Ethereum may lose large part of its decentralization with upcoming Merge and associated updates like PBS and Soulbound tokens
The long-awaited merger event of the Ethereum mainnet with the Beacon chain will bring a new consensus algorithm to the blockchain, but there is a big problem with the decentralization of the network because the largest validators are addresses belonging to the exchange , unlike Cardan.
As the Beacon chain validator rating suggests, Lido Finance, Coinbase and Kraken penetrate around 55% of the network. The majority of ETH 2.0 validators are exchanges or custodians, which directly affect the decentralization of the network.
Alternatively, networks like Cardano offer more diversity, as the main service providers in the chain are community members. The metric, which measures the network’s ability to withstand the 51% attack, called the “minimum attack vector”, is at a significantly higher level for Cardano than for Ethereum: 23 and 3, respectively.
Previously, users started to actively question Ethereum’s intentions to remain decentralized in the future as the co-founder of the network, Vitalik Buterin, suggested centralized block production with decentralized validation.
In addition to the proponent-builder split, Buterin recently described the concept of “soul-bound tokens” as an alternative to NFTs. SBF tokens would be issued by a centralized entity and would be non-transferable as an alternative to the type of items featured in MMORPGs like World of Warcraft.
Despite questionable decisions that will soon be realized on the network, Ether still remains one of the most profitable assets on the market, which is hard to say about Cardano that has lost more than 80% of its value since the all-time high.
At press time, Ethereum is trading around $1,768, while ADA is losing another 5% in value and failing to break local resistance, while trading at $0.55.
