the $1600 level could potentially lead to a further decline to the $1500 level.</p>
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<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/ethereum-2-0-upgrade-has-brought-more-centralization-to-the-blockchain-tbt65551.html">https://thebittimes.com/ethereum-2-0-upgrade-has-brought-more-centralization-to-the-blockchain-tbt65551.html</a></p>

Ethereum 2.0 upgrade has brought more centralization to the blockchain

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