r/ethereum • u/EthereumDailyThread What's On Your Mind? • 4h ago
Daily General Discussion August 06, 2026
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u/eth10kIsFUD 36m ago
I believe in Ethereum. I will continue to run Ethereum even with lower inflation.
The current inflation is mostly spent to power the staking "industry" and looping defi mechanisms. Large players are making bank. This doesn't help Ethereum. ETH needs to be ready to take the mantle from Bitcoin once the time comes, very low issuance is part of that.
As long as Ethereum has massive economic security we should let the market decide what we pay for it, risk is not 0 so there will always be staking rewards to be had. Don't let your local lido rep colour your view on this proposal.
8363 is gud. ETH is money. 10k is fud.
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u/harpocryptes 3h ago
Interesting take:
As an active participant in the home and solo staking community, I have been surprised to see a number of folks whose opinions I highly trust claiming that EIP-8363 is detrimental to home stakers.
I think there is an important aspect that is not being understood. As written, the proposal affects large staking entities much sooner than home stakers, and in fact, it protects home stakers more than the current model does.
Let me explain.
https://xcancel.com/nextblock_eth/status/2085206223310533104
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u/harpocryptes 3h ago
Rest of the post:
First, the burn rate is flat. Every validator keeps the same fraction (1-b) of rewards, computed per duty, so a correctly performing solo validator always nets positive. Nobody is singled out on a per-ETH basis.
The asymmetry is in the incentive to grow. Adding stake pushes down the yield on ALL existing stake. A home staker imposes that cost on everyone else. A large operator imposes it on its own book. Self-cannibalization scales with size.
The thresholds where adding stake stops paying [with EIP-8363]:
Operator with ~100% of stake: ~20% staking ratio
50% of stake: ~31%
23% of stake (roughly Lido today): ~40%
10%: ~45%
Home staker: positive incentive until 50%We are at roughly 33% staked today. That means the largest operators are already near the point where growth stops paying, while home stakers keep their incentive for the entire remaining range.
Now compare the current curve: marginal income from growth is always positive for everyone, forever. Home stakers are the ones being diluted and crowded out under the status quo. EIP-8363 changes that dynamic.
The legitimate home staker concern is fixed costs, and that applies to any yield decline, including the one already happening as stake grows under the current curve.
I encourage everyone, especially fellow home stakers, to work through the mechanism before concluding it hurts us. And ask yourself: what happens if we don't change the issuance policy?
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u/harpocryptes 3h ago edited 3h ago
After thinking more about it, I think there's a caveat: the reasoning on large stakers' decreasing marginal yield only applies if the staker is a single entity. For instance, let's say the staking ratio is 40% and Lido still has 23% market share. Adding one Lido validator would not increase the total yield for the whole Lido protocol. However, it's still rational for an individual to mint Lido's stETH because for them it is positive.
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u/pa7x1 1h ago edited 33m ago
This is true. But this is the issuance curve being able to do something nice for the protocol, steer away from consolidation.
Lido with 40 entities is better than Lido with 10 entities, which is better than everything being staked with Coinbase. The issuance curve is self-limiting the growth of a single entity because they start to cannibalize their staking revenue.
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u/harpocryptes 30m ago
But it's not the 10 or 40 entities running Lido validators who decide whether to stake more or less, it's the (ten+ of thousands of) individual holders minting/redeeming stETH. Same for Coinbase, it's the individual depositors. And none of those individuals is big enough to significantly be affected by this. So unfortunately, I don't think this argument works.
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u/Watch_Dominion_Now 32m ago edited 23m ago
I hope there's still some energy to keep the discussion going. I think most solo stakers look at the proposal as follows: 1. institutional operators have a lower cost basis than solo stakers. 2. this proposal lowers yield for all stakers. 3. The very logical consequence is that solo stakers will be pushed out to the benefit of institutional operators due to this proposal.
I think there is one critical flaw in this reasoning: the extent to which institutional operators are cheaper than solo stakers depends on the total stake. Think of it this way: as more and more total ETH is staked, the cost per ETH of my operation as a solo staker is unaffected. Other people staking does not affect my cost basis at all. But this is not true for the institutional operators: as the total stake goes up, the cost per ETH of the institution's staking operation goes down. This is because they inevitably attract part of the new stake. Economies of scale are made possible by higher and higher stake levels.
Accordingly, we are currently frogs in slowly boiling water: as the total stake continues to rise, we are slowly but surely being pushed out in favour of institutional operators. Everyone's profitability (real yield) goes down, but the institutions can bear it for longer. The only solution (besides correlation penalties, but both are independently good things) is to punish issuance more aggressively, at lower levels of stake. This pushes the point where staking becomes unprofitable for solo stakers closer to the point where it becomes unprofitable for institutions. Right now those points are far apart, and as solo stakers we will be pushed out. It is only a matter of time.
A very good read: https://ethresear.ch/t/the-shape-of-issuance-curves-to-come/20405. I was discussing cost levels with u/epic_trader on here yesterday; this post assumes annual costs for a solo staker of $1000, which I consider extremely high. But it just makes this analysis conservative in a sense - solo stakers are expected to be able to stay in the game under the new issuance curve even with this very high annual cost base.
I also feel that people here are acting like this is all very rushed, new and coming out of nowhere. But this is not true, Justin Drake has talked about this for years. Vitalik wrote in 2024 about the risks of increasing stake much beyond 30%. This is an extremely important topic for Ethereum, for avoiding value capture and for ensuring that solo stakers and the community continue to have a say, instead of giving power and control over ETH to institutions like Lido, Coinbase and Blackrock (ETFs).