JPMorgan sees more centralization in Ethereum after network upgrade

According to analysts, the fork produced by the upgrade could divide the community

22.09.2022 - 15:15

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What’s new? Experts at financial holding company JPMorgan have reported “some concerns” that have emerged on the Ethereum network since the move to the Proof-of-Stake (PoS) consensus algorithm. According to analysts, the fork produced by the upgrade could divide the community. However, they noted that some exchanges and platforms have demonstrated support for the fork on the Proof-of-Work (PoW) algorithm. The report also indicated that about 19 former ETH mining pools are actively working on PoW. Experts also emphasized that the blockchain has become less decentralized, CoinDesk reports.

Information on the CoinDesk website

What else did the report say? JPMorgan analysts noted that the move to backwardation in the futures market is “manifestation of the shift towards more bearish sentiment in crypto markets in recent weeks.”

Backwardation is when the spot price of an asset is higher than in the futures market.

The report also indicated that from a mining perspective, Ethereum Classic (ETC) has been the main beneficiary of the upgrade, as its hashrate has increased several times, while other PoW blockchains compatible with graphics processing units (GPUs), such as Ravencoin (RVN) and Ergo (ERG), have also shown significant growth.

As of September 22 at 14:50 UTC, ETH is trading at $1279,59, having lost 4,69% in a day, according to Binance.

Earlier, JPMorgan noted a sharp decline in the use of cryptocurrencies for payments in the last six months. The bank still supports customers who want to pay in cryptocurrencies, but for now it remains a niche use case.

To learn how major crypto services hinder the decentralization of Ethereum, see GetBlock Magazine's article.

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