​Uh-oh, did Ethereum just become way less decentralized?

The Ethereum Merge may have changed a lot of things for the better, like:

• Lowered energy consumption (by 99.99%)

• The ability to earn interest on your ETH holdings (~5% per year)

• More transactions per second, or 'TPS' (with a theoretical limit of 100K TPS)

But like with most good things, there's a trade off - and in this case, it's decentralization. Decentralization is a term that's thrown around a lot in the Web3 space, and it's importance is simple:

The more decentralized something is, the less outside entities can mess with it.

Imagine if tomorrow someone pitched the idea of printing 1 trillion new ETH tokens (which would essentially make Ethereum worthless) and they had the voting power to make it happen...not good.

Thankfully, Ethereum's decentralization problems aren't that bad - but they still exist.

The old system allowed folks (known as 'miners') to process transactions on Ethereum and earn ETH in return, depending on how much computing power they had.

The new (post Merge) system allows folks (now known as 'validators') to do the same, but it's based on how much ETH they have in their staking pool.

(It went from a question of computing power, to total funds).

The issue being, that it's much easier and faster to collect a large pot of Ethereum tokens, than it is to set up a warehouse full of computers.

...and right now, 60% of all the staked Ethereum is controlled by only four validators (Lido Finance, Coinbase, Kraken, and Binance).

They're all considered to be reputable entities - but what if they were forced by governments to blacklist certain transactions? That's the sort of censorship that blockchain technology was designed to combat.

And it's not a question of 'if' or 'when' this sort of thing might happen - because it already has.

The US government recently sanctioned any funds that had been sent through the Tornado Cash coin mixer, and these companies have abided by these rules.

Which on one hand hand makes sense - there's a lot of illegally gained money being washed using the service.

On the other, many people are just using it to ensure their crypto accounts are afforded the same privacy as their bank accounts.

Here's the silver lining:

That 60% dominance should soon be watered down, as more individual validators come online.

So the risk of censorship should decrease over time.

And hopefully a privacy solution will be created, that doesn't nurture a hotbed of criminal activity.

(Like a blockchain that can toggle privacy on/off, in specific circumstances - like a tax audit).