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RIYADH: Bitcoin, the leading cryptocurrency internationally, plummets again as it traded lower on Sunday, falling by 7.04 percent to $27,248.32 as of 8:30 a.m. Riyadh time.
Ethereum, the second most traded cryptocurrency, was priced at $1,433.14 plunging down by 14.35 percent, according to data from Coindesk.
Biggest Ether staking service raises red flags
As Ethereum undergoes a closely-watched software upgrade, a cryptocurrency project claiming to have helped democratize the token is under fire for taking too much control of the network, according to Bloomberg.
The fact that over 4 million Ether has been deposited through Lido, or 32 percent of the total staked amount, is raising red flags.
Lido Finance, a platform that provides decentralized finance services, is now the largest staking provider for Ethereum. Staking lets owners of the Ether cryptocurrency earn passive income without having to sell their tokens, the article added.
In exchange for rewards, staked coins help validate transactions and secure the network. Rewards are determined by the number of new tokens minted and fees collected. Bloomberg said that leading exchanges such as Coinbase, Kraken, and Binance also practice the practice.
Critics argue that one entity holding large amounts of Ether could compromise the network’s security, Bloomberg added.
Ethereum is moving from its current proof-of-work mechanism to what is called proof-of-stake, which is said to be less energy-intensive.
However, Bloomberg added that Danny Ryan, a researcher at the Ethereum Foundation that supports the network, warned in a recent article that Lido’s dominance in staking could lead to a centralized attack on the network when it switches to proof-of-stake consensus.