Ethereum Proof-of-Stake Consensus Layer: Participation and Decentralization

In September 2022, Ethereum transitioned from Proof-of-Work (PoW) to Proof-of-Stake (PoS) during 'the merge' - making it the largest PoS cryptocurrency in terms of market capitalization. With this work, we present a comprehensive measurement study of the current state of the Ethereum PoS consensus layer on the beacon chain. We perform a longitudinal study over the entire history of the beacon chain, which ranges from 1 December 2020 until 15 May 2023. Our work finds that all dips in network participation, unrelated to network upgrades, are caused by issues with major consensus clients or service operators controlling a large number of validators. Thus, we analyze the decentralization of staking power over time by clustering validators to entities. We find that the staking power is concentrated in the hands of a few large entities. Further, we also analyze the consensus client landscape, given that bugs in a consensus client pose a security risk to the consensus layer. While the consensus client landscape exhibits significant concentration, with a single client accounting for one-third of the market share throughout the entire history of the beacon chain, we observe an improving trend.