More than 41 million ETH — roughly a third of the total supply — is now staked on Ethereum, and a single liquid-staking protocol, Lido, controls nearly a quarter of that. The concentration has caught the attention of the Bank for International Settlements, which published a working paper in April 2022 warning that permissionless proof-of-stake architectures naturally produce economic and operational concentration across validators, liquid-staking pools, and MEV capture. The finding complicates the push to use such networks for wholesale financial infrastructure.
The numbers behind the concentration
As of February 12, 2025, approximately 41,467,082 ETH was actively staked, representing about 33% of the circulating supply. By the third quarter of 2025, Lido accounted for 23.7% of all staked ETH. That gives the protocol outsized influence over validator selection and block production — a fact that regulators and central bankers are increasingly uncomfortable with.
What the BIS paper found
BIS Working Paper No. 1061, published in April 2022, examined the economic and operational dynamics of permissionless proof-of-stake systems. It found that concentration tends to emerge across multiple dimensions: validators, liquid-staking pools, and the capture of maximal extractable value (MEV). The paper argued that these tendencies make regulatory oversight more difficult, especially if such networks are used for wholesale financial transactions that require accountability and recourse.
The case for permissioned validators
The article argues that for wholesale financial infrastructures, a permissioned validator model is acceptable at the base layer — provided robust oversight, logs, and recourse mechanisms are built in. This is a direct challenge to the "permissionless everything" ethos that dominates much of crypto. The BIS's own Project Dunbar, which demonstrated a permissioned multi-CBDC design using Corda and Quorum, highlighted the governance and operational trade-offs that come with financial networks. Meanwhile, Hyperledger Fabric 2.5 achieved roughly 3,000 transactions per second in a controlled benchmark — though real-world deployments may be lower.
Flashbots and the MEV problem
Flashbots transparency reports from May and June 2023 documented that a small number of relays and builders accounted for a large share of Ethereum blocks. The reports also showed episodes of coordinated exclusion of sanctioned Tornado Cash transactions. That kind of gatekeeping, even if well-intentioned, underscores the centralizing pressures that the BIS paper describes. If a handful of entities can decide which transactions get included, the network starts to look less permissionless in practice.
The tension between the ideal of permissionless consensus and the reality of concentrated control is unlikely to resolve soon. But the BIS paper makes clear that for central banks and financial regulators, the burden of proof is on the permissionless side.
