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Recently, a financial institution called "Sygnum Bank" announced the launch of ETH 2.0 staking. It's the first time a bank offers crypto services to its customers (as far as I'm aware). While some may say this is good for mainstream adoption, I think this does more harm than good to Ethereum over the long term. If more banks join the game, they'll be able to control the Ethereum blockchain using customer's stake. Remember what happened with the STEEM/HIVE fork some time ago? Big exchanges like Binance and Huobi used customer's funds in order to manipulate the blockchain to their own desire. Imagine if centralized exchanges and banks dominate the whole ETH blockchain with their stake. It'll be a complete disaster for the decentralization and censorship-resistance of the world's second-largest cryptocurrency by market cap.

What are your thoughts? Do you think banks adoption of ETH will harm the decentralization of the blockchain in the long run? If not, why? Is going full PoS a bad idea for Ethereum? Your input will be greatly appreciated. Thank you. :)

I never heard of the sygnum bank before it seems to be a relatively small swiss bank with a focus on digital assets. It would make sense though also for more traditional and conservative banks to offer ETH Staking as a financial product to their customers, because they can offer the customers fixed interests of around 4-5% and they can keep the rest of the earned interests as fee. It also makes sense for the customers because if you stake your ETH on a exchange and that exchange gets hacked or was a scam then your money is lost. If you stake your ETH in a real bank than your funds are insured trough the bank.
I don't really think that i will have a huge impact on the decentralization of ETH because ETH is just too big already that 1 Bank can accumulate such a big amount of Staked ETH that they can somehow influence the whole network.

It depends on how big the banks are in terms of their stakes. Obviously, if they have the majority then perhaps they can sway away the price and somewhat manipulate it. But Ethereum staking market is huge, there are no single entity that can control. Although there could be whales in the Ethereum ecosystem, but I just the majority of holders are just average joe like you and me who chooses to earn some at a certain APY percentage. I guess for now, we can say that we are safe from this banks, and besides Sygnum bank is not one major player in the field. Probably they just wanted to take advantage of the current hype and make more money.

With one bank beginning to stake ETH 2.0, it should only be a matter of time before others follow. We've already seen banks worldwide offering crypto custody services to its customers. What's concerning is that banks could eventually gain control of major blockchain networks with their customer's stake. This would undermine the decentralization of crypto/Blockchain tech as we speak.

Imagine both banks and centralized exchanges having a large stake of ETH's supply. It would be disastrous for the whole Blockchain network! Developers should make ETH a hybrid coin (PoW + PoS) in order to prevent powerful entities from gaining control over the blockchain. But they don't care about decentralization as they've put convenience/ease-of-use first. I hope the events of the STEEM/HIVE hard fork (crypto exchanges making decisions on the Blockchain with customer's funds) don't repeat themselves on Ethereum. Otherwise, it'll go down the drain faster than you could've ever imagined.

Given the path Ethereum is heading to, it looks like Bitcoin will be the only decentralized cryptocurrency that will stand the test of time. It's not about low fees and faster transaction confirmation times, but rather security/reliability/censorship-resistance. Hopefully, people will understand this once they experience the negative effects of centralization across major blockchain networks. Just my thoughts ;D

We don't know yet what results might exist because only few banks only adopted eth for a main time. However, harming decentralization has no direct impact with respect to ethereum, unless there's a massive adoption. For let's take a closer monitoring while the system continues to pursue their plans to move ahead.

When trading on a centralized exchangeor bank, your assets are not in your control, but in the hands of the centralized platform. This is a very costly and risky thing。Never Trust Banks&Big exchanges. Bitcoin is the only decentralized cryptocurrency. The decentralization and censorship-resistance  is a  disaster for Eth .

it is big step for bank for providing service rellated with cryptocurrency . it give opportunity for two side , first for bank its self. This services will attract more people to be their customer. with staking services , easy for crypto customers and it will give more guarantee for fund security. and for crypto community , it will bring more adoption crypto tecnology in finance institution.

Banks that understand that the adoption of a decentralized currency is inevitable trying to involve in it and make it to be centralized as much as possible, they tried to offer services like holding cryptos in their safe vault so no one going to lose in the past but now they understand the power of staking can give them validatior works and rewards as well wants to make use of it. But this is not going to harm as we think as long as most of ETH 2.0 stake holders or individuals or else ETH is going to be a centralized on in the future.

Wow, this is a good news for eth now because nobody expected that bankers will adopt cryptocurrency. Most people and other economist think that digital currency is a threat to physical money, that's why this news about staking would be amazing to hear. I believed this will uplift ethereum in the near future once everything will become popular to all banks.

Very bad. I realized long ago that PoS would be a centralized blockchain system. Accumulating ETH 2.0 to one central entity is equivalent to allowing them to achieve high consensus power. Sooner or later, the way Sygnum Bank will be followed by other financial institutions.

In terms of volume, Ethereum is second only to Bitcoin. However that is not yet with tokens which running on the ethereum blockchain.

It is interesting to see that bank announced the launch of ETH 2.0 staking to their customers. Well, that can push the adoption to grow fast in the financial institutions as if this succeeds, the other bank will do the same and help crypto reach many customers from a country.

Maybe they can manipulate ethereum, but they can not manipulate all coins or crypto because ethereum is just part of the cryptocurrency. If crypto users somehow see that the bank is trying to manipulate the system or even blockchain, they will try to select the other and the decentralization will still decentralize. Maybe that can make ethereum lost its believers if that happens, but crypto will survive.

I think it's not the first time to see a bank adopted or goes with crypto too. I don't mind if they'll get in, I'll just think of them as an individual that has tremendous cash that can be invested in to the market. They're for sure going to be there as long as they see that it's profitable for their enterprise. The only advantage they've got is that they have capital ready to be staked.

Maybe you haven't read the thread completely.

I haven't thought about it before, If that were to happen, it would be very bad, But I think even if several banks cooperate to control more than 50% of the ETH supply it will be very difficult, the total supplay of ETH is 116,681,089.25 ETH, so the Banks must collect around 60 million ETH, and it's not easy to get this much ETH

Adoption is always good so it would be depend on how the bank will cooperate with ethereum. If they just going for investment or have a joint agreement. But this would be a huge tackle since eth is a decentralized asset and we all knew banks are not into that. Unless they are willing to give up on how they settle with their customer and use blockchain ledger as their system. Nothing wrongs on adoption, its just that it could affect their long timw traditional system in a spun of time.

This is probably one of the reasons why Ethereum's shift from PoW to PoS is not supported by many people. But I am deferring to the wisdom of Ethereum developers who must have already looked into this possible controversy in the future.

If Ethereum would want to avoid the possibility that only the whales such as exchanges and banks could control and dictate on the direction of the network, they should reduce the staking minimum so that many retail supporters could join and monopoly is avoided.

adoption is good, but this is a worries for the future. indeed there is a possibility that if many banks provide eth 2.0 staking services, the ethereum network will be easy to control. they can influence the blockchain by using their customer stake. if that happens then ethereum has become centralized.

It is no secret that more and more banks are indirectly forced to offer such services simply because customers want and demand them. You can see this not only in a small, rather unknown bank like the one you mentioned, but also in large Wall Street banks, which announced in the hype a few months ago that they would also invest in crypto in the future. The only problematic thing at the moment is the lack of regulation. Should this ever come, almost all banks will offer such services.

Now they wanted to take advantage of it since it originally came from their platform which is interest when you put your money in their bank. Staking is similar to that where you don't need to do anything but your money will grow. this kind of investment will manage to gather most of the investors especially those who are familiar with staking. But when banks are involve something is not right about it. This can be meant as their attempt to look at the different ways of getting people to invest in their bank, so it is understandable that they used the term staking to get the investor's attention.

As far as I'm aware, it's the first time a bank offers ETH staking to its customers. Other banks are offering crypto services, but they haven't joining ETH staking yet. Knowing that these financial institutions are filthy rich, they can do whatever they want with Ethereum if they manage to gain control of the whole Blockchain with customers' stake. That's very concerning, because it brings back the middleman (something crypto was meant to avoid in the first place). ETH developers should implement a hybrid solution into the Blockchain in order to prevent a few from dominating the whole network with their capital. I wouldn't want the events of the STEEM/HIVE hard fork to repeat themselves again.

Unfortunately, most developers care about making money even if they have to sacrifice decentralization in the long run. With the path ETH is heading to, it seems to me that Bitcoin will be the only truly-decentralized cryptocurrency that will stand the test of time. We'll see how everything unfolds once ETH 2.0 is released to the public. Just my thoughts ;D

It is really something new that banks offer services connected with crypto. And I think that it is a real threat for decentralization. There is a similar situation with custody services (crypto-exchanges) like Kraken and Binance. Exchanges have many clients and a low entry threshold, for example, it is possible to stake on Binance from 0,1 ETH. This leads to the capture of a large part of the market by exchanges and, as a result, the centralization of this system. This also applies to large non-custodial validators. It is a real threat for Ethereum.

Of course. But most people are "blind", and don't care about decentralization as long as they're able to fill their pockets with money. In a society where convenience matters most, people are willing to invest into a cryptocurrency that's profitable and easy to use even if it's utterly centralized. ETH's transition from PoW to full PoS, shows us that the network will become less decentralized over time.

Big players like banks, exchanges and companies will gain all of the advantage on PoS blockchain networks like Ethereum and Cardano. They'll be using customers' funds for their own interests. The same way Binance and Huobi approved the STEEM hard fork which confiscated witnesses' funds, the same could happen with Ethereum in the future. Imagine how disastrous this would become if only a few players controlled the ETH blockchain. If the situation worsens, we may end up with Bitcoin as the only truly-decentralized cryptocurrency on the market. I hope the ETH dev team does the right thing by adopting a mechanism that would prevent staking centralization for the good of the Ethereum project itself. Just my thoughts ;D

I just don't see the need to use such a service from any bank. Why involve banks if there is already an established procedure for using Ethereum staking? Yes, indeed, with the services of banks when using cryptocurrency, you need to be more careful. They will not offer their services without calculating their benefits in advance, which may not only be material.

There is certainly a case for banks or institutions or SICAVs staking ether and other PoS based chains. The fact remains that interest rates are near zero or sometimes below zero and they institutions and clients are desperate to find yield producing assets so ETH and other may cover that space of investment needs. These has obvious problems: firstly, the yield is based on paying for the security of the network which means that if the demand lowers so does the yield. Also, if real world interest rates of fixed rent assets improve their yields, Eth would become uncompetitive.