Why Diva Staking DAO voted to Self-Limit to 22% staking share
The staking ecosystem is rapidly evolving, with Diva Staking providing the best combination of:
- Scalability: Providing the best capacity for trustless Liquid Staking.
- Trust-minimization: Relying purely on cryptography & economics.
- Participation: Allowing 5x more Operators to join from only 1 ETH.
This means that it’s not outside the realm of possibility that Diva will become a “killer app” in the staking ecosystem.
With the increasing centralization of liquid staking, the DAO has recently decided that Diva will self-limit to prevent centralization risks.
In a recent interview, Danny Ryan highlighted key thresholds and their corresponding implications for Liquid Staking Derivatives (LSTs):
- Above 33% — Risk of preventing finalization.
- Above 50% — Potential for censorship.
- Above 66% — Likelihood of achieving finalization.
Consequently, acknowledging the centralizing trends within the liquid staking market, a proactive approach is necessary to address the issue, mitigating those concerns.
This aligns with the perspectives presented by Anthony Sassano & Eric Conoar, and others in the field.
Superphiz’s rationale for limiting to 22% are:
- It requires at least four parties to affect finalization.
- We can lose one provider at 22% and not miss a step on the network.
- It is capture-resistant so third parties are comfortable building on the network.
A few other protocols have also committed to self-limiting:
- Rocket Pool has passed a DAO resolution to self-limit to a maximum of 33%
- Stakewise has stated on Twitter that they would self limit to 22%
- Vitalik suggests self-limiting via increasing its protocol fee
Diva’s commitment to decentralizing Ethereum Liquid Staking
The DAO resolution for Diva Staking reads:
Diva Staking commits to maintaining its stake within 22% of the total ETH deposited on the beacon chain. To achieve this, Diva will implement necessary measures to restrict further accumulation beyond the specified threshold. This could involve temporarily ceasing the creation of new validators while continuing the issuance of divETH tokens.
By reducing the staking APR for divETH, an economic disincentive is created, encouraging diversification among liquid staking providers. This strategic move not only safeguards against breaching the 22% threshold but also facilitates seamless integration with other protocols, ensuring enhanced reliability and operational stability.
Learn more about the governance process for [DIP 02] Self-Limiting Diva to 22%, and other DAO proposals now in Tally.
- 📗 Learn more about Diva Staking
- 👩🏻💻 Run a testnet node from home, no ETH required for testnet
- 🌱 Participate in the Early Staker initiative for Diva Staking
And also follow us on Twitter, Discord and the Telegram Announcements
