A long-time Coinbase user recently took to social media to announce his decision to unstake all Ethereum (ETH) holdings from the platform.
This was an obvious move that underscores growing concerns among some investors about the security and architecture of staking services.
Cryptocurrency investor Aftab Hossain, who goes under the name DCInvestor and who has been staking ETH with Coinbase since the service’s inception, initially chose the platform to earn passive yield and support Coinbase’s contributions to the crypto industry.
Coinbase staking product lead John Zettler, and protocol specialist Bienvenido (Ben) Rodriguez, did not immediately respond to a request for comment.
In his post , Hossain underscored the potential risks associated with this setup. “If I have misinterpreted your architecture, please use this post as an opportunity to clarify it,” he urged, opening the door for Coinbase to address these concerns publicly.
Coinbase told CCN they are sure that client diversity helps the health of the Ethereum network.
“As industry leaders, we are committed to helping our customers participate in the crypto-economy safely and securely. To date, Geth is the only execution layer client that has met our technical requirements. We are actively assessing alternative execution clients, and we will share an update on that process by the end of February.”
Coinbase has recently indicated plans to transition to a multi-client staking environment, which would diversify the risk and potentially enhance the security of staked assets. However, the user noted a lack of a clear timeline for this shift, contributing to their decision to unstake their ETH.
A significant worry for the user is the possibility of a consensus bug in Geth, which could lead to substantial losses.
“In the event of an unforeseen Geth consensus bug in the meantime, I could stand to lose a large percentage of my deposit,” Hossain explained .
The user did express a willingness to reconsider staking with Coinbase in the future, provided the platform updates its staking clients to a diversified setup and transparently discloses the details of this new approach.
Geth, known for its role as an Ethereum execution client, is pivotal in managing transactions, as well as the deployment and execution of smart contracts on the Ethereum blockchain.
Be it as it may, both Coinbase , and its CEO Brian Armstrong promptly responded. Coinbase therefore announced it is actively pursuing the integration of an additional Ethereum execution client into its systems amidst ongoing concerns over the widespread dominance of Geth (Go Ethereum) in the ecosystem.
A recent post on X , highlighted Coinbase’s intensified efforts to diversify away from its exclusive reliance on Geth. According to the details shared in the thread, when Coinbase Cloud initially introduced Ethereum staking, Geth was identified as the sole Ethereum execution client that fulfilled the technical criteria required by the exchange. This move towards incorporating another client reflects Coinbase’s response to the growing calls for a more varied and resilient infrastructure within the Ethereum ecosystem.
The thread read:
“Although we’ve evaluated execution clients since 2020, none have met Coinbase Cloud’s requirements to date. Many other operators on the network have reached the same conclusion, which is part of the reason why 84% of Ethereum validators run Geth. However, the tide is turning.”