Beacon Chain D&D
The Altair hard fork for Ethereum’s Beacon Chain went live on 27th October, marking a significant milestone before the Merge of the current Ethereum execution chain with the Beacon Proof of Stake (POS) consensus chain.
To mark the occasion, we take a look at how the Beacon chain deposit and distribution metrics are holding up a year after they began.
Total Deposits
Total deposits into the Beacon chain have now totaled up to 8.2 million ETH!
The rate of deposits can be broken down into chunks of 2 million:
- After a slow start in November 2020, deposits quickly ramped up to its first 2 million by the end of year (in 2 months)
- The second 2 million took another 4 months to reach
- In May, as ETH price quickly mooned and crashed, deposits recovered their momentum and breached the third 2 million in 2 months
- From there the rate has slowed back down, taking another 4 months to reach the fourth 2 million chunk
In USD terms, the deposits equal to an eye-watering USD 16.8 billion.
The May run-up in ETH price coincided with a spike in deposits. Even after the pullback — with ETH halving in price — deposit values did not drop, actually climbing even higher.
While USD 16.8 billion sounds high, deposits still make up only 7% of total ETH supply —there is still much room for more!
Deposit Distribution
The all-important metric for many in the community is validator decentralization. How does the Beacon chain measure up?
A high level look at the entities depositing show that roughly a quarter are done via exchanges and staking pools respectively.
Zooming into the entities involved, we see that Lido leads the way with 17%, followed by Kraken (11%) and Binance (9%). A collection of 39 whales make up another 9% and Coinbase rounds off the top 5 with 6%.
42% of Lido’s deposits are made using a 6 of 11 multisig (7.2% of total deposits). Excluding the portion held by whales, we find that 45% of deposits are held by 12 entities (6 exchanges, 6 staking pools).
These numbers are much better than the current POW mining pool distribution but is not ideal.
With that said, the trend for take up of decentralized staking pools is optimistic, as Lido’s deposits after becoming decentralized have been larger than other entities combined. Rocket Pool’s successful launch and development of protocols such as Secret Shared Validators also bode well for those of us interested in more decentralization.
Another view to analyze is the number of Ethereum addresses that have more than one validator on the Beacon chain. 50,189 (91%) of the total ~55,000 addresses have only one validator tied to them, while 44 (0.1%) have more than 1,000 validators.
Node Distribution
Separate from deposits, another important distribution metric is that of nodes. Using data provided by Chain Safe, we detect a total of 4,564 Beacon nodes. These are distributed geographically across 66 countries.
North America and Europe dominate here, with at least 81% of nodes coming from these regions.
The node distribution roughly matches that of the POW nodes detected by Etherscan’s Node Tracker.
Comparing the nodes by client, we find that Prysm makes up 75% of all Beacon clients. A client that is too widely used bears risk for all its validators, as a bug in its code may cause its validators to suffer larger slashing proportional to their combined stake. If you are a validator, consider using other clients. If you are staking through a third party exchange or staking pool, urge your provider to do the same!
The above metrics indicate high confidence by the community in Ethereum’s efforts to switch consensus to Proof of Stake. At the same time, validator and node client decentralization have much to be improved on.
Are we all going to make it? Time, and validator choices, will tell.
