Risk to Ethereum's growth: warning issued by JPM

From JP Morgan analysts have been coming dissenting opinions on the crypto Ethereum for some time now. And if one day the analysts of the large investment bank consider it a great asset to invest in, the next day anything but, they return to point out the limitations of the token itself. Limits that, according to a report that was published a very few days ago, would stem mainly from its move to PoS (Proof-of-Stake).

A move to PoS that, absurdly, had been deemed attractive to institutional investors initially. This is because now $ETH is for all intents and purposes an interest-bearing asset when staked, which to large investors, obviously makes for much interest.

Not everything glitters in the same way, however, there are different perspectives: the Proof of Stake has made Ethereum much more centralized than anticipated. And concerns about Lido's overwhelming power within this context have also made it to the pages of JP Morgan reports that have investors as their primary targets. But what is happening? Is JPM catching on or is it just unnecessary concern?

Ethereum? It has become too centralized!

According to JP Morgan experts, the move to Proof of Stake for Ethereum would have taken a huge toll on the network and beyond. Since the Merge was in fact implemented, the network would have become decidedly more centralized, and for a crypto this is bad, precisely because its founding principle of life, decentralization, is missing. A concern that is actually not new and has also been repeated by some developers in the ecosystem.

Many in the crypto community see Lido, a decentralized liquid staking platform, as a better alternative in comparison with the staking platforms associated with centralized exchanges.

The debacle of exchanges has also been dictated by SEC interventions in the U.S. that have defined the offering of staking as security and thus as a registrable activity. This has resulted in fines for Kraken, around $30 million, and also lawsuits involving Coinbase. A situation for which Ethereum is not to blame.

There is another issue that is cropping up: that of the potential use of tokens that are obtained through staking on Lido as collateral for various assets and lending. Re-mortgaging could result in a cascade of liquidations if the assets in stakink lose value or are hacked or still thrown away due to attacks or a protocol error.

A situation that JPM experts said would reduce the attractiveness of the albeit significant returns of staking on Ethereum.

Concrete concern?

Impossible to say for now, or even to make predictions that only go one way, since unfortunately even in JP Morgan's parts people change their minds rather quickly. Sudden changes that are a sign that one is writing more to tell investors something while having no knowledge of it than to say something new. In short, pay attention, but not all analysis can be correct in this climate.

The situation on Lido's side, or rather on Etheruem's staking side, is certainly worthy of analysis and attention. And perhaps even of concern. But it is frankly unbelievable that certain institutions have gone from being "all in" on Ethereum because of staking to objecting to the ways in which it has developed.

Bicci