Ronan on Warpcast

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https://warpcast.com/~/channel/ethrd

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kydo pfp

Two questions that's been on my mind, would love people's thoughts here. 1. Does the moneiness of a derivative of ETH (eg LST) translates into the moneiness of ETH? 2. Does the moneiness of ETH translates into the moneiness of a derivative of ETH (eg LST)?

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Barnabé Monnot pfp

Barnabé Monnot

Please expand ser. What is one example of the moneiness (moneyness?) of a derivative influencing the moneyness of ETH? What do you define as moneyness?

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Ronan pfp

would argue that an LST with sufficient liquidity and integrations (stETH) eliminates the opportunity cost of staking (locking) your ETH, thus increasing ETHs underlying utility (especially as a collateral money), which proliferates the use of ETH as money -- moneyness 🆙

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Barnabé Monnot

If we wanted to eliminate the opportunity cost of staking and have more ETH around to use as collateral, why wouldn't we prefer to target some amount at stake?

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Ronan pfp

i guess i agree that some target amount at stake is ok, just dont really know how you come up with that desired % ? Dont think there is anything inherently wrong with targeting, but deciding too quickly or targeting too low of a % seemingly will have negative externalities

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Barnabé Monnot

To be clear the decision right now (and even then, not right now, in the months to come) is not about targeting, but about a more moderate issuance curve https://ethereum-magicians.org/t/electra-issuance-curve-adjustment-proposal/18825?u=barnabe

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Ronan pfp

yea i think my main concerns are: -vertically integrated centralized providers could push the long-tail of stakers and protocols out: prob of CB having >50% of stake increases imo -frequent adjustment of the issuance curve arguably degrades ETHs moneyness -issuance doesnt necessarily have to be dilutive for holders

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Barnabé Monnot

- Well incidentally I was replying to CB > 50% stake in a different forum, but here are some thoughts on this narrative: https://ethereum-magicians.org/t/electra-issuance-curve-adjustment-proposal/18825/11?u=barnabe

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Ronan pfp

gotcha yea -- i am of the opinion that much of the net-new stake is going to come from large, yield-insensitive institutional flows, which v well could disproportionally accrue to centralized providers. At a reduced issuance curve, i actually see the ratio benefiting more to centralized providers (Coinbase)

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Ronan pfp

https://medium.com/collab-currency/a-look-into-etheruems-future-staking-market-dynamics-16fdfd6bba62

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Barnabé Monnot

Super nice post, thank you for sharing! One question is that it seems in your analysis that the ability to offer competitive rewards is sth ETF issuers would seek, but at the same time they are also described as yield insensitive

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Barnabé Monnot

I guess I am wondering why the issuer wouldn't optimise strategy between staking and other opportunities, if the staking rewards did become low enough and holding (possibly lent, or re-staked) raw ETH procured a better yield.

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Ronan pfp

institutional flows broadly: i am of the belief that staking represents the most risk-minimized ETH opportunity, and given their longer-term time horizion, they will capture *any* available yield that is sufficiently risk-minimized (staking).

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