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ConsenSys Is Becoming Systemically Important to Ethereum


cryptobriefing.com 18 June 2020 12:30, UTC
Reading time: ~2 m

Staking Ethereum as a Service

ETH 2.0 is scheduled to launch any month now. With its rollout date inching closer, ConsenSys has strategically announced it will foray into staking through its branch, CodeFi.

ConsenSys CodeFi is teaming up with the likes of Binance, Crypto.com, and Huobi to build out its staking tool. Providing a foundation for institutions to partake in ETH 2.0 staking is the prime focus.

However, since a majority of these institutions are consumer-facing companies, ConsenSys is actually targeting custodial staking for retail users.

“With staking on Binance, users can receive staking rewards without needing to set up nodes, or worrying about minimum staking amounts, time lengths, or any catches,” said Changpeng Zhao, CEO and co-founder of Binance.

Bringing staking to the masses is a benefit to both the Ethereum ecosystem and ConsenSys. However, the big picture isn’t as rosy as one would imagine.

ConsenSys is slowly becoming to Ethereum what Blockstream is to Bitcoin.

Both companies seem to have their respective network’s best interests at heart, but the concentration of power is concerning.

Infura, an Ethereum API upon which a significant number of dApps are built, was acquired by ConsenSys in October 2019. As a key partner to Gitcoin‘s quadratic funding events, ConsenSys also funds developer funding, although the community determines how these funds are distributed.

With the launch of a DeFi KYC tool and a staking service by CodeFi in the span of the last two weeks, ConsenSys will own several vital pieces of infrastructure for Ethereum.

This need not be a bad thing, as ConsenSys has always acted per the community’s wishes.

But if for some reason the company was forced to wind down – by regulators or otherwise – it would be disastrous for Ethereum.

Crypto is designed to inhibit the formation of “too big to fail” entities. But in a free market, this is unavoidable as those who control the capital build out all the essential functions.


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