Liquid staking solution Lido Finance now accounts for about a third of all staked Ethereum (ETH), and that is making some community members worry. The increasing clout of Lido, they say, is undercutting the decentralized character of Ethereum as a whole. 

“Lido may be the biggest attack on Ethereum’s decentralization (‘credible neutrality’) in our entire history,” said Evan Van Ness, Ethereum’s chief decentralization officer, in a Twitter post on Friday.

In the last year, the amount of ETH staked has risen nearly 95% from just over $22 billion to about $41.6 billion, according to Dune Analytics. Of this amount, Lido accounts for 32.7% of all staked ETH on the market—nearly four times higher than the amount staked by runner-up Coinbase at 8.7%.

Ethereum is designed as a platform for decentralized applications run on smart contracts, and it undergirds many of the ecosystems and tokens in the DeFi ecosystem. In this space, Lido is the leading decentralized platform for liquid staking ETH, allowing investors to stake ETH with the network’s validators and earn rewards. In exchange for doing so, they receive a token representation of their deposit called stETH.

But as it grows in size, critics caution that Lido and other liquid staking solutions could be amassing undue influence over Ethereum, and risk becoming overly centralized in how their decentralized autonomous organizations govern themselves. This could undercut what they characterize as the democratic ideal in the DeFi space, where users can use their tokens to vote on the direction of projects there. 

Indeed, some have posited that all liquid staking derivatives “have inherent issues” that, without well-designed controls, “can ultimately destroy their product.”

Ethereum investor Ryan Berckman also warned that Lido’s growing centralization could harm its acceptance reputation among corporations and governments, undercutting any hope of becoming a global settlement layer in the financial system.

In a Twitter post on Friday, Berckman said that Lido “uniquely threatens” Ethereum’s reputation as a decentralized chain through its “uncapped dominance” and that this can also come at the cost of cutting ETH’s long-term valuation. Berckman suggests that these goals would be knee-capped if this issue is left unaddressed.

“If this were to happen, it may affect the order of magnitude of our growth rate and, therefore, Ethereum’s benefit to humanity and the number of zeroes on the long-term ETH valuation,” wrote Berckman.

Lido has taken steps that aim to keep its DAO more democratic. In a July interview with Decrypt, LidoDAO’s business development contributor Marin Tvrdić said Lido is exploring a “dual governance” model that would allow holders of sETH veto power over governance proposals approved by holders of Lido’s LDO governance token.

The current governance system for Lido is based on LDO, which means that only LDO holders can vote on proposals. Naturally, this gives LDO holders a degree of power over the protocol that stETH holders don’t have. This can have consequences if, for instance, LDO holders move to change something that could negatively impact liquid stakers.

Lido’s DAO token is currently the 36th most traded token with a market capitalization of just over $1.35 billion, according to data from CoinGecko. In comparison, its sETH is the seventh most-widely traded token with a market cap of about $14 billion.