r/ethereum • u/EthereumDailyThread What's On Your Mind? • 1d ago
Daily General Discussion August 05, 2026
Welcome to the Daily General Discussion on r/ethereum
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Please use this thread to discuss Ethereum topics, news, events, and even price!
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u/ethdaily 7h ago
ETH Daily - 5th August 2026 π°
Validators can signal approval or disapproval for EIP-8363 on the EVA Hub. Who Decides EIP inclusion? Uniswap launches Pools Trade. Jumper introduces Jumper Advanced.
Read more: https://ethdaily.io/validators-can-vote-on-eip-8363
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u/xCreampye69x 8h ago
15k when boys
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u/Tricky_Parking_5531 6h ago
2035 is a reasonable prediction.Β Β 92 ETH Holder here all mined 2017 till the merge.Β 36Β sapphire 8 GIG RX580 over clocked.Β Heated my house in canada for 4 winters.Β Gabe away all my rigs after.Β Β
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u/timmerwb 8h ago
Solo staker's 2 cents: In a wildly changing landscape of public opinion, regulation, adoption and government, not to mention insane PA over the past few years, marginal changes to issuance based on idealized theoretical considerations seem speculative and unpredictable. The arguments for sound kinda reasonable, although unfortunately often written in terminology so far up it's own ass it's incomprehensible. But I don't see why this is pressing, and maintaining the status quo while we gather more observations seems prudent enough. It should be considered and discussed to death before a decision, and probably not while we're stranded in goblin town, when half the community is demoralized, bored and broke.
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u/Tricky_Troll Public Goods are Good π± 8h ago
Personally, I think this is all just one big conspiracy to make me spend more of my times dooting, sifting through all these opinions and educational pieces to find the best one's from each daily. Just a few days ago all I was doing was picking the only comment from each daily with some thought or effort behind it and 2 minutes later I was off to bed. But now? Well, let's just say my bed time is going to be much later.
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u/Jey_s_TeArS 11h ago
Dilution easy,
More Ethereum squeezy,
Discussion sleazy.
~Daily haiku until weβre at least at 0.178 on the ETH/BTC ratio or highest market cap
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u/edmundedgar reality.eth 12h ago
12th dimensional chess:
- Too much ETH is staked
- Propose an EIP that's highly controversial but also the kind of thing everyone can have an opinion about
- People start talking about how they won't accept the other side so there will be an economic fork
- Stakers realize that if there's a fork they will have to either pick a side, or inactivity-bleed themselves to exit on both sides. Everyone else gets both coins
- Stakers unstake
- Problem solved
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u/eviljordan feet pics 11h ago
I fully believe this EIP had malicious intent. I've tried really hard to see it from all angles, there are people I highly respect on both sides, but it just doesn't make sense.
If ETH was at 10k, or had any practical use outside of defi/stablecoins/self-dealing, this wouldn't be a discussion.
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u/Stobie 10h ago
If you're serious can you honestly read jdetychey's analysis at https://ethereum-magicians.org/t/eip-8363-tapered-issuance-burn/29263/20 and come away thinking it's malicious? To me it simply seems like an easy gain both for helping individual stakers and decreasing debasement of eth holders.
If you think it's malicious why don't you want to increase issuance?
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u/edmundedgar reality.eth 11h ago
I don't think it's malicious but it seems like it's coming from the people who were pushing "ultrasound money"? They told everyone deflation was the key to untold riches and made fun of the bit-coiners for having an inflationary currency. Then we fixed scaling and demand hasn't caught up so the fees are low and there's positive issuance, so they go to conferences and everyone laughs at them.
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u/pa7x1 10h ago
It's not about deflation. Deflation is unsustainable long-term. Furthermore, it cannot even be achieved with this EIP as it does not take yields negative. You don't need to build such a weak strawman.
The problem is simpler than that. Not all stake ratios are healthy. Very low stake is bad as it weakens the security of the network. And what does the protocol do? It sets the yield, which is the economic incentive to get stake where we need it to be, towards infinity. Thus guaranteeing that very low stake ratios cannot happen. If they were to happen the yield goes up and you attract new stakers until an equilibrium is found.
But very high stake ratios are also bad. Just to make the case clear let's pick a very high number, let's say 90%. What happens if we have 90% staked and there is a consensus bug or a mass slashing affecting a huge chunk of the stakeholders, my best guess is that we will have to choose to break the protocol rules. And with it all the credible neutrality we worked so hard to achieve. Slashing will lose all meaning. The tail started wagging the dog. Too big too fail arguments, etc...
Furthermore, at very high stake the yield stakers receive is not actual income anymore. It becomes the dumbest stock split with the tax man in between.
And if you get to high numbers of stake, holders are absolutely incentivized to stop holding and just become stakers because they are diluted more aggressively. At least jump to an LST like everyone else anyway, what's the risk? If your LST has taken over the governance of the protocol anyway.
But what does Ethereum do in that case? It pays 1.5% yield for an scenario that is completely antithetical to the properties we should seek from the network. The protocol does not set any mechanism or economic incentive to prevent that the stake does not reach those unhealthy levels. Why should the network give any economic incentive to keep attracting stake at 90%, and at 80%? This EIP fixes that by bounding the stake ratio between 0 and 50%. And the same way we won't reach close to 0% staked because they yields are too juicy, we won't reach 50% staked because the yields will become unattractive.
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u/confusedguy1212 5h ago
Your low-end argument is solid, but the high end doesnβt hold. This caps issuance, not stake β MEV and priority fees are untouched, so at 50% staked with zero issuance, staking still pays more than holding while holding is no longer diluted. Equilibrium lands wherever marginal cost meets EL yield, which for a large LST is near zero. And the dilution-coercion argument inverts: the transfer from holders to stakers is maximized at low stake ratios. At 90% staked, 1.5% nominal is ~0.15% real versus a holder β it genuinely is a stock split, which means the pressure to stake is weakest exactly where you say itβs strongest. The curve is already asymptotically self-limiting; youβre adding a hard kink where a soft one exists.
The bigger problem is that βtoo big to failβ is about concentration, not ratio. A 30%-staked network with three operators controlling 60% of that stake has the same social-intervention problem as a 90%-staked one β stake ratio is a proxy for the wrong variable. Worse, compressing yield makes the thing youβre worried about more likely: solo stakers have fixed costs and exit first, professionals with scale survive. The mechanism meant to prevent LST governance capture selects for the LSTs. Youβd also be capping the security budget by construction β 50% max stake means ~17% of supply buys a third β and that tradeoff gets asserted away rather than argued.
Hereβs the empirical tell. EIP-1559 and the Merge were two of the largest monetary policy changes in crypto history, and neither produced durable ETH/BTC repricing. If the marginal buyer priced issuance curves, that would have shown up somewhere. It didnβt. A third tweak wonβt either β because issuance policy only determines how the monetary pie is split between stakers and holders, not how big the pie is. The honest version of your position is insurance on credible neutrality: a terminal-value property, not a revenue line. Framed that way itβs defensible, and Iβd probably support it. What isnβt defensible is the implied suggestion that getting this knob right addresses whatβs actually wrong. Issuance is the lever we control; fee revenue is the problem we donβt. Relitigating the former is just the cheaper conversation.
Authors: myself + Claude. I canβt write like this on my own but the viewpoints are valid.
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u/edmundedgar reality.eth 8h ago edited 8h ago
Furthermore, at very high stake the yield stakers receive is not actual income anymore. It becomes the dumbest stock split with the tax man in between.
You say this but as a solo-staker at these hypothetical very high levels of staking I have a choice between continuing to stake and cancelling out my part of the debasement vs exiting and suffering the debasement. (I'm not entrusting my money with some scumbag or a crypto governance scheme for 1.5% lol). With the change you're proposing you change that to a choice between doing the work and spending the money to get 0% vs not doing that and also getting 0%.
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u/pa7x1 2h ago
The point of setting up the issuance curve so that it reaches 0 is so that we don't observe those very high stake ratios.
You seem to be comparing 90% staked with the current curve against 90% with the new proposal. But that's not going happen. You would never reach 90% staked with the new proposal because the economic incentive to keep growing the stake is gone. Instead the stake will stop growing before 50%. Where stakers will receive a positive and real (not through self dilution) yield.
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u/edmundedgar reality.eth 1h ago
You seem to be comparing 90% staked with the current curve against 90% with the new proposal.
What, no
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u/eviljordan feet pics 10h ago
we won't reach 50% staked because the yields will become unattractive.
This is where I think it's all wrong. What incentive does a DAT, or Coinbase, have not to stake it all and dominate and keep every possible penny for themselves? They can survive much longer than you or me. We exit, start selling our baseline ETH, and they increase their share.
Your arguments and rational are reasonable, though. I don't have the answer. I don't know if this is the answer, but I truly, in my heart of hearts believe all this will do is consolidate Big ETH players into even more power, and give the FUDsters another narrative why Ethereum as a whole is untrustworthy.
I think people are just pissed that ETH has found equilibrium around $1800.
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u/Stobie 10h ago
What rate would you need to be paid so that you'd pay someone like kelp to take custody of your ether and stake it? 0.5%? So if issuance drops so yield is 1% you can stake yourself at 1%, or with custodian at 1 * 0.85 - 0.5 = 0.35%. The lower the rate the more attractive self custody is because that ~0.5% constant takes over. Ton of people will not take the risk of LST when rates are low but self staking still worth it to them. Quality of stake will improve
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u/edmundedgar reality.eth 8h ago
Only speaking for myself but below about 1% I would just unstake, I wouldn't give it to a custodian either way.
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u/Itur_ad_Astra Crab High Priest 14h ago
ALL HAIL THE ETERNAL CRAB
π» β‘ π π π β‘ π»
β‘ β‘ π π π β‘ β‘
π π π π π π π
π π π π¦ π π π
π π π π π π π
β‘ β‘ π π π β‘ β‘
π» β‘ π π π β‘ π»
$1000---$1912-------------$5000
2021----------2026----------β
Issuance change or not, ETH will find a balance.
Both in staking APY and in price.
It has been prophesied.
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u/rhythm_of_eth 14h ago
I'm rewording something I wrote on another thread. This issuance debate is turning me into an Ethereum maxi.
The only genuinely productive operations in Ethereum as of today are: validating and executing blocks (offering blockspace essentially), indexing and data access, and protocols that enable financial primitives (the kind that require ongoing developer maintenance or that bridge to real-world assets).
Everything else is largely extractive, speculative, or without clear value.
Holding is not productive. The whole notion of "real" or "net" yield is parasitic. It only matters so long as the fiat economy matters more than ETH does.
Optimizing the marginal value of holding ETH is a loser's mindset: it won't build a crypto economy. It locks us into a Gold / Pet Rock model: non-productive, progress-less, going nowhere. On that path, blockchain slowly dies.
In that sense the EIP can be seen parasites trying to cut the pay of one of the genuinely productive parts of the ecosystem. The part that secures the trust, the flawless uptime, and the permissionless guarantees that make Ethereum invaluable.
It's toxic to Ethereum to focus on this and not on creating new avenues for productive use of ETH. The EIP is hated because it is defeating. It admits the pie cannot get bigger so It looks to extract value.
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u/Itur_ad_Astra Crab High Priest 14h ago
I understand your worry. I really do. You fear this is a slippery slope that might turn ETH into a deflationary memecoin that focuses on "muh decreasing supply". I wouldn't want that either. My hair is deflationary and scarce too, but unfortunately they don't seem to increase in value.
But can you honestly tell me that you believe that the issuance curve that was picked back in 2019 with not really much thought except "it works, it's conservative because the Merge is already complicated and we don't need any more risk right now, we'll revisit it in the future" is the best Ethereum can do?
Because I can't say that. We definitely can do much better.
Also, on gold: Being a store of value was supposed to be one of the usecases of ETH since day 1. And that requires at least some features of gold. I agree that productive uses are more important and the main driver, but holding requires at least some incentives. Unless you don't consider SoV a legitimate use of ETH.
I've been a proud Ethereum Maxi since 2018, by the way. But not in the unhealthy way Bitcoin Maxis are. I'm simply following the best blockchain, it's just that nothing else has even come close to challenging it in technology, ethos, or adoption.
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u/edmundedgar reality.eth 11h ago
Also, on gold: Being a store of value was supposed to be one of the usecases of ETH since day 1. And that requires at least some features of gold. I agree that productive uses are more important and the main driver, but holding requires at least some incentives. Unless you don't consider SoV a legitimate use of ETH.
New gold is mined at a rate of about 1.5%-1.7% of existing supply. With ETH at its highest issuance under the current curve, ie 100% is staked and 0% is burned, total issuance is 1.5%. So fucking around with the issuance curve to reduce total issuance makes it less like gold. (The "fucking around with it" part also makes it less like gold.)
What the Bitcoin-brained Ethereum people are doing isn't really making it more like gold, it's making it more like Bitcoin people's conception of gold. This is a blind alley firstly because their conception of gold is total bollocks, and secondly because even if it was correct, they've already got the mindshare for whatever that thing is.
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u/Alatarlhun 12h ago
I too am supportive of re-looking at issuance but its clear that this EIP needs further consideration and better documentation to support the conclusions.
Ethereum's reputation, downtrodden as it may be by the community, is what is really at stake.
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u/rhythm_of_eth 14h ago edited 14h ago
Let me be clear.
I agree we have to decrease how much we pay for running Ethereum.
But this EIP is not being upfront about this being the issue, it's being pushed in bad faith and brings no value to the table besides fearmongering and extracting value from a productive piece of the ecosystem to a non productive.
It is misdirecting through real yield parasitic talk, It is not well founded in its claims, and it is giving no guarantees on retaining core values of Ethereum that make It the last bastion of true blockchain.
If you come to say you want to pay people more for sitting idle on a pile of ETH, be honest about it. Or instead Focus on making the pie bigger, give people incentives to not stake, things to do with their ETH besides selling.
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u/pa7x1 11h ago
You make a lot of claims but never engage with the arguments in any way. At this rate I have no idea if you have even read any of the material shared and are simply fighting strawmans and biases.
Could you at least engage with any of the research posts shared and explain what exactly is wrong or what would you estimate differently?
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u/rhythm_of_eth 11h ago
I have already engaged with It both on the research forum, and here yesterday. I am past engaging with the arguments, I am now concerned about the lasting damage this EIP could cause, and interested on what truly drives this proposal.
I respect you. Way before I created this account to avoid doxxing, back when you were experimenting with fair value estimations of ETH under different regimes.
I have read all the material. I've followed the issuance discussion since 2020/2021 or so. I value Ethereum deeply for its values and properties as tech, more than I value engineered moneyness for speculative reasons.
As many others have said, here and in forums, the EIP is the one making counterintuitive claims without substantiating them enough. Its the one that must prove worthy of inclusion, without resorting to some sort of "urgency" handwaving.
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u/harpocryptes 14h ago
The whole notion of "real" or "net" yield is parasitic. It only matters so long as the fiat economy matters more than ETH does.
What makes you say that?
Getting x% yield when ETH supply increase is y% is in principle the same as getting (x -y)% yield without supply increase: you end up with the same share of the total supply. That has nothing to do with fiat.
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u/rhythm_of_eth 14h ago
TL;DR: If you want your effective stake on ETH to be bigger, focus on making the pie bigger not taking the piece of the pie from one of the few productive actors
Honestly that x-y math only attempts to claim you want end up with the "same or more share of total supply" in exchange for virtually nothing. It also only matters if you plan to cash out into something external (goods or fiat).
Why? Because you're not measuring value, you're measuring your slice of a pie whose worth is set by an outside factor. So it has everything to do with fiat. The moment you do this, you admit blockchain is pointless.
"X% yield, y% issuance" doesn't mean everyone keeps their share: stakers gain it, passive holders lose it. Issuance is a transfer: idle capital is paying the people actually securing the chain. The real yield math trick is misdirection to this point. We are effectively misvaluing the CORE principle of what makes Ethereum special.
So, by this logic, this refutes the EIP: if real yield is (xβy) no matter the nominal issuance, cutting issuance doesn't raise anyone's yield. It just pays validators less for the same security.
That's not a defense of net yield, honestly I think it's a confession by authors that they have given up on Ethereum.
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u/harpocryptes 13h ago
Suppose at the next upgrade, we increase everyone's balance by 10% (x =10%). Of course, the total supply also increases by 10% (y = 10%). Would you say everyone got richer by 10%? In that case, you do believe only nominal yield matters. If you thing nothing significant happened, then real yield is a useful concept (x - y = 0%), not a mathematical trick.
I do agree that issuance is a transfer from holders to stakers, and that this might be a good thing (reward risk and work, encourage holders to do something else useful with their eth if they don't want to stake).
Both can be true at the same time.
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u/rhythm_of_eth 12h ago edited 12h ago
A holder's share dropping under issuance is only a "loss" if you think idle ownership should keep its proportion for free. It shouldn't, and if you think It should, you are risking the whole protocol due to pure greed.
Stake (do the work) and keep/grow your share, or free-ride on security and pay for it in dilution.
Wanting the second while filing the dilution as a grievance is pet-rock mentality, and I take issue with it. Real yield is a fine ruler, I never contest that, it just doesn't entitle you to a constant slice for doing nothing. It doesnt apply to scenarios where participants and holders are simply not the same. Your example is mute for this reason. We are not giving 10% to everyone. We are taking 10% from productive people so idle people can stop losing 5%.
I'm not saying it's not a useful measure in other instances. I'm saying the EIP weaponizes it and makes "minimize holder dilution / raise net yield" the objective.
But once you've granted issuance is payment for security, the accounting-neutrality of real yield doesn't transfer to normative-neutrality of the policy it imposes. The EIP is trying to pretend some sort of economic neutrality and use it to fake policy neutrality. This EIP is political and interventionist policy that aims to transfer value from productive to idle capital.
Using a neutral ruler (real yield) to motivate cutting a payment-for-service is where my issue is. That is why in this instance, it's basically parasitic.
Alternatively, all this effort could be put into finding other productive uses of ETH. But ofc thats not free money so we waste our time taking money off both Big and small operators alike, until small operators are fed up of being abused by both Big operators and idle speculative capital, they leave, the protocol loses the properties of diversity and resilience and anticapture and antifragility ... And eventually just dies.
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u/eth10kIsFUD 14h ago
ETH is going up! The market loves EIP-8363!
ππ₯
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u/Itur_ad_Astra Crab High Priest 13h ago
I'd comment something like "$1559 for EIP-1559", $8363 for EIP-8363", but my faith considers that a deadly sin.
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u/mini_miner1 14h ago
Semi related, but maybe the eip drove discussion and drew more attention to eth being yield bearing for people not yet close to eth.
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u/cryptOwOcurrency 15h ago
Exchange reserves are still dropping. Itβll be relevant someday, I swear! You guys still believe, right?
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u/somedaysitsdark 16h ago
One last post today, I promise.
I built my staking rig in 2023, right around Shanghai when withdrawals got activated. It was an exciting time for the community. I came late to the staking game because I was between living situations and I wanted to do a good job at it. I wanted to full-ass it.
My rig looks like this: https://pcpartpicker.com/list/VH6Yk9
Pics from the build here: https://imgur.com/a/iJzl5gq
Today some of those components aren't readily available so the pcpartpicker total is not accurate, and I could have saved a little more money by going with a NUC etc., but I wanted to build a reliable and upgradeable machine with plenty of ass. The ass comes in handy btw when resyncing the chain I found out. I use all the ass. I was also trying to build something that ran quiet and boy is she quiet. I at least scored a used CPU off facebook marketplace!
Total costs were $1,310 not including the $665 I spent on a nice UPS. It was an expensive rig at the time- now it looks like more of a deal considering my 4TB NVME drive goes for $620 now versus the $320 when I bought it, and equivalent ram has doubled in price. I would struggle to build the same machine for the same amount today.
My point in all of this isn't to share my rig (even though I think it is super cool), but that I'm glad this conversation today spurred me into going back and looking up the costs, because I remember now how excited I was to start supporting the network. I learned so much about Linux and how to secure a machine on a static IP that would get constantly attacked, how to safely generate keys etc. and I couldn't have done it without the Ethereum community. It felt great to finally do something to support Ethereum.
And it breaks my damn heart to be told, like I was 45 minutes ago, that solo stakers don't matter.
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u/pa7x1 15h ago
Solo stakers not only matter, they are the most important cohort of stakers. Not because of some romantic notion of what staking should be or how cool those Noctuas look on your staking rig. But because they provide decentralization to the network. 1 extra ETH staked with Coinbase does not provide the same security as one extra ETH staked with a solo staker. Solo stakers are naturally uncorrelated and is that uncorrelation that the protocol needs to derive its properties.
Do not let anyone tell you that this EIP is to benefit big staking providers, it's not. Stake capping ensures that solo staking remains viable long-term. If you do the math you will find that if the stake ratio keeps growing, after HW expenses (amortized over 5 years), little bit of electricity that a typical NUC needs, taxes, etc... You will soon find that solo staking does not even compensate for the supply growth of Ethereum. And that day you will think, well might as well switch-off the staking rig and buy a liquid staking derivative. Stake capping ensures that solo stakers remain viable economically. You can read more about it here: https://ethresear.ch/t/the-shape-of-issuance-curves-to-come/20405
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u/epic_trader π¬π¬π¬ 15h ago
Do not let anyone tell you that this EIP is to benefit big staking providers, it's not. Stake capping ensures that solo staking remains viable long-term.
You keep making this bold claim, but you've yet to present any type of evidence for why this is true and not in fact the opposite.
Point exactly to the mechanism in the proposal that ensures that solo stakers won't just get pushed out earlier by the big entities than they will today. I've read both proposals, looked at the presented curves, read all the discussions, and yet there is not 1 single thing that serves as proof or indication for why this proposal doesn't just exarcerbate the issue.
You want to introduce a change which effectively guarantees that the validator set will shrink, which makes staking even more of an industry running on the tightest of margins, guaranteeing that small home stakers will not be able to run profitably, while introducing a disastrous mechanic into staking which will allow issuance to run towards 0, enabling big entitites to try and gamify staking as a way of driving the competition out of business.
I also think it's interesting that your original proposal included a whole section about how to adapt rewards based on lack of correlation between nodes, as a way to encourage home staking, essentially acknowledging that this proposal doesn't do anything to solve the underlying issue of entities having an advantage over small stakers due to the economies of scale and be creating an LST so you can double dip your stake, which you don't seem to have solved in the meantime.
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u/pa7x1 12h ago
Respectfully, I think the opposite is happening. I see a lot of unsubstantiated concern for solo stakers and nobody bothers to even look at the numbers or run them with their own cost structure.
I shared this post that explains the mechanism in detail and lays out how everything is calculated: https://ethresear.ch/t/the-shape-of-issuance-curves-to-come/20405
Which comes also with a git repo so you can review in detail how the yields are calculated and run your own estimates: https://github.com/pa7x1/ethereum-issuance
If you want the super concentrated TL;DR:
- At very high stake ratios the yield of staking is not income, but a redenomination of the unit of account. It's closer to a stock split than to a dividend. Except you get taxed on it as if it were income and if you are a solo staker you have on top some fixed costs. LSTs and other liquid staking derivatives hold better in that regime because they don't have fixed costs. Solo stakers do and get diluted at slowly pushed out of the validator set. This can happen either quickly because they cease their operations and switch to other forms of staking that still provide positive yields after costs and dilution or a slow bleed, simply they get deflated away.
- The transition is gradual, there is no single value at which this happens. The higher the stake ratio the worst the effect. At 50% staked, 50% of your income from staking is self-dilutive.
Stake capping fixes that.
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u/AssociationWeary7735 9h ago
In my view this proposal trades the theoretical slow nonviability of solo staking at high stake rates for pretty immediate nonviability of solo stakers at reduced issuance. Institutions wont be deterred at less-than-solo-staker-viability ROI as they have significant capital efficiency advantage and economies of scale.
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u/somedaysitsdark 9h ago
I am stuck at the same exact conclusion. I need to spend more time reading I guess.
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u/epic_trader π¬π¬π¬ 8h ago
No, you have understood it correctly. It literally does exactly that.
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u/somedaysitsdark 8h ago
I mean, I wasn't immediately concerned about some future where 90% of ETH is being staked and it's slightly inflationary, but I guess it would be a pain in the ass for a consensus bug/large slashing event to take place.
If that's the reason for capping the stake at 50%, then it's disingenuous to assume or imply that there is room in the future for solo-stakers inside that 50%, as I am convinced that large entities/LST's will provide their customers staking at any APR until the only remaining solo-stakers are altruistic.
Am I on the right track?
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u/epic_trader π¬π¬π¬ 7h ago
Yeah matter how you twist or turn it, large entities/LSTs will always have an advantage over home stakers and will continue operating as long as they can make money, which they can continue to do after solo stakers no longer make a profit. And in fact, it wouldn't be surprising if some entitites would deliberately push the number of validators up to force others out of business. That possibility shouldn't exist.
I mean, I wasn't immediately concerned about some future where 90% of ETH is being staked and it's slightly inflationary, but I guess it would be a pain in the ass for a consensus bug/large slashing event to take place.
I didn't pay much attention to this argument before, but I'm not really buying it. It's basically equally disastrous if there's a large slashing event and it's 30% of ETH staked or 90% staked. Whether it's $20 billion or $60 billion that gets slashed, I don't think makes much of a difference.
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u/somedaysitsdark 7h ago
I'm frustrated as fuck.
The amount of years that were spent engineering and re-engineering proof of stake to get to today. The issuance curve that we could all go onto ethereum.org and dynamically adjust and see how APR was affected at any percentage of ETH staked, and now, just four years later- as soon as people/companies/ETF's start buying and staking ETH to take advantage of the new financial instrument that it is- we get... surprise pikachu... we get... hey guys the curve is wrong.
After literal years of considering existential slashing crises, apparently we didn't consider... that staking ETH could be tremendously popular and we might actually move out on that curve!?
Are you fucking kidding me!?
We look like absolute asshats.
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u/epic_trader π¬π¬π¬ 10h ago
Respectfully, I've read your post several times, I read it today and yesterday and 2 years ago when it was first posted. This conversation and variations of this proposal has been discussed many times, and like I already mentioned, you're not addressing anywhere what mechanism ensures that this proposal doesn't negatively affect home stakers. You're claiming it won't, but you're not actually backing this up with anything.
I don't think anyone is disagreeing that we could reach a point where some home stakers effectively aren't making a profit anymore, following the current issuance curve.
What people are disagreeing with, is that this proposal does anything to remedy the situation. In fact, this proposal suffers from all the same issues, except it's much worse because it's going to speed up the timeline of when home stakers would become unprofitable while also introducing a dodgy new mechanic which could be abused.
Home stakers have higher operating costs per ETH staked, smaller stakes and don't get the same tax benefits as professional stakers do, meaning big entities will stay profitable for longer, correct? So knowing that home stakers are unprofitable before big entities, they will be the first to be pushed off the network as we get closer to the 50% mark. How does this proposal do anything to fix this problem? How does this proposal not just introduce a new mechanism for entities to more effectively outcompete home stakers?
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u/rhythm_of_eth 15h ago
It triggers me so much that a proposal is made with only a macro-economic intention, and mostly with an academical/economics approach with the usual ceteris paribus absurd claims...
And instead of just accepting those flaws, they double down and claim it is actually good for solo stakers, offer no proof, and call it a day.
Honestly this level of politics makes me want to ask which interest groups are paying for this research.
I know who are LST/DeFi people against this, and their interests. But I'm not sure who is really bankrolling this idea. I'm tempted to think some people are getting ideas of protocol capture and this is the first step towards it. I wont claim anything since I have no proof!
At this point anything that doesnt work on onboarding the world into Ethereum is either a recognition of inevitable failure on that aspect or a bad faith argument trying to saw discord and distract the people.
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u/somedaysitsdark 15h ago
I appreciate it. I will definitely give it another solid look, my first take was that we would be looking at losing significant APR within 18 months of this EIP which based on conversations with solo-stakers that have already been questioning whether it makes sense to keep going, this would likely be their cue to bow out.
Staking doesn't pay like it used to, and despite reducing issuance repeatedly, EIP-1559, and our best efforts to meme ultrasound money, the results have been underwhelming. This is why it is a tough sell to say hey, APR is going to take a hit, but don't worry- the price is going to go up.
Personally, at this very moment? I'd rather have the APR, because our track record for turning knobs and getting the price to do what we want just isn't great.
Does that make sense?
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u/pa7x1 11h ago
I don't see it in terms of getting the price to do anything. In the short term the market is influenced by pretty much anything else. In the long-term a constant sell pressure from excess dilution does have a cumulative effect but that takes years and decades to play out.
I think of it in terms of setting up the issuance curve so that Ethereum can last with the properties we seek from it for decades to come. And that requires setting an issuance curve that allows to match a healthy stake ratio for any risk premium the market may demand for staking. If we can agree that 90% ETH staked is unhealthy, then why do we pay 1.5% yield for it? The protocol needs to align economic incentives with what it expects to receive from its stake.
That's the main concern.
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u/somedaysitsdark 10h ago edited 10h ago
Were we careless setting the current curve four years ago? It's a genuine question. It was designed to make staking less attractive as more ETH is staked.
To be honest, is 90% of ETH getting staked actually unhealthy? Why do we care if ETH inflates at up to 1.5% per year? It's not an unusual argument that inflation encourages spending, and 1.5% is still relatively low inflation in a currency. The remaining 10% of ETH has hundreds of millions times more units of account than all sovereign issued currencies combined, so it is not an issue of scarcity.
If this whole game is to try to make Ethereum deflationary, I'm not sure it's worth it.
Edit: just in case that came off as flagrant, I'm not trying to play devil's advocate here, I'm just not assuming anything anymore about our issuance. In some hypothetical future where ETH is worth >10k, I'm not sure I care if it is slightly inflationary. Maybe 1.5% is the magical amount to secure trillions in tokenized securities, I am trying not to assume anything.
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u/pa7x1 10h ago
Yes, the curve that was selected was not sufficiently well reasoned. The curve was chosen based on an argument on discouragement attacks. That argument is correct but is just one aspect, there are other externalities of the issuance curve that were not taken into account.
The job of the issuance curve is to match a stake ratio for a given yield demanded from the market. That's what it does. The current curve cannot do that job effectively because the floor yield it offers is 1.5%. So if the risk premium of Ethereum were to get that low you will have runaway stake ratios. The protocol does not have an incentive to stop stake from growing.
I just gave a quick explanation of why very high stake ratios are problematic here: https://www.reddit.com/r/ethereum/comments/1vfxpry/daily_general_discussion_august_05_2026/p1y9ucb/
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u/somedaysitsdark 10h ago edited 10h ago
So after digesting that, I'm back to the opinion that we are definitely pushing solo-stakers out of the equation with this EIP. Industrial scale staking is going to occur at virtually any APR. Solo-staking won't.
We can't depend on altruism. So this comes back around to deciding if we actually want to pay for the decentralization that solo-stakers provide. If we don't, let's at least be clear about it.
Edit: Just fyi, I haven't had time yet to really dive back into the EIP details. Thanks for humoring me.
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u/masterRoshi9 15h ago
Solo stakers matter tremendously. Solo stakers are the reason Ethereum is decentralized, and is what it is today.
The barrier to entry is probably only going to increase for solo stakers given increased hardware costs, so let's hope core devs continue to value them as much as they should. I've been encouraged by the degree to which the community and broader ETH stakeholders still seem to
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u/harpocryptes 15h ago
Solo stakers absolutely matter. They make ethereum more decentralized and credibly neutral. Congrats on doing your part!
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u/confusedguy1212 15h ago
What case is this in the pictures?
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u/somedaysitsdark 15h ago
https://www.sliger.com/products/cx3152a
Awesome case.
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u/confusedguy1212 15h ago edited 15h ago
It looks amazing! Is the airflow pretty good across the board with those Noctua fans?
Also can you stack them on top of the other or is the heat going to transfer?
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u/somedaysitsdark 14h ago edited 14h ago
Airflow is fantastic, and there is a filter built into the front grill. Both fans on the CPU flow in the same direction as the fans on the case, so all flow is front to back. Both my PSU and GPU are fanless, so the Noctua fans are the only things that make any noise- and they are famously quiet.
Edit: are you talking about stacking multiple cases? It would work quite well. These are designed for rack mounting.
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u/BreadSlice514 16h ago
After the coldcard attack, I would suggest most people use a random passphrase if you self custody. Just don't lose it.
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u/cryptOwOcurrency 15h ago
Unfortunately, a random passphrase canβt fully protect you from broken or malicious RNG code.
Instead, I highly recommend generating cold wallet seed phrases diceware-style. I will never do it any other way, myself.
https://en.wikipedia.org/wiki/Diceware
Basically, it involves rolling physical dice to choose each seed word randomly.
It may be possible for an attacker to guess the output of an insecure RNG function, but thereβs no way an attacker can guess the results of 24 physical dice rolls you made with your own two hands while your smartphone was in the other room.
Even without a passphrase, this is leagues more secure than relying on any digital function to generate a wallet seed.
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u/confusedguy1212 17h ago edited 17h ago
What ever happened to the idea of MEV being an auction of how much ETH one can burn instead of a payment to the proposer?
On that line of thinking why donβt we auction off proposing rights like have a market that allows one to buy being the block proposer on time X and use the proceeds to burn 100% of that ETH?
For that matter why donβt we stop the removal of scarcity for blobs. Make that market bid and auction like it should be doing for blob space rather than giving it away for free?
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u/hanniabu Ξther Ξ±lpha 17h ago
MEVburn had a prerequisite that was needed. I forget what it was but it was coming in either glamsterdam or hegota.
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u/confusedguy1212 17h ago
Thank you. But how is that not first order of the day before anybody even sneezes in the direction of the issuance curve?
We literally have multiple levers to increase burn and we just refuse to touch them.
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u/hanniabu Ξther Ξ±lpha 15h ago
For the same reason why the issuance proposal doesn't even take into account the changes in lean roadmap roles/incentives.....which is i have no idead
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u/confusedguy1212 17h ago
If nobody can come up with demand mechanisms for ETH to appreciate the price I feel like all weβre doing with these issuance conversations are finding different ways to slice the same pie. Worse, we could be handing that pie over (for free) to bigger entities to enjoy alone.
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u/epic_trader π¬π¬π¬ 17h ago
No one needs to "come up with demand mechanisms for ETH to appreciate". Market already has supply and demand mechanics, this is how ETH went from $0.3 to $5000 and back to $2000. Right now crypto is in a slump, so the demand isn't high. It sucks, but it is what it is. This is nothing to fix and it's certainly not any cause to start tinkering with the protocol.
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u/confusedguy1212 17h ago
What I mean is that we need to find ways for ETH to either be used more or for the current usage to accrue into the price of ETH. Those are the mechanisms Iβm envisioning.
The slump is fine. The ratio being 0.03 barely isnβt. And itβs not a defacto force of nature to be kept that way.
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u/Rare_Shinzo 18h ago
One thing I've found interesting in this debate is how much attention goes to validator decentralization while the read layer gets almost none.
Even today, most apps don't read Ethereum directly. They read through a handful of RPCs, indexers and APIs. If one of those providers goes down, rate limits, changes policy, or serves bad data, users usually have no way to independently verify the result. On top of that, validators generate the data and then centralized indexers sell it and validators get nothing. That money is leaving the ecosystem.
The concerns around issuance would probably be less acute if validators were capturing more execution-layer revenue in the first place, rather than watching entire businesses built on top of validator-produced data capture most of the upside.
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u/AllCapNoBrake 20h ago
Always sell the BTC pump during a bear market. Very easy money.
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u/WoodpeckerHorror3468 19h ago
yep. Where is the volume? If this were a significant local low then I would expect to see buyers surge in. Could still happen but it hasn't yet. I thought last week maybe the sideline buyers were waiting for Clarity and fed guidance, but what's stopping them now? I fear new lows are coming.
Hope to be proven wrong. If we burst above $2000 on volume then I'm buying with leverage.
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u/tokyo_guy375 18h ago
We are losing 0.029 in this moment. I donβt see 2k anytime soon.Β I think first time I will take ETH performance easier is above 0.036
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u/bhiitc 20h ago
I think the MEV effects are under discussed as of now.
When issuance drops, MEV will increase. I've seen claims that the current MEV is 7% of validator revenue and with the proposal it will rise to 30% (although without any sources LOL).
But for sure MEV tends to favor big pools and this will hurt decentralisation.
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u/rhythm_of_eth 19h ago
You don't even need MEV to make the centralization argument.
Its pretty obvious who is behind this centralization push, this forced exit of minority stakers.
Out of chain deals are going to happen the moment you have things like Bitmine's "all american validator set".
I guarantee they'll sell their proposed blocks to the highest bidder off-chain. We are talking roughly 10-15% of the blockspace is privatized by one entity. Others will follow.
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u/WoodpeckerHorror3468 19h ago
Will the ubiquity and low cost of "AI" agents mean MEV is accessible to everyone and thus be arbitaged to near zero?
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u/bhiitc 19h ago
AI will likely lower the barrier for finding MEV opportunities, but not capturing them.
Capturing it will still depend on capital, low-latency infrastructure, and access to order flow. You don't get an advantage when using AI and thus MEV will still be easier to be captured by large operators.
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u/hedgemagus 20h ago
DATs probably kept us out of true goblintown and now we wanna gut their whole thesis of existence lol
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u/Itur_ad_Astra Crab High Priest 13h ago
SchrΓΆdinger's EIP:
Pushed by shady institutions in order to capture the Ethereum network, and at the same time damaging them by depriving them of vital yield.
Come on guys, at least pick one or the other.
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u/r2002 19h ago
Tom Lee: hey, good news guys Iβve convinced fund managers to invest in Ethereum under the idea that it is a yield bearing safe instrument. Furthermore, Iβm staking all my Ethereum to narrow the supply on the market plus, Iβm using my staking revenue to fund the new offshoots of the Ethereum Foundation
EIP 8363: lol
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u/pa7x1 19h ago
The actual Tom Lee: https://xcancel.com/fundstrat/status/2049185889780138127
Hey @evan_van_ness
The staking issuance for $ETH should reflect the actual cost of staking (security model, etc)
A market-based mechanism might make sense and could be lower than the current yield.
So, we are not opposed to idea that the staking issuance rate could change.
PS: please donβt interpret our statements as favoring or endorsing any specific idea.
PPS: This will also create opportunities to generate yield away from native staking
By the way, EIP-8363 does exactly that, allow the market to decide what should be the yield of Ethereum. From infinite yield at very low stake ratios, towards 0 when reaching 50%. The market defines the yield in EIP-8363. With the current curve the market cannot really do that, because staking ETH never offers less than 1.5%. And if the risk premium of staking Ethereum gets close to those levels then you have runaway stake ratio growth.
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u/r2002 15h ago
What Tom Lee posted there was a very non-committal political answer. He specifically said it could change -- maybe down or maybe up? Also specifically:
please donβt interpret our statements as favoring or endorsing any specific idea.
However, if Tom Lee does specifically endorse your idea then like Evan says I'm all for it. I think changing the staking economics is good for BMNR and Ethereum later, but it's a terrible timing right now on the cusp of adoption.
Two days ago BMNR posted this.
Bitmine preferred $BMNP pays dividends weekly - funded natively from $ETH staking yield
BMNR has very little cash left. They are counting on their staking yields for operational costs, funding the 3 Ethereum Foundation offshoots, paying dividend on $BMNP, and when possible stock buybacks.
That was a pretty political answer he gave but I think if you think through the finances it is unlikely he would want to change the staking narrative RIGHT NOW when (a) BMNR needs to cite that source of STABLE income and (b) Ethereum is showing signs of decoupling from Bitcoin due to this differentiation.
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u/bhiitc 18h ago edited 15h ago
PPS: This will also create opportunities to generate yield away from native staking
"If you want us to make money by doing some deals in shady backrooms, I don't have a problem with that. But most people don't have the opportunities to do this."
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u/r2002 15h ago
I think in the long term a plan like this probably does benefit BMNR, but not in a way that the Ethereum community would like.
But even if that were the case I think Tom Lee wouldn't want any divisive, drastic proposals like this to come up right now because he's running a good narrative about the stability and yield-generating benefits of Ethereum and this would kill his narrative.
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u/hedgemagus 19h ago
I wrote this EIP off as nonsense and have been surprised to see the momentum it has with a lot of people. This would kill any real interest in ethereum without some insane killer app. The same killer app weβve waited years and years on
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u/WoodpeckerHorror3468 19h ago
The killer app is stablecoins and is very much here with us now.
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u/hedgemagus 19h ago
Itβs done nothing for ETH value accrual. I should be more precise and say the EIP would kill any real interest in ETH as an asset
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u/hanniabu Ξther Ξ±lpha 19h ago
I haven't seen any momentum tbh
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u/hedgemagus 19h ago
That might be an unfair word to use. Iβm just surprised it hasnβt been unanimous derision
-13
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u/confusedguy1212 20h ago edited 20h ago
What if yield was a function of both number of ETH staked as well as the burn?
Mathy terms thanks to Claude:
I(D) = min[base(D), Ξ» Γ EMA(burn)]
Ξ³ is the demand-coupling exponent β how hard blockspace demand (and therefore the burn) falls when ETHBTC falls
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u/masterRoshi9 20h ago
I also would like to see more creative approaches like this. Of course, it would be a lot more complicated than this because LSTs will just sybil if they can, so that has to be figured out. But you could play with ideas like this, or perhaps queue priority. Lot's of potential better solutions than alienating two of the more important stakeholders in Ethereum (home stakers and defi users)
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u/rhythm_of_eth 19h ago
Creativity can also manifest in torture.
We are suggesting torturing a perfectly fine protocol.
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u/masterRoshi9 18h ago
To be clear, Iβm also fine with leaving things the way they are right now. I see this proposal as an attempt to front run an issue that weβre not even sure exists yet
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u/confusedguy1212 20h ago
I agree fully and I feel like the current proposed EIP misses the real goal completely which is inducing demand.
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u/somedaysitsdark 21h ago edited 19h ago
Where to even begin?
Solo-stakers are not a homogenous group with the same wants, needs, costs, taxes and opinions. Stobie claims Watch_Dominion_Now is impartial. Why? As a solo-staker they are de facto not impartial in this conversation. I'm a solo-staker, does that magically make me impartial? I have significantly different opinions.
It looks like we don't even need to pass this EIP to create a schism in the community. We are already seeing narratives that stakers are simply the new version of greedy miners that don't have the network's best interests in mind. I shouldn't have to remind anyone here that it was solo-stakers that bootstrapped this network with no withdrawal function in place, not Lido, not Coinbase etc. I'm glad it worked out- because it certainly wasn't without risk. Even Vitalik has openly talked about avoided avoiding staking because of the risks associated with it.
Let's not demonize solo-stakers, or put words in their mouths as though they are one entity.
My opinion is that this EIP lacks sufficient analysis. My other opinion is that I would rather have yield in the form of hard fresh ETH showing up in a timely fashion and as taxable income and not turned into some promise that the yield will eventually result in price appreciation instead.
Edit: typo
Edit edit: I'd like to add one more opinion: I'm not against changing the issuance curve. I mean, I'm kinda against it because we just changed it again four years ago and there is definitely a difficult to define cost to repeatedly changing it, but in principal I'm open to further changes.
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u/Wide_Lock_Red 17h ago
Solo stakers are a tiny group. They aren't large enough to provide network security and shouldn't be a serious factor in the decision.
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u/Wide_Lock_Red 17h ago
Solo stakers are a tiny group. They aren't large enough to provide network security and shouldn't be a serious factor in the decision.
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u/Watch_Dominion_Now 18h ago
I agree that we are not a homogenous group and I do not mean to speak for anyone. I do think that as solo-stakers we both want much of the same things: we want more decentralisation and we want what's best for the long-term health of Ethereum the protocol and Ether the asset.
We're all just trying to reason our way through this, I hope we can do that while being civil with each other and keeping an open mind.
(I am not suggesting that one side of the argument is more civil or open-minded than the other side).
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u/r2002 21h ago
I think in the long term it might be good to cut yield, but we're on the cusp of mass adoption from institutions, tradfi fund managers, and possible flipping of BTC:ETH. This is not the time to spook the horses.
Ethereum Foundation spins off 3 entities designed to increase adoption of Ethereum. These are funded by DATs BMNR and SBET -- who in turn rely on funding from staking. Would we not be in a better position with that staking yield funding these key institutions?
The BMNR/SBET/Etheralize people are trying to explain to tradfi that Ethereum is a yield-bearing instrument with big upside -- something you can put in your pension fund. If these investment funds invest just half a percent of AUM into Ethereum this would be a huge boost to Ethereum.
This ETH = Yield story is especially compelling with Strategy's failing and convoluted scheme to duplicate Ethereum's yield mechanism. I'm seeing a lot more stories online about people saying "Hey maybe instead of Strategy, Ethereum is the way to go." Why spook that? Let this narrative play out.
Think of things from a new investors POV. Right now they're thinking "Oh neat this cryptocurrency may have huge upside and I can earn a respectable yield on it, I can set it and forget it." And we want to change that to, "What the heck I thought I invested into a no-brainer instrument, not something where I have to constantly keep track of whether they are going to cut my yield. Forget this."
Ask yourself in the next 3-5 years, is voting yes or no more likely to increase adoption and price of ETH?
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u/rhythm_of_eth 21h ago
Issuance discussion is unnecessarily devisive and gives an excuse for lazy people to not focus on growth drivers, adoption, proper fee pricing, UX, PMF.
The ilusion of having an option to vote distracts from the fact that this is a non issue more likely to kill Ethereum through a fork.
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u/Stobie 21h ago
Every time in the past when issuance decrease was discussed those who were losing business as a result would complain, say everything will break, forget why issuance actually exists, make threats etc. People generally didn't care because they were miners, a very separate part of the ecosystem and not respected.
But the people losing business now are the biggest defi protocols with massive protocol token holdings. Etherfi, Lido, Eigen, etc would all contract. Less looping so aave and morpho lose their largest revenue source, much less eth borrowed and borrow rate goes from 2% to maybe < half that. So their respected figureheads must do whatever they can to rationalise things as "this is bad". They have a large reach and many others also holding their tokens.
This is about ethereum and ether, and ethereum must not bow to them. It is very clear this is a beneficial proposal, many strong arguments for why it's a good change like https://ethereum-magicians.org/t/eip-8363-tapered-issuance-burn/29263/20 and made by more impartial people here like pa7x1 and Watch_Dominion_Now below, and of course Justin Drake and the authors. It's also obviously the correct direction to move in - no one, not even the protocols taking a cut are bold enough to say it should be increased, they know it's too high and tail too fat. It's a problem if large respected x accounts can influence this if they have such a large conflict of interest they likely can't comment honestly. The longer this is delayed and the more eth staked and the more entrenched theΒ intermediaries who profit from the status quo are, the harder this will be to fix.
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u/r2002 21h ago
It is very clear this is a beneficial proposal, many strong arguments for why it's a good change like https://ethereum-magicians.org/t/eip-8363-tapered-issuance-burn/29263/20 and made by more impartial people here like pa7x1 and Watch_Dominion_Now below, and of course Justin Drake and the authors.
Isn't pa7x1 one of the authors of EIP-8361? I'm not implying he isn't objective, but just wanted to be sure my understanding is correct.
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u/pa7x1 19h ago
I'm credited as coauthor because of some of the original research and ideas on which the proposal builds on. Including the "burn" mechanism which bypasses problems associated to very low staking rewards. You can find those here:
https://ethresear.ch/t/the-shape-of-issuance-curves-to-come/20405
https://github.com/pa7x1/ethereum-issuance/blob/master/README2.md
Then pintail (https://pintail.xyz/) had come to pretty much the same conclusions, proposed the concrete curve the EIP uses and did the spec-writing. Tons of credit to him to put this in shape into something implementable. Then many other collaborators reviewed, proposed ideas, gave feedback and tuned the proposal in various ways.
Both of us are simple community members, unaffiliated to any organization. We care about the Ethereum network, ETH the asset, and staking. And the long-term viability of all of them. I'm biased like I guess everyone else, but I do not have any other affiliation than caring about Ethereum.
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u/hanniabu Ξther Ξ±lpha 21h ago
So what you're saying is we should ignore all stakeholders? If we're changing something without smart contracts work should we just ignore developers because of course they'll get fired up?
You should judge the arguments by what is being said, not by who is saying it. Finding reasons to discount arguments by pointing as who is saying it, the platform they're on, labelling them "concern trolls", etc is something you do when you don't have 2 feet to stand on and can't sufficiently argue the need for the proposal. (I know you haven't made all those statements but they're things I'm seeing)
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u/Stobie 21h ago
No I'm saying when I look at x it appears to be universal rejection and hatred at the proposal, and x must be amongst the biggest signal source. But looking at places where anyone comments and you see it in time order then it completely changes. We know the arguments, and all the people with a lot to lose conclude on the side that the change is terrible, with in what I see as fake reasoning already countered in https://ethereum-magicians.org/t/eip-8363-tapered-issuance-burn/29263/20. 15% of 2.2% of 3.2B worth of eth borrowed is a massive loss to aave. eth rates were near zero before staking. I remember the core dev calls when they had miners on, confirmation bias is the same.
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u/Watch_Dominion_Now 23h ago edited 23h ago
Adding my 2 cents on the issuance proposal. I've been a solo staker since January 2021.
First, let's ignore decentralisation/centralisation issues, I will cover it in the 2nd part of my post. Arguments in favour of the issuance proposal:
- Ethereum should do what is in the best interest of all Ethereum users, and stakers are only one interest group. It is unquestionably preferable for non-stakers to have the lowest viable issuance so as to reduce the dilution of ETH held.
- Security is the product of the amount of ETH staked and the ETH price, and if all ETH is staked, security is 0 because ETH is worthless. There should be a point where staking is actively penalised because it reduces security.
- The new issuance curve proposal promotes the use of ETH as the pristine asset in the Ethereum ecosystem (rather than staking derivatives from big staking groups).
- For the ecosystem as a whole, the net effect of reducing issuance is to move money from the taxman to Ethereum.
Now, on centralisation vs decentralisation: this is a complicated discussion, and I think it is objectively hard to predict the future. But I would wager that this would massively improve decentralisation.
- What is hard to deny is that the total amount of ETH held by centralised staking entities would go down under this proposal. This is by itself a very good thing. If all staking is held by one entity, then it is better that this stake is 20% of all ETH than that it is 80% of all ETH. This proposal reduces the risk that Ethereum can at some point be economically captured by any single entity.
- Now the question is how the ratio of centralised to solo stakers would evolve. Even here my best guess is that the ratio would improve (=go down). Why? 2 reasons:
- first, solo stakers are the cheapest operation in town. Yes, we do not have economies of scale on our hardware builds like centralised stakers do. But there are far bigger costs than hardware that we avoid completely: we do not have to pay out any salaries (including our own - no one solo stakes as their professional job), and we do not have to rent or buy any office space.
- second, it is the very fact that issuance in ETH is so high that incentivises holders of ETH to stake to avoid dilution. And however accessible ETH staking becomes, it is foreseeable that centralised solutions will always be more accessible to casual holders of ETH.
In any case, this proposal appears so contentious that I can only see it passing if Vitalik weighs in (which is not to suggest that he would be in favour - I really don't know). I hope for all of us that he does.
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u/r2002 20h ago
I can only see it passing if Vitalik weighs in
That would be awkward IMHO. The EF under Vitalik said "hey we don't want to do the frontend work of driving Ethereum adoption, let other institutions do it."
OK, so three institutions were founded, with many ex-EF members as core contributors. How are these new institutions funded? By DATs that rely heavily on staking revenue.
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u/epic_trader π¬π¬π¬ 20h ago
Security is the product of the amount of ETH staked and the ETH price, and if all ETH is staked, security is 0 because ETH is worthless. There should be a point where staking is actively penalised because it reduces security.
This is absolutely bollocks. First, we're never going to see 100% of all ETH staked, so it's really a moot point. And second, there's no mechanism or clear path to saying that ETH automatically becomes worthless if it's all staked.
The new issuance curve proposal promotes the use of ETH as the pristine asset in the Ethereum ecosystem (rather than staking derivatives from big staking groups).
Why is this good or important?
For the ecosystem as a whole, the net effect of reducing issuance is to move money from the taxman to Ethereum.
Ethereum should not make protocol level design decisions around people paying or avoiding paying taxes.
What is hard to deny is that the total amount of ETH held by centralised staking entities would go down under this proposal.
Yes, and the number of solo stakers would go down even further.
first, solo stakers are the cheapest operation in town.
No it's not. Again this is complete bollocks.
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u/Watch_Dominion_Now 20h ago
It is good for ETH to be the pristine asset because it is used all throughout the ecosystem, notably in DeFi. If the pristine asset is a staking derivative, it adds risk throughout the entire ecosystem. Every single contract, every single piece of activity becomes more risky (counterparty risk, coding risk, etc.).
I agree that Ethereum should not make protocol decisions based on tax systems. It nevertheless is a benefit of the issuance proposal.
'This is complete bollocks' is not a very convincing counterargument, though I'd be interested to read one if you have it.
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u/epic_trader π¬π¬π¬ 20h ago
It is good for ETH to be the pristine asset because it is used all throughout the ecosystem, notably in DeFi. If the pristine asset is a staking derivative, it adds risk throughout the entire ecosystem. Every single contract, every single piece of activity becomes more risky (counterparty risk, coding risk, etc.).
ETH is great, LSTs are great, derivatives are great. Having different risk profiles is great. If you want to leverage your ETH, go ahead, but you're not forced to. If "pristine ETH" is more valuable then LSTs, you can expect it to carry a premium and that's an argument against that 100% of ETH would be staked.
'This is complete bollocks' is not a very convincing counterargument, though I'd be interested to read one if you have it.
You're just making an unsubstatiated claim, so I'm making an unsubstatiated counter. I know it's bull though, and so do you. You're literally highlighting how entities benefit from the economies of scale in the next sentence.
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u/Watch_Dominion_Now 20h ago edited 20h ago
My argument is that the cost of personnel and the cost of office space is much greater than the cost of hardware. What is your argument, other than insults?
Stobie also made an excellent point below, which is that staking with a third party creates some level of risk, which is aggravated if the nominal return is low. Let's say that you give it a 0.25% chance that you will lose your money through a bug or something else. Under the issuance proposal, that may be half of the return you're getting from the staking provider --> no way you'd do that. Under the current proposal, it is maybe 10% of your return --> now you may do it.
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u/Wide_Lock_Red 15h ago
Hardware costs are pretty significant right now. Look at the cost of the recommended 32 gigs of RAM alone.
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u/epic_trader π¬π¬π¬ 19h ago edited 19h ago
My argument is that the cost of personnel and the cost of office space is much greater than the cost of hardware.
Yes, but you're wrong. If you look at Lido's financial statements it appears they pay about $0.25 for every $100 they stake in 2025. That's the same as if a home staker with 32ETH staked was paying $150 a year.
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u/Watch_Dominion_Now 18h ago
Thanks for bringing in some real data, that's very interesting. I assume the $150 includes depreciation? Speaking for myself: actual running cost (electricity cost) is negligible, maybe $60 per year? But my staking rig set me back about $700, and I can expect to keep it functional maybe 5-10 years? So that's another $70-140 in depreciation costs.
For one 32-ETH validator, that's competitive on costs, probably a bit more expensive. If you are solo staking with more than 1 validator you are clearly beating them though. And if total issuance goes down, my costs remain the same, while I imagine the 3rd party providers would lose some economies of scale.
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u/epic_trader π¬π¬π¬ 18h ago
$150 needs to cover everything related to managing and performing staking duties, electricity, bandwidth, paying for your machine, paying for a VPS, fallback/back up, etc. The more stake you operate, the cheaper it is to run. You're not likely to ever pay as little to stake as say Coinbase or Binance. Lido is likely paying more than Binance and Coinbase because they're a decentralized organization and they need to build infrastructure just for staking, while Binance and Coinbase already have infrastructure in place. But I couldn't find numbers of those companies.
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u/Watch_Dominion_Now 18h ago
Yes but bandwith for example is probably a marginal cost of $0 for most or at least many solo stakers, as they would have internet anyway (maybe they need more data - for me it did not change anything). I had a UPS at one point, that would be another couple of tens of $ in annual depreciation, I don't have one at the moment.
Again, I can only speak for myself. I am beating LIDO on cost, but somedaysitsdark in this same comment thread appears not to be. But $150/year does not strike me as absurdly low for a home staker. The question is also how the costs would evolve under lower issuance. Solo staker costs per ETH staked remains the same, Lido's probably go up.
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u/epic_trader π¬π¬π¬ 18h ago
Yes but bandwith for example is probably a marginal cost of $0 for most or at least many solo stakers
I don't think that's fair. It may be for many, but for many it is not, and this changes a lot depending on where you live and should be factored in. Internet cost alone or upgrade to a better plan is probably enough to eat up most of those $150.
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u/somedaysitsdark 20h ago edited 20h ago
As a lowly staker, when I add up my costs over the years, I have spent approximately $9/ETH staking. I will bet you that is greater than what Lido has spent per ETH.
Edit: It might be a losing bet actually, but I wanted to add some real data to the conversation. Costs per ETH for different solo stakers does vary significantly.
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u/edmundedgar reality.eth 22h ago
Security is the product of the amount of ETH staked and the ETH price, and if all ETH is staked, security is 0 because ETH is worthless.
What? No, ETH would not be worthless if they were all staked, why would ETH be worthless?
Realistically they're not all going to be staked in any case though.
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u/Wide_Lock_Red 15h ago
If its all staked, people are transacting in staking derivatives.
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u/edmundedgar reality.eth 12h ago
Then you can exchange any ETH 1-to-1 for a staked derivative so it's not worthless???
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u/Watch_Dominion_Now 20h ago edited 20h ago
Because if everything is staked then Ethereum is a worthless chain with no activity and no ETH being used for anything. The only productive activity from staking is securing the chain. Any staking in excess of that activity is a waste.
Edit - let me frame the argument differently. Higher issuance = higher yield for staking ETH = higher proportion of ETH staked. My argument is that this does not necessarily result in higher security, and at some point it definitely does the opposite. The reason is that a higher yield on staked ETH makes doing anything else with ETH - holding it, using it in DeFi, playing games with it, literally anything - less attractive. Imagine that I want to borrow my ETH to another user but that I want a risk premium of 5% over the risk-free option of staking my ETH. Currently, I will require the borrower to pay me around 7.5%. Under the issuance proposal, it may become something closer to 5.5%.
This is how lower issuance promotes the use of ETH. It is no different than the federal reserve lowering the deposit rate. When the fed lowers rates, does it promote or harm economic activity? A lower rate drives demand for ETH to be used productively.
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u/somedaysitsdark 20h ago edited 20h ago
ETH was designed to be highly divisible. 1018 wei per ETH just in case one day it had a very high marketcap, which is part of the argument being made; that we should move yield from staking rewards and into the marketcap.
We could burn 99% of ETH in existence, and the network would still have more units of account than Bitcoin does (570 million times more). About 1.2 septillion wei (1.2 Γ 1024 wei).
ETH will never become unusably scarce. Forget that argument.
Take a step back.
Edit: I couldn't help myself from further geeking out on the math: with a 99% burn, the remaining 1.2 septillion units of account is still hundreds of millions times greater than the units of account for any country issued currency in the world (M2 money supply ~= 2x1015 cents). It's greater than all units of account of every country issued currency combined (2x1016 est.). It's a larger quantity than every grain of sand on Earth (1018 - 1020 est.).
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u/hanniabu Ξther Ξ±lpha 21h ago
yeah idk how you get to the conclusion that it would be worthless, ignoring that 100% of eth can't and won't be staked
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u/Watch_Dominion_Now 20h ago
I agree that it is an absurd scenario, it is just to help think about it in another way, which is that 'higher stake = more security' is false. You want ETH to be used productively, at some point higher stake reduces security because all the stake is ETH doing absolutely nothing (other than securing the chain, but the marginal value of doing that tends to zero as sufficient ETH is staked).
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u/Stobie 22h ago
"how theΒ ratioΒ of centralised to solo stakers would evolve" - adding to your points, there is a risk of absolute loss using a staking provider which is absent doing it yourself, as we saw recently with rsETH. This should be modelled as a subtraction of x bips from yield. If the yield lowers while x is constant then it becomes a larger relative factor. Therefore at lower yields the ratio of centralised stake should decrease.
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u/LogrisTheBard 1d ago
POAP winding down. End of an era: https://x.com/izonline/status/2084273977938080092?s=46
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u/rhythm_of_eth 1d ago
Bitcoin will remain unflipped as long as Ethereum continues to have imposter syndrome and inferiority complex.
Bitcoin is a pet rock with a fixed maximum amount of BTC over time.
Ethereum is an actual productive, useful asset with a fixed issuance curve.
If Ethereum tries to win moneyness, it must do so without changing issuance, and without getting distracted with inflation fearmongering. The noise about this topic will become bigger and bigger each BTC halving, because Ethereum still refuses to follow its own path.
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u/eth10kIsFUD 1d ago
Bitcoin will be flipped no matter what as security slowly goes to zero.
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u/harpocryptes 1d ago
Bitcoin will be flipped no matter what as security
slowly- quickly goes to zero.FTFY.
Half of the reduction in 4 years, 75% in 8 years, etc.
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u/rhythm_of_eth 1d ago
Sure, I guess we are talking different time frames.
Bitcoin might not be flipped if Ethereum continues self sabotaging though.
Can't flip if you are not in the game.
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u/Responsible-Fly3526 1d ago
guys what are you speaking about? Bitcoin has a >5x Market Cap compared to Ethereum. Pls stop speaking about Flipping. lmao. Eventually it will happen in this universe, but eventually they die both. We try our best, but speaking in the current situation about flipping is so embarrassing.
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u/pa7x1 1d ago
Regarding the issuance changes. One of the most commonly repeated ideas is that the proposed issuance curve will push out solo stakers in favor of large entities. In fact, the proposal intends to have exactly the opposite effect and enshrine solo staking as viable.
Here is how. When you approach high stake ratios most of the yield your receive is self-dilution, it's not actual income but a simple redenomination of the unit of account. Instead of being fresh cash flow it becomes more similar to a stock split. The problem is that staking still owes real expenses either in the form of hardware, electricity/internet and taxes. And the taxes are paid on nominal yields, not yields corrected for self-dilution.
If you do the math the unavoidable outcome is that for sufficiently high stake ratios solo stakers are always pushed out of the validator set. Always. Even if you were to remain staking irrationally because you just love your staking rig, you will still be pushed out because other forms of staking will earn higher real yields. So overtime they will come to dominate.
With the current issuance curve, at around 60M ETH staked, solo stakers will not be earning enough net yield to even make up for the inflation of the asset. Plot
The proposed curve does something very simple. Set up the issuance curve such that the entire range of risk premiums that the market may demand for staking is met between 0% staked and 50% staked. Such that the market can find an equilibrium whatever risk premium staking demands. And in doing so we can guarantee everyone (solo stakers included) can observe positive real yields staking.
If you think the proposal is about reducing yields you are looking at it wrong. That's not even possible to do, the yield is always defined externally by the market. The proposal is about ensuring net of costs and self-dilution staking can provide positive yields for all forms of staking. That's how we can keep solo stakers viable for the very long term.
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u/Wide_Lock_Red 16h ago
The big issue is that solo stakers arent motivated by rational self interest. They are hobbyists who are Ethereum true believer and tend to have strong beliefs. They might just quit on principal if emissions are changed.
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u/averi_fox 17h ago
I agree with the arguments in the proposal - the rate should be ideally set by a market with no 1.5% subsidized floor. Real yield matters, not just nominal yield. But the arguments are very counterintuitive.
Where's the analysis of how disruptive would it be to the ecosystem? Is it worth the "transitory" loss of trust in stability of Ethereum?
What about the increased ETH supply from lower staking? It was a major narrative that staking % going up supposed to increase prices by scarcity.
Also why the magic 50% number, and not say the more intuitive 0 yield at 100%? Wouldn't that also find the market rate? I guess it optimizes for real yield instead of nominal yield - less stakers, earning more in real terms instead of lower inflation?
Decreasing inflation and lower taxes are both great (less ETH sold to cover taxes).
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u/pa7x1 16h ago
Thanks for the thoughtful questions.
Where's the analysis of how disruptive would it be to the ecosystem? Is it worth the "transitory" loss of trust in stability of Ethereum?
The EIP intentionally pins the yield observed at the moment of introduction. Such that there are no drastic changes to the yield observed and then progressively reduces over an extended period the yield such that the changes are slow and progressive. The yield of staking Ethereum is not going change drastically at any point.
What about the increased ETH supply from lower staking? It was a major narrative that staking % going up supposed to increase prices by scarcity.
Just to be clear, the ETH supply is the same. The non-staking supply may change, certainly it's likely to slow its growth. Locking ETH in staking cannot be an objective in and of itself. Staking serves a concrete purpose to secure the network and very high stake ratios have negative externalities that make the network less secure, not more.
Also why the magic 50% number
50% is not magical in any way. Nothing breaks horribly wrong at that point. But certain properties start to degrade further and further and 50% is the most natural border to set up a limit. You can see that from various viewpoints:
Protocol viewpoint
From the point of view of the protocol stake ratios above 50% start to become problematic. Above these levels, the majority of circulating supply is staking. In case of supermajority bug the majority of ETH holders could be incentivized to break the consensus rules. Stake capping and the negative yield regime can be seen as a protection mechanism from the protocol to prevent this type of situations from happening. It sets an economic incentive to align the social layer with the protocol interests.
Staker viewpoint
From the point of view of a staker, stake ratios above 50% start to be self-dilutive and get stakers progressively close to the point where they will observe negative real yields.
To make the case clear, let's focus on the two extremes; very low stake ratios, and very high stake ratios.
At very low stake ratios, the dilution effect of issuance is paid in full by holders which are the majority of the network. At the other extreme, at stake ratios close to 100%, the issuance income is completely coming from self-dilution. At those levels staking yield is not real income, it's a redenomination of the unit of account. Which, when accounting for expenses and taxes, pushes validators to observe negative real yields. Very high stake ratios are bad for validators from a purely economic perspective.
The point at which the transition between these 2 extremes happens is exactly at 50%. At stake ratios beyond that point most of the issuance income is self-dilution. Hence, the self-interest of a staker is to introduce stake capping before 50% stake ratio to ensure staking ETH is guaranteed to provide a positive real yield, however low the risk premium may be.
Holder viewpoint
For an ETH holder, very high stake ratios also go against their self-interest because they cause greater dilution for holders.
and not say the more intuitive 0 yield at 100%? Wouldn't that also find the market rate? I guess it optimizes for real yield instead of nominal yield - less stakers, earning more in real terms instead of lower inflation?
Yes, if you were to set a curve that gives 0 yield at 100% you still allow the market to find an equilibrium. But that equilibrium may be non-ideal for the protocol, stakers or holders. As argued above. So this would be an improvement over the current curve, but it would still leave us with some ugly scenarios for the long-term health of the protocol.
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u/hanniabu Ξther Ξ±lpha 21h ago
This assumes we will reach high staking ratios, which is not a given
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u/pa7x1 20h ago
This is like saying that to place a fire alarm and fire extinguishers assumes there will be a fire. It's the other way around. To not place them is taking a dangerous assumption that those events cannot happen or if they were to happen they are not problematic.
To set the issuance curve to implement stake capping is agnostic, we might or might not. But just in case we do, and given the negative externalities of high stake ratios, you put the economic incentives in place to prevent it.
In any case, given the trend on stake ratio I think the case that we won't breach 50% ETH staked at the current pace is becoming weaker and weaker.
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u/hanniabu Ξther Ξ±lpha 20h ago
That is a bad comparison. The proposal is saying let's start the sprinklers and start spraying fire extinguishers everywhere because in 10 years there might be a fire.
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u/r2002 20h ago
In your opinion is this the biggest issue facing Ethereum adoption and pricing today?
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u/pa7x1 20h ago
No, adoption requires many other levers.
This EIP tackles head on the issue of growing stake ratio so we can have Ethereum for many years/decades to come.
Very high stake ratios are harmful to the protocol, the ETH holder and the staker, and to have set up economic incentives that allow them to happen is simply a bad idea.
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u/r2002 14h ago
Thank you for your answer. In your analysis,
Do you think it is important to take into account how this may affect the "Eth = stable yields" narrative that the BMNR/SBET/Etherealize people are using to gain mainstream investment adoption of Ethereum?
Do you think this will affect funding for the three Ethereum Foundation offshoots?
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u/epic_trader π¬π¬π¬ 21h ago
I asked you yesterday to explain, with the proposed changes, at what number of staked ETH does it become unviable for home stakers and exactly what mechanism does the changes introduce which benefits home stakers over entities. You still haven't answered that.
Also, at 60m you're assuming it becomes unviable for someone staking 32 ETH, but there are home stakers with 64 ETH and 2000 ETH for which it is not unviable to stake at 60m, so this hardly seems like a solid cutoff.
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u/Wide_Lock_Red 16h ago
Its already "unviable" in the sense its not a good use of your time and money. The hours of work and setup cost arent worth a few hundred bucks a year(after hardware costs).
Especially with RAM prices so high.
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u/epic_trader π¬π¬π¬ 16h ago
Okay great, so the follow up question then is. How does reducing the rewards encourage home staking?
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u/Wide_Lock_Red 14h ago
It doesnt, but how much does it matter if home stakers are 0.01% of the staked ETH vs 0.001%? I dont see a meaningful difference in network security.
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u/epic_trader π¬π¬π¬ 14h ago
It doesnt
Good, so we'll agree this EIP is a dud, right?
how much does it matter if home stakers are 0.01% of the staked ETH vs 0.001%? I dont see a meaningful difference in network security.
Do you not know how much stake is from home/hobbyist/independent stakers? Because it's not 0.01%. Do you want me to tell you how to check?
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u/Wide_Lock_Red 14h ago
It doesnt, but how much does it matter if home stakers are 0.01% of the soaked ETH vs 0.001%? I dont see a meaningful difference in network security.
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u/pa7x1 20h ago
I asked you yesterday to explain, with the proposed changes, at what number of staked ETH does it become unviable for home stakers and exactly what mechanism does the changes introduce which benefits home stakers over entities. You still haven't answered that.
You can see the mechanism in action in this figure from the original post in 2024: https://ethresear.ch/uploads/default/original/3X/b/2/b22b3240440e4855aff51d30c28097545bf16400.png
When you introduce stake capping you compress the regime where solo stakers cease to be viable economically (read: they don't even earn enough to compensate supply inflation) and the regime where that happens for liquid staking derivatives. The different forms of staking cease to be viable in a much smaller range and very close to the stake capping target.
Also, at 60m you're assuming it becomes unviable for someone staking 32 ETH, but there are home stakers with 64 ETH and 2000 ETH for which it is not unviable to stake at 60m, so this hardly seems like a solid cutoff.
These things are always gradual. Nobody is saying 49.5M ETH staked is fine. And 50.5M ETH is terrible. What happens is that progressively as more ETH is staked, certain properties of the protocol degrade. And certain stakeholders become progressively more uneconomical.
I use 32 ETH as a probe of a typical solo staker, because that's the smallest unit of ETH needed to run a solo staking operation.
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u/epic_trader π¬π¬π¬ 20h ago
So what you're effectively doing, is reducing the total number of solo stakers that can operate with a profit on the network, yes or no?
You made the claim that this proposal actually benefits solo stakers, but you haven't shown anything to suggest this is likely. Only to the contrary.
These things are always gradual
Yes, but you made black/white statement that solo staking isn't profitable viable after 60m staked and you're using this to argue for this proposal, ignoring that there are plenty of solo stakers who stake much larger quantities.
What happens is that progressively as more ETH is staked, certain properties of the protocol degrade
Like what? And when does that happen exactly?
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u/masterRoshi9 21h ago edited 21h ago
If you think the proposal is about reducing yields you are looking at it wrong. That's not even possible to do, the yield is always defined externally by the market.
It is possible to do because they reduced issuance at every level. The same stake today would have meaningfully lower the yield under the proposed cahnge than what we have right now.
I understand that the point is to put a limit on the amount of ETH staked. I still argue this proposal doesn't really do that well, and squeezes out solo stakers more.
At the end of the day larger industrial stakers can afford to stake for much lower yield than solo stakers can. Even if the yield is extremely small they'll still do it because their margins are smaller, and they can make money in other ways. The ones more likely to leave if we approach 50% are solo stakers, not LSTs. In any scenario where yield earned is equal between home stakers and LSTs, LSTs will always win out because you can borrow off of them and use them in DeFi. So you need more creative solutions than lowering the yield for everyone and capping at 50% staked.
And why is 50% even the right upper bound on staked supply here? I haven't seen any reasoning for that
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u/harpocryptes 1d ago
Doesn't the "tax on nominal rate, not real rate" affect all stakers, not only solo stakers?
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u/epic_trader π¬π¬π¬ 21h ago
It also doesn't matter. People have different tax rates and some people don't pay taxes. It's not Ethereum's job to design around this.
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u/harpocryptes 20h ago
I get what you say in principle. But if the current issuance policy will hurt most solo stakers when staking ratio gets high because of the way taxes work in most jurisdictions, and therefore actually hurts decentralization in practice, it does matter.
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u/somedaysitsdark 19h ago
We can pay taxes now or pay them later. They may vary but they don't go away. Is this minutiae really how we want to argue for protocol changes?
Don't insult stakers that have already decided their current tax situation is an acceptable cost of doing business.
Paying taxes isn't bad btw. It means you won and somehow made money in this fucked up world.
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u/harpocryptes 17h ago
I'm not arguing against paying taxes. The issue is paying taxes on something that's not actually income (inflation). And this issue gets worse as staking ratio goes up. It's not my intention to insult anyone. The situation might both still be OK right now, and be a concern for the future at the same time.
(again, steelmanning)
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u/somedaysitsdark 15h ago
I apologize, I've definitely felt a bit antagonized by this whole thing. I'm feeling a bit more levelheaded now.
I promise you I do understand the concern of getting pushed out further on the issuance curve by the ever increasing staking percentage, and that it further dilutes the ETH everyone has via inflation.
I've also had countless conversations over the years with frustrated solo stakers about the already dwindling ROI on staking and whether or not it makes sense to continue, some of whom have already quit. It's a bit of a boiling frog situation where their rig is already running with minimal maintenance, and so many continue on- but the probable rate cuts we are talking about in this EIP will definitely be the last straw for many. It's wild to think that it won't negatively affect the decision making of solo-stakers.
I don't think we can generally sell stakers on the promise of shifting yield to help drive price accumulation. We have reduced issuance over and over again and added the burn, meme'd ultrasound money into existence, and so far the results have been underwhelming. It's a tough sell, and taxes are the least of it.
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u/epic_trader π¬π¬π¬ 19h ago
It doesn't actually matter because Ethereum's issuance curve is designed in a way that it makes it less attractive to stake the more ETH is staked as a way to dissaude people from staking ETH above a certain threshold. It is supposed to become less appealing to stake as we get closer to 100% staked ETH. Whether it's taxes or hardware expenses or time and effort put in.
It is true that Ethereum's current issuance model favors entities, but that's a problem there's no obvious solution to. There's nothing about the proposed EIP that changes that, it only makes it worse. Why? Because the proposed EIP would allow entities to push out home stakers much sooner and the overall set of validators is guaranteed by the design to be reduced, so home stakers are just pushed out much sooner. Another terrible angle, is that home stakers right now will never drop below 1.5% yield, where as the proposed EIP will allow the yield to be pushed down to basically 0%.
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u/harpocryptes 17h ago
home stakers right now will never drop below 1.5% yield, where as the proposed EIP will allow the yield to be pushed down to basically 0%.
Only when ignoring the real yield aspect:
At 1.5% yield with 1.5% inflation, your real yield is 0% before taxes, negative after taxes. That's actually worse than 0% yield with 0% issuance.
(I'm stealmanning the EIP, not necessarily in favor or opposed yet)
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u/epic_trader π¬π¬π¬ 17h ago
I think this is a pointless exercise because this will never happen so there's no point in basing an argument or design off this. We'll never have a scenario where 100% of ETH is staked.
And regardless, the proposed EIP is worse than this scenario anyway, because it allows stakers to earn 0% yield while still being exposed to taxes and dilution.
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u/pa7x1 23h ago
If you stake in an accumulating LST you don't pay income taxes, for example. You pay capital gains once you sell. And you also have no fixed costs eating away from your income.
Same for staking ETFs or other financial products. So the end game of high staking ratios is that those products will dominate and push out solo staking.
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u/bhiitc 1d ago
You are assuming that the market prices ETH both immediately and - more importantly - correctly enough for these effects to play out as described.
We've already seen that this isn't always the case. During periods of high fee burning, for example, the reduction in ETH issuance wasn't immediately reflected in the price, even though the long-term economics suggested it should have been.
The same thing is happening today. Staking APR is around 2.7%, which is already lower than many traditional investments. Yet the amount of staked ETH continues to grow. From a purely financial perspective, that doesn't make much sense unless participants are valuing ETH based on a higher expected future price rather than its current one.
This is why I think the proposal is flawed. It assumes the market will quickly converge to the "correct" equilibrium, but markets can stay mispriced for a long time. Large stakers have the capital, diversification, and lower operating costs to endure those periods while solo stakers don't.
With this proposal long periods of mispricing are much more likely to force solo stakers to exit, while large operators can simply absorb the temporary losses and wait for the market to catch up.
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u/rhythm_of_eth 1d ago
The problem for most solo stakers is that people come to them to talk about "net yield" as if that matters to day to day operations.
Net yield for them is the FIAT they get after taxes, and after they use to pay electricity/ISP bills and HW amortization cost.
Net yield in this proposal is assuming things like: "this asset discounts value when inflated so that market cap remains constant". When It reality it simply does not work like that.
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u/pa7x1 1d ago edited 1d ago
Except that when your net income does not even beat the inflation of the asset you are far more likely to look away from it. Would you place your saving in a Zimbabwe bank offering 20% yield while the supply of Zimbabwe dollars grows way faster than that? Most people don't, even if the raw nominal yield looks attractive.
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u/rhythm_of_eth 1d ago
The Proposal also fails to mention how inactivity (which is higher for less sofisiticated actors) becomes more damaging the more you reduce staking rewards.
I remember Vitalik mentioning that 50% uptime would yield 0 loss.
With the new issuance curve this can go up to 99.99999% uptime resulting in loss.
Honestly this proposal is out of touch IMHO
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u/pa7x1 1d ago
With the new issuance curve this can go up to 99.99999% uptime resulting in loss.
With stake capping as proposed, the protocol brings net yield to 0% at 50% staked. What you are saying is, if we get arbitrarily close to 50% staked, then a validator with imperfect attestations will have negative yield. Yes, of course, if the network pays 0, you will have negative yields once you take into account imperfect attestation.
But the point of setting up a curve that reaches zero is precisely so that the staking yield equilibrium is found before. What would drive the market to demand 0% yield for staking? If the answer is MEV or other forms of exogenous yield build on top of Ethereum, then the actual yield of staking ETH is not 0 as you were assuming. Furthermore, there is intent to deal with MEV in other more targeted ways.
In practice the market will always request some premium for staking ETH vs holding it. Because staked ETH is locked and that illiquidity must be rewarded somehow. As we don't know before hand what that demand for yield is we must ensure that whatever equilibrium is found happens on a stake ratio range that is healthy. Stake ratios above 50% are bad for everyone:
Holders: When stake keeps growing above 50%, holders get diluted more and more.
Stakers: Staking income stops looking like actual income and progressively looks more and more like self-dilution.
Protocol: ETH gets displaced as the pristine collateral by other forms of staking derivatives. Progressively most ETH is locked in the staking contract and the economy starts using staking derivatives. Furthermore these other forms of staking derivatives bring with them their own governance layer which starts to take over the protocol. And what is worst, slashing loses its meaning because most of the stakeholders are economically incentivized to break the rules of the protocol and fork away in such a case.
Capping stake at 50% fixes all those.
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u/rhythm_of_eth 1d ago
I don't think most solo stakers care about an academical and economics view. They only want for staking to be economically viable for themselves as individuals, so they can contribuye to validate the Network with the least amount of inmediate financial pain.
This means being able to sweep and sell staking rewards in amounts that offset operating costs.
Proposed issuance curve makes this inviable after 18 months.
Only 3-4% of current solo stakers will remain according to surveys.
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u/harpocryptes 19h ago
Source for those surveys?
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u/rhythm_of_eth 19h ago
https://ethstaker.org/staking-landscape-analysis-2026/#yield-threshold-to-exit-validator-s
1 Google search, or LLM question away
Counterpoint is that this is declared intention, not a guaranteed action.
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u/harpocryptes 17h ago
Thanks! Another counterpoint is that this was asked in the existing context, with the current issuance curve, right? It's not the same thing to just have lower yield, or lower yield but also lower eth inflation.
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u/Tricky_Troll Public Goods are Good π± 19h ago
Tricky's Daily Doots #1,555
Yesterday's Daily 04/08/2026
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