Anders Elowsson pfp

Anders Elowsson

@anderselowsson

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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
Here is the change in issuance yield. Whether this automated graduated approach is worth the additional implementation complexity will depend on the shape of the new reward curve, the quantity of stake at the time of the switch, and the sensitivity among stakers to abrupt changes in yield.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
This of course also means that there is a weaker guarantee that the quantity of stake is maintained close to current levels. The change in staking yield with 300k ETH of MEV would look as follows.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
Another example using the purple reward curve from the Practical endgame on issuance policy-post is here shown, but the curve is adjusted to peak at an issuance rate of i=2^-8=0.39%. A lower peak gives stronger guarantees on the maximum amount of ETH that can be issued each year.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
Issuance yield is instead affected as shown in this plot. The starting point and end point of the automated reduction can of course be adjusted.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
The easiest way to do this, shown in these plots, is to slowly bring down the constant k in the equation for the new reward curve. When k is infinite, both curves are identical. Staking yield with 300k ETH of MEV per year would be affected as shown here.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
If the quantity of stake continues to rise and we reduce issuance, the yield differential between the new and the current reward curve may become very large. We could then consider implementing an automated, gradual reduction down to a new reward curve over a period of 1-2 years.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
My talk from Devcon on a Practical endgame on issuance policy is now up. I review the motivations, impacts and potential downsides of a reduction in issuance. This thread will visualize an automated gradual reduction in issuance, which I suggested in an answer at the end. https://www.youtube.com/watch?v=m91Wu6-cdwk
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
Here is rough draft of how we can design consolidation incentives in Orbit SSF. Publishing it now since I will briefly refer to it during my talk at Devcon tomorrow. https://notes.ethereum.org/@anderselowsson/Incentives_SSF
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
Whereas a cap on the circulating supply is an intangible monetary policy, a cap on the issuance rate is not. We get the same memetic simplicity and possibly a deflationary native asset, without compromising security. The post concludes with a set of questions for the community.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
The post also introduces a tangible framework for Ethereum that is easy to understand: never exceed an issuance rate of 0.5%. A stringent cap on issuance is desirable because it caps the inflation rate, solidifying ETH as trustless sound money with preserved economic security.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
Practical endgame on issuance policy This post presents a practical endgame on issuance policy that can stop the growth in stake while guaranteeing proper consensus incentives and providing positive regular rewards to diligent small solo stakers. https://ethresear.ch/t/practical-endgame-on-issuance-policy/20747
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
A future post is intended to focus on the available chain and how to approach incentives as well as issuance policy in the context of SSF. I thank @fradamt and @barnabe for their feedback!
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
A high yield differential or a reliance on collective incentives can cause tensions among stakers. Therefore, compressing the activity ratio seems desirable. A sophisticated utility measure guiding committee generation could incorporate the activity ratio as a key feature.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
The activity ratio between the lowest and highest rates dictates the range of staking risks available. Bigger validators take higher risks because they are active more often. They can therefore be compensated with a higher staking yield (otherwise, they may deconsolidate).
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
The activity rate is the proportion of the committees that a validator is active in. It is shown here at the setting that minimizes the aggregate finality gap (the circle in the previous plot). Rates vary with the composition of the validator set (hence “Vorbit”: varying orbit).
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
Consensus properties are also analyzed and discussed. One of these is the committee rotation ratio: the proportion of the stake that is replaced with each new committee. The setting for the five validator sets that minimizes the aggregate finality gap is indicated by a circle.
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Anders Elowsson
@anderselowsson
A few methods for improving the selection and distribution of validators are suggested. One of these, leveraging circular finality, is to have repeated validators equally spaced across the epoch (rather than randomly). As evident, this improves cumulative finality somewhat.
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Anders Elowsson
@anderselowsson
Cumulative finality is impeded at epoch boundaries when committees are shuffled. Two resolutions are proposed. Circular finality: successive epochs are repeated across a longer era. Spiral finality: shuffling of validators is restrained to limit the slots required for full finality.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
This plot shows the composition of the validator sets used in the analysis. The “Zipfian” set adheres to Zipf’s law, with big stakers then splitting up stake into 2048-ETH validators. The “1/2 Zipfian” set instead sees half the stakers keep their 32-ETH validators.
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Anders Elowsson pfp
Anders Elowsson
@anderselowsson
What do I mean by a pure Zipfian distribution anyway? It’s an early assumption from Vitalik’s review of the beacon chain—that stakers’ balances follow Zipf’s law. The post presents some equations for derivation and generation that can come in handy as we move forward with SSF.
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