Post-Merge, If Lido Becomes Dominant, What Does That Mean for Ethereum? - Ep. 372

Ryan Berckmans, Ethereum investor and community member, and Alexandre Bergeron, Bitcoin investor, discuss Lido’s dominance as a liquid staking provider, whether that issue can be resolved, and how it could be a centralizing force for Ethereum. Show highlights:
what stETH is, what the uses cases are for stETH, and why it is important
how Lido had a first-mover advantage and how that kicked off network effects
whether the liquid staking derivatives system is one of a “winner-take-all”
how much of the staked ETH will be turned into a liquid staking derivative
how Lido might have a huge MEV opportunity after the Merge
what the proposer-builder separation is
whether Lido's dominance will increase over time
whether other competitors have been competitive with Lido
why Lido is a natural monopoly because of the incentives and MEV opportunities
what the implication of Lido’s monopoly is for Ethereum’s censorship resistance
whether Lido is effectively a single entity despite having multiple node operators
whether there could be a long waiting period for becoming a validator after the Merge
how Lido is moving its staking derivatives to other chains
how Lido’s new dual-governance proposal works, why it might be useful to decentralize Lido and whether it reduces the power of LDO token holders
how Lido’s centralization is the biggest threat to Ethereum in the long term and what are the possible solutions
why Ryan believes the value of ETH comes from its credible neutrality and whether Lido's centralization may jeopardize that
whether finding solutions around MEV opportunities is a good way to reduce Lido’s monopoly
whether Lido’s competitors could form an alliance and build a tokenized basket of their staking derivatives to compete with Lido
whether Lido could airdrop the LDO token to all ETH holders to decentralize its governance token
 
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Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021
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Alex:  Twitter: https://twitter.com/bergealex4

Ryan:  Twitter: https://twitter.com/ryanberckmans

 
stETH Lido’s explanation of what stETH is: https://twitter.com/LidoFinance/status/1535184472546889735?s=20&t=oQeB1uj7HG7Y4he-0gbcLg

Previous Unchained Coverage: In the Recent Crypto Market Meltdown, What Role Did Lido’s stETH Play?: https://unchainedpodcast.com/in-the-recent-crypto-market-meltdown-what-role-did-lidos-steth-play-ep-370/

Lido’s Centralization: Alex’s thread on why ETH is broken: https://twitter.com/bergealex4/status/1410761639226318852?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ

Ryan on a liquid staking monopoly: https://twitter.com/ryanberckmans/status/1521179049548300291?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ

Ryan’s proposed solutions: https://twitter.com/ryanberckmans/status/1531731955011579904?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ

Is Lido making Ethereum less decentralized?: https://cryptobriefing.com/is-lido-making-ethereum-less-decentralized/

LDO token analysis: https://medium.com/general_knowledge/lido-finance-liquid-ethereum-staking-ldo-potential-f5dc3553b8d2

Ethereum researcher Danny Ryan’s take: https://twitter.com/dannyryan/status/1524044527828303872?s=20&t=H4UNoLn7sKQyZx5ll3-Ncw

Ryan’s take on Lido’s self-limit: https://research.lido.fi/t/should-lido-on-ethereum-be-limited-to-some-fixed-of-stake/2225/9?u=ryanberckmans

 
 
Lido’s Governance Proposals Lido + stETH dual governance: https://research.lido.fi/t/ldo-steth-dual-governance/2382

Hasu on Lido’s dual governance proposal: https://twitter.com/hasufl/status/1540652075352313857?s=20&t=sJU5C5xo5litEJrZZDaWNQ

Lido’s two-phase voting scheme: https://blog.lido.fi/moving-to-two-phase-voting/

 
MEV Ryan on post-merge MEV: https://twitter.com/ryanberckmans/status/1453597003397611526?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ

Alex on proposer-builder separation: https://twitter.com/bergealex4/status/1540934540901744640?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ

Haseeb on post-merge MEV: https://twitter.com/hosseeb/status/1464003851942391834?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ

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