Two Wallet Domination Addresses For The Merge Ethereum Process, ETH Becomes Sentralized?

The Merge Ethereum is done. (Photo; Doc. Unsplash)

JAKARTA After the completion of the Ethereum Merge transition which is a transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) recently, it is known that there are two crypto wallet addresses that dominate the Merge process. Both addresses process more than 45 percent of ETH transactions when blockchain completes its transition.

According to the crypto analytics and data analytics platform, Santiment stated that 46.15 percent of the PoS nodes used to store data, process transactions, and add new blocks are only associated with two wallet addresses. Santiment stated that the dominance of the two addresses should be a concern.

According to our Ethereum Post Merger dashboard, 46.15% of the node proof of stake to store data, process transactions, and add new blockchain blocks can be attributed to just two addresses. Heavy dominance by these addresses is something that must be considered, wrote the Santiment statement, September 15, 2022.

According to the data, the first address validated 188 blocks representing 28.97 percent, while the second validated 105 blocks representing 16.18 percent of nodes. The third address validated 54 blocks representing 8.32 percent. Santiment states that the dominance of the two addresses responsible for more than 45 percent of the blocks validated as something to watch out for.

Ethereum Becoming Sentralized?

The crypto community expressed their concern about the decentralization of Ethereum after finding data from Santiment. The reason is, with the dominance of the two crypto addresses, it has reduced the nature of cryptocurrencies, which are as decentralized to centralized.

For information, decentralization in crypto is the absence of any authority that regulates or controls it. While centralization is the opposite, where everything is regulated by certain parties.

On the other hand, there are also users who criticize Santiment by stating that the two addresses are flashbot relays consisting of thousands of validators who use one relay. That way, both addresses could be relay addresses and not single validators, as reported by CryptoSlate.

Who owns the Two Crypto Wallet addresses?

Before Ethereum Merce, several stakeholders in the industry repeatedly discussed centralization issues within the crypto space of ETH. Five entities control more than 64 percent of the stored Ethereum, and three of them are centralized exchanges. The decentralized staking platform, Lido (LDO) DAO alone controls 31 percent Ethereum.

According to Gnosis founder Martin Köppelmann, it was revealed that the two wallets belonged to the largest crypto staking platforms in the US, Lido and Coinbase.

"From the last 1000 block, 420 have been built only by Lido and Coinbase," said Köppelmann, September 15, 2022.

Köppelmann further tweeted that the top 7 entities control two-thirds of the taken Ethereum.

"The top 7 entities that control badminton 2/3 stocks are disappointing enough to look at frankly," Köppelmann wrote in his Twitter post.

Node plays an integral role in Ethereum staking mechanism as they guarantee tokens to gain the opportunity to generate the next transaction block. Although the dominance of the two wallets during the early hours of the merger contradicts Ethereum's decentralization goals, it is not enough to conclude that the PoS network is centralized.

Meanwhile, Ethereum Merger's success has not been responded to by the price movement of Ethereum. The value has actually fallen by 7.8 percent in the last 24 hours. At the time of writing, the price of ETH is trading at the level of Rp. 21,975,991.