📉 JPMorgan found that the decentralization of the Ethereum network decreased significantly after the Merge event and the Shanghai update. The reason was the increase in staking and centralization:
- Staking leads to concentration of liquidity providers and node operators, creating the risk of a single point of failure or oligopoly.
- The practice of rehypothecation (using liquidity tokens as collateral across multiple DeFi protocols) can cause a cascade of liquidations and undermine the stability of the DeFi ecosystem.
- The increase in staking has reduced the attractiveness of Ethereum in terms of profitability: the overall staking yield has decreased from 7.3% to approximately 5.5%.
- Staking leads to concentration of liquidity providers and node operators, creating the risk of a single point of failure or oligopoly.
- The practice of rehypothecation (using liquidity tokens as collateral across multiple DeFi protocols) can cause a cascade of liquidations and undermine the stability of the DeFi ecosystem.
- The increase in staking has reduced the attractiveness of Ethereum in terms of profitability: the overall staking yield has decreased from 7.3% to approximately 5.5%.