A lead Ethereum developer has highlighted some of the risks that liquid staking derivatives pose to the Ethereum ecosystem.
On June 1, Ethereum developer Danny Ryan posted a recent article on liquid staking derivatives (LSDs). Those above “critical consensus thresholds” pose risks to the Ethereum protocol, he noted.
“With withdrawals enabled, it’s time to reshuffle,” he said.
Are Liquid Staking Platforms a Danger to Ethereum?
Liquid staking derivatives are protocols such as Lido that offer flexible ETH staking. However, their “decentralized” governance is questionable and could lead to centralization.
Ryan stated that LSD protocols are a “stratum for cartelization” that induce significant risks to the Ethereum protocol. Those allocating capital to these protocols should be aware of the risks associated, he added.
“LSD protocols should self-limit to avoid centralization and protocol risk that can ultimately…
