Deutsche Telekom is joining the Ethereum network as a validator following the blockchain’s transition to a far more energy-efficient consensus mechanism.
In an event known as “The Merge,” Ethereum moved from Proof of Work — a process that relies on energy-intensive computations from powerful hardware — to Proof of Stake, which requires far less energy. As a result of this change, Ethereum’s energy consumption dropped by approximately 99.98 percent.
As the largest smart contract platform, Ethereum’s shift to a low-energy consensus is expected to broaden interest from individuals, enterprises and institutions that had previously been hesitant to engage with a technology perceived as highly energy-consuming.
On Thursday, Deutsche Telekom announced it will expand its blockchain activities by supporting Ethereum. The company’s subsidiary, T-Systems MMS, will contribute infrastructure to the Ethereum network by operating validation nodes.
“Our cooperation partner StakeWise aggregates Ether from many individual holders and bundles those stakes into validator nodes. Those validator nodes are provided and operated as infrastructure by T-Systems MMS,” says Dirk Röder, Head of the Blockchain Solutions Center at T-Systems MMS.
In this arrangement, staked Ether remains accessible to its owners in liquid form and can continue to be used in other decentralized finance (DeFi) applications.
There are ongoing concerns about centralization in Ethereum staking, since a large share of staked tokens can accumulate in a relatively small number of staking pools—an issue comparable to how mining power has concentrated among a few Bitcoin mining pools. Increasing participation by more diverse actors over time should help improve decentralization.
“With the move to Proof of Stake, we expect strong demand and significantly increasing capital flows within the Ethereum network. We are therefore pleased that T-Systems MMS, as an infrastructure provider, is supplying additional reliability to our protocol and helping to make the Ethereum ecosystem safer overall,” says Kirill Kutakov, co-founder of StakeWise.
Deutsche Telekom’s support for Ethereum builds on its existing involvement with several other blockchain ecosystems, including Flow, Celo and Polkadot.
“After collaborating with Flow, Celo and Polkadot, we are now taking the next decisive step in the blockchain space and doing pioneering work with Ethereum. Entering the liquid staking market as a node operator and collaborating closely with a DAO represents a first for Deutsche Telekom,” Röder adds.
(Image Credit: Deutsche Telekom)
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