With the SEC actively clamping down on centralized staking-as-a-service providers, pursuing Kraken, Coinbase and others, the threat of continued and gradual overreach by government is a material industry concern.
Feb 11, 2023
GM Aquanauts - With the SEC actively clamping down on centralized staking-as-a-service providers, pursuing Kraken, Coinbase and others, the threat of continued and gradual overreach by government is a material industry concern.
The Case For Liquid Staking Protocols
Other measures such as requiring further disclosures from centralized actors could have been a fruitful interim solution. However, it is disappointing to see that the opposite has occurred with a heavy-handed and knee-jerk reaction to major industry players - likely in part driven by optics in the aftermath of FTX / Alameda. Whilst this trend is currently largely limited to the US, it does set a dangerous precedent for other major geographies and the ecosystem at large. Ultimately though, we are optimistic for more honest and open-minded dialogue in the future between industry and regulators over the short, medium, long-term.
On this note, liquid staking protocols such as Swell, and other staking infrastructure such as distributed validator technology (DVT), are now more important than ever. Together with the social layer, i.e. you, these technologies remain the latter lines of defense for the ongoing economic security and censorship resistance of Ethereum and other Proof of Stake blockchains. This is especially true at a time where there is clear industry-regulator tension.
In any case, it is positive to see upward price action for the true alternatives to centralized actors. More support is needed in this direction.
With Shanghai soon to be in effect and Zhejiang testnet successfully processing withdrawals a couple days ago, we look forward to seeing a potential withdraw-then-shift cycle towards more anti-fragile offerings. These are those protocols that are decentralized and non-custodial by current design and future intent, in other words, as true as possible to the original ethos of blockchain.
Join the Community
There has been no better time to join the Swell community and take part in pushing for more decentralization, diversification, and self-custodial design!