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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
A simple change to issuance like this will not stop LST dominance but it WILL kill off many Rocket Pool node operators who are far more sensitive to rate changes. If the goal is to keep Ethereum's solo stakers relevant, than this approach is not sufficient. 1/n
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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
Going from 3.5% to just over 2% yield at the current amount staked will have demonstrable impacts on home stakers! We cannot push this upgrade into Electra without understanding these impacts. Lowering staking yield will incentivize solo stakers to go out on the risk curve w/ restaking/abandoning node to hold LSTs.
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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
I strongly believe this proposal will harm solo stakers and benefit LSP dominance, even if it limits the total amount staked. I support MVI, but I am far from convinced that this is viable.
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Barnabé Monnot pfp
Barnabé Monnot
@barnabe
What do you believe solo stakers will do, once this 2% (nominal!) yield is reached with the current curve, and the world around them is holding and using LSTs while their capital is stuck in a node?
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Barnabé Monnot pfp
Barnabé Monnot
@barnabe
I understand the concern, nobody likes to end the party, but I think we should have an honest conversation without hyperboles on where we think we're going with the current state of things. There is no free yield in any world, so it really is all about maximising relative differences
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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
I think we should be talking about increasing the issuance such that nominal yield stays higher. The current issuance curve breaks at the far end with Eigenlayer, the proposed curve breaks immediately. I don't see why we should be rushing into a world where solo stakers are pushed out.
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Barnabé Monnot pfp
Barnabé Monnot
@barnabe
I wouldn't assume that nominal yield is what's preventing solo stakers from being pushed out, and without this assumption a lot of the dominos fall in terms of recognising the environments where solo stakers really thrive. I am not sure what you mean by "breaks" however, maybe I misinterpret
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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
I speak from the experience of the RP home staker community. The competitive edge of LSTs is too massive when the difference in yield is so low. Nominal income lets people pay for goods, real yield is a wealth effect. By 'breaks' I mean that we end up allowing LSPs/pros to outcompete solos completely
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Barnabé Monnot pfp
Barnabé Monnot
@barnabe
What is the difference between it dropping overnight and dropping over the span of years, for the question of long-term sustainability of solo stakers? Especially if one believes the endpoint of slowly dropping to the long term equilibrium on the current curve is relatively more adversarial to solo staking?
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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
I said overnight because that's what would happen with the proposed issuance curve chain. There's a psychological impact of that. I do agree thought that ultimately a low nominal APR squeezes out solo stakers altogether - we should absolutely not rush into that since we can make use of that time to research
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Barnabé Monnot pfp
Barnabé Monnot
@barnabe
So we agree on the consequences but disagree on the urgency, at least this is good! And yes, I would say having done a very partial bit of the research that I feel somewhat convinced of the urgency, and the lack of alternatives in a limited design space (the curve should be future-proof, unmaintained)
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Barnabé Monnot pfp
Barnabé Monnot
@barnabe
But for sure there is much more research to be done, in order to make more convincing points, don't want to minimise that at all and pretend like all the answers have been found. People find themselves in different points of the "need for more evidence vs need for action" spectrum, and that's alright and desirable even
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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
Just want to say that you started with "without hyperboles on where we think we're going with the current state of things" and now we're agreeing the issuance curve change will definitely hurt solo stakers in the short term, as I suggested :)
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Barnabé Monnot pfp
Barnabé Monnot
@barnabe
Fair, still think 2% yield at 25% staked is a very different world from 2% at 100% for solo stakers :) “kill” is a little strong, and effects on current solo stakers may not be quite as bad with a sudden and significant reduction due to sunk costs, vs again the current course which is the real pt of comparison
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jasperthefriendlyghost.Eth pfp
jasperthefriendlyghost.Eth
@jasper-eth
What do you think the best way to collect data on the latter point would be? I really would love to get data on this.
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