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Thomas
@aviationdoctor.eth
Candid take from an ex-staker, with an equally candid reply by @sassal.eth. I was never a fan of LSTs and how their hodlers reap the benefits of staking without actually putting in the work, while diluting the solo stakers. https://x.com/0xquit/status/1870581266640511387
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Chainleft
@chainleft
I think it's not an incentive problem. If you own as much ETH as Quit, you have more at stake in the security of the chain than plebs, so you don't get the complain that your rewards are diluted because plebs found a way to get rewards too.
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Thomas
@aviationdoctor.eth
I probably have more at stake too and I got 2.3% APY in the past 30 days. Volume-wise, it’s enough that it covers the cost of hardware and electricity and then some, but percentage wise it’s not enough to justify the opportunity cost relative to alternative “risk-free” investments. My own justification is altruism to the network (@sassal.eth’s point in the replies), but I understand people who prefer to exit and reinvest elsewhere. What would the APY be without LST dilution? It’s hard to say, because a higher APY would attract more solo stakers, and thus decrease the APY again to some equilibrium, maybe even the same as we have now. I see this as another trilemma of trying to retain both large solo stakers (sensitive to APY) and small solo stakers (sensitivity to recouping their CapEx), while at the same time LST hodlers benefit from ~equal APY with zero CapEx, no accountability to performance, and freedom to exit instantly
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