[CLS] Ethereum Magicians Infinite Endgames: Ethconomics by Tim Beiko | Devcon SEA

their talk um and like their overall position and then we'll open up with some questions and my sense is uh we will have a lot to discuss um I don't know what the order was for the dev the Devcon talks 9 okay 9:00 a.m. do we have anyone before 10:00 a.m. yeah yeah yeah we can do the same order um okay so yeah so we'll start with this 5 minute Recaps yeah please come I guess everyone who had a talk please come and sit here and um I guess also for a bit of context before we dive in so the goal with these sessions is to have like an open conversation with everyone here so if you have like a question or a comment or something you want to bring in you know we have a bunch of chairs here you can just come and sit and join the conversation um it shouldn't be just like us talking to you for an hour and a half but ideally uh two-way conversation um yeah does that make any question before we get started um okay so let's uh yeah let's have ongar start give some context and then uh yeah we'll go as the same order of the schedule and open up after there um you have five minutes H you have to turn a mic on sounds even better can you hear me awesome yeah so um so we gave a talk um in the morning um so thanks for everyone who who who attended here because uh morning sessions always a little a little bit tough to get an audience for um and the the idea there was just to talk primarily about like so so specifically there was Kasper and me Kasper and we were the we published this post uh in February on like uh why the etherum should should change its issuance um and that had quite a bit of kind of blowback on on on uh Twitter and one of the kind of the the the pieces of feedbacks that that we got there was just that like people really wanted to First understand why we even want to change anything before we start talking about what to change so we focused on like just talking about why we think the current situation is unsustainable um it's maybe too short to go through all the argument I think specifically what I wanted to mention is we have this what we call nominal versus real yield um I had like I had like a nice example with little Stickman that like um uh transfer money but basically the idea is just staking has two weird accounting anomalies the first one is also was already um present in in proof of work which is just that we pay via dilution instead of direct taking coins out of one balance and putting into into another balance right so that already makes accounting a little bit more indirect because you have to basically take into account that b indirectly everyone who holds the coin was a little bit taxed to then forward it to the to the recipients which is the first kind of accounting anomaly and then the second accounting anomaly that is specific only to proof of stake is that the recipients are like a subset of the same people that pay for it in the first place right because both of them are like one of them is the entire set of e holders and the other one is a subset of the eth holders and that leads to this really strange effect that like you pay and then you receive more money back basically for like if you're a Staker and so for example if you take the midpoint right like if half of all people stake then for every two coins that you get issued as staking rewards one of them is just offsetting the taxation that you just went through basically to to pay for the security so like only one in two coins is like real income the other one is just pure accounting kind of circle circular payment and so that means that that has all kinds of implications like a trivial one is just a lot of you pay uh taxes on staking income which means you actually pay taxes on like in normally you pay taxes on both of those coins that you just got even though one of them is fake so say if you get tax at 50% I mean hopefully most of you are under that but like if you get tax at 50% now you actually get taxed the one coin that was your real income and you end up with like literally zero net income for staking activity so like the more percent of the network Stakes the more of like what what you see on the accounting side is actually like fake Revenue right and so it's that's fine that doesn't destroy the system but you have to account for that you have to basically um if if you talk like I don't know so if if a network says oh we have 7% staking yield but also 70% of the network stake then what you should think is ah okay so you have 2% staking yield because out of that 7% 5% is just offsetting the inflation in the system right so basically the argument there was just um we should we should make we should understand that for ethereum basically we have this choice either we we are on the side where like only small sub portion of the network stakes in which case most of what they earn is real income or we go to the world where like most of the network stakes in which case it's barely any real income mostly it's just like a duty like you could imagine at 100% literally like you just have to stake if you want to hold eth right you don't actually gain anything from you know because like at 100% like who would pay you that money right it's literally just everyone's balance goes up by the same amount so it's it's really like of course that's a theoretically extreme case but basically like in that entire range like to a high high percent State it's mostly just like you know it's just a duty everyone has to help secure the network and we personally think that we should basically make this choice either we we we we we stick with what ethereum was supposed to be like you actually stake as a revenue driven like as a you know as a profitable like um service then we should really stay in like the 10 20% stake range or we embrace the everyone par iates in staking then we should like enshrine some sort of Delegation mechanism into the protocol and just like have literally all of e participate in security so that was kind of the main argument that we're making there we have we have supplementary arguments maybe the one I want to very briefly mention I hope I'm I'm probably out of time 30 seconds yeah Network we call it Network effects of money it's just the point that like basically eth is currently used pretty widely in like unisa pools in a in like on openc as the the unit of account and all these kind of places if at some some point there would be a different like an LST that had higher liquidity than all of the remaining raw eth you could imagine that over time the deepest Unis were pool the like the the the the the the the the the the primary volume on opy that would all no longer be in eth that would be in like CB e Ste i e whatever now pick pick your favorite um and that would have two downsides one would be just that like it means now the base money of the network would no longer be like a completely trustless asset but also it would mean that like now within the LST world it would have like a super centralizing effect because you would want to hold the LST that actually is useful on Unis swap not the other one right and so in that market it would be really become like a winner Tech most market so that's like one of the other Arguments for why even independent of this we accounting thing we also just really don't we are really worried about the implications once we go to like 50 60 70% Stak um and for now we just keep keep having more and more stake in um like yeah there was and that's why we're having a conversation about what to do sorry sorry sorry no thanks this is great uh Sasha you were next on the schedule so uh should have a yeah we have some under mics over there oh and maybe we didn't really do intros but ongar is a researcher at the EF Sasha do you want to introduce yourself not quit up hello yeah okay hi yeah so I'm I'm a researcher at Li um I'm actually very sympathetic uh to ansar's concerns um what I would prefer is if we were like less radical about Shifting the reward curve like one way you can see this is okay my my personal take it's not a Lio take is okay let's say we take a axiomatic that we don't want to have another currency displ e as the base money of ethereum then you kind of get okay 50% % staking ratio is kind of the highest you can go right given the current uh churn limit I think even with the current reward Cur it's going to take what four years quickest we can yeah we can check I I think it's close to four I think it's close to two but it's it's several years before we get close to that and like I'm of the opinion of we should actually minimally change uh the reward curve until we get very close to that and then see for one big reason which is we actually don't know how changing yields even by small amounts right now will affect the distribution of stake and I think as Ana I think agrees we're in quite a healthy place now with respect to how stake is distributed you have in the past yeah okay so my my main concern is if we do cut yields now at this um at this staking ratio that we actually end up centralizing things and my main concerns right now are sort of the staking ETF tailwins now that Trump is in power and the fact that kind of coinbase has cornered that US market so I think we we're going to see a lot of inflows towards coinbase possibly driven by Black Rock and it's hard to predict exactly how that's going to play out in two years's time I think we're going to have a much better read on that um but we risk making that problem a lot worse inadvertently um yeah that's kind of like my two cents there thank you um Aram you had the last talk on the topic oh c oh sorry okay yeah second to last hello nice um yeah so my name is ardam I'm a researcher at Cyber fund um so the viewpoints that I want to bring are I guess the M there are two main ones one is very high level one is very lowlevel practical the high level uh point that I would actually love to discuss today is what to optimize for and what framework should we in general use thinking about these questions because I mean as researchers you know I also myself love diving into various models and interesting things and etc etc but if we want to do it in a let's say in a coordinated um unified way we need to find uh like a some sort of framework some sort of Northstar and as a starting point I would suggest to think about three things one is Network ethereum another is asset eth and a third one is stakers and uh yeah I would suggest to discuss it like in my opinion uh network ethereum is by far the most important thing that's why we stake that's what we secure and uh stakers are very important to us because they Safeguard the network right not just because they're sters it's because they Safeguard the network so Network first in that respect but also within the asset like you know you know asset is is a tricky thing but ultimately I don't think there's a world where ethereum fails but eth succeeds I think there's a the arrow from the network to asset is much stronger than the arrow from asset to network so in my personal opinion we really need to focus on network and in security as a as the main guide in pril not to say that we did we need to like forget about other things but this should be the thing that we analyze first and uh make it right and then the rest we need to let's say uh make viable um but yeah I mean would love to discuss and then the second topic is more practical lowlevel I would say you know there's a whole staking economy uh actually built on top of ethereum um um you know there's solo stakers 10% but then there's 90% of delegated staking e commy and there's various parties there there's centralized exchanges um where stake is very concentrated with coinbase and binance then there's staking service providers like uh K figman P2P and Etc there's very competitive market there um with very different fees by the way um and we can dive into that as well like the fees for csps centralized taking providers with for direct saying is from 1 to 5% and then like centralized exchanges charge 25 so you see that these are different market segments and then there's of course lsts and lrts which are not really staking providers those are middle Wares where people send eth they get liquidity you know the receipts and then those parties distribute that e among various either centralized Turing providers like for example Li distributes among 40 of those uniformly really uh adding decentralization to the network or like rocket pool or uh Community staking module of Flo they actually distributed among solar stakers so that's another market right and and there like the t a typical fee structure is 10% higher than in csps but because there's liquidity it's it's it offsets a little bit so yeah and you know to me it's it's it's important to discuss this and and try to understand in either scenario uh of cutting issuance not cutting ISS etc etc what actually happens like talk to these people find out cost structures and etc etc so I want to bring that practical approach to the table and also just to speedrun like we we did uh we did an analysis in our maximum viable security paper so by the way the framework that we suggest is to network First Security and neutral of the network first and so in that paper we uh we show that actually cuted issurance is dangerous in terms of uh State concentration coinbase has 15% stake of stake right sorry of staked e and uh it can grow to like um to basically 34% if uh if we kep the stake staking ratio at 33% um but um yeah so just need to be aware of of all those factors analyze so this practical approach in my opinion hyper important um and then also do the relative analysis you know if you cut ISS this happens if you don't cut or you do something else this happens and then do like an informed decision in a uniform way in sorry unified unified way thank you thanks okay last but not least and's okay yeah all right do you hear me yeah so I'm going to try to explain why are we doing this like the motivation at the basic level here first and so you can think of uh all the participants in ethereum network that are prospective each token holders they have different what we refer to as reservation yield you know the lowest yield at which they're willing to stti and we can we can draw H we can begin by just drawing some sort of you know distribution of what these sort of reservation Ys might look like something like this right some sort of normal distribution so some people are willing to stake at here is now yield and here is amount of Stak so some people are willing to stake at a very low yield and some people would like to stake at very high Y and if you are at some specific yield where your reservation Yi is that's a point where you are indifferent to staking or holding the token okay you're starting from that now we take the cumulative distribution of this sort of PDF so we take sort of the CDF of this they're recording so we have to okay so now we take the cumulative of that one and then we are forming the supply curve looking something like this I'm instro very simply now all right so if you are here that's your that's a certain certain point now we have we say that we have yield here and we have uh deposited stake here so if you're here then you are indifferent to staking if you are positioned here you are indifferent to staking at this specific yield But but so this is the marginal reservation yield at this specific point and this is what what so the this this supply curve is the marginal reservation and now we draw a sort of a demand curve specified by the protocol all right and so there there becomes an equilibrium here and what happens is that the protocol pays this amount of e right the area here and below the supply curve we would like to claim that everything below the supply curve is the cost to ethereum's users because they were indifferent at that point right so here are the cost and here is the Surplus for staking and so the problem so one of the main motivations for reducing ins is that we reduce the cost for staking and the cost we're talking about you know you have to buy Hardware you have to spend time for upkeep you have to pay taxes you have to do whatever you know you you're taking on a risk premium ET so when we reduce ision to a lower uh reward curve that is the demand curve something like this we get a new equilibrium here and what happens is that we reduce we get this area is the new issuance here and we have reduced this area here we removed these are costs that we have removed by reducing ISS that's the key property that's a welfare gain of reducing insts there is also a shift in Surplus right this Surplus is shifted from stakers to all token holders and so so this area here is the welfare gain that's that's the main reason and we don't really care about shifting surface like okay it's nice perhaps that everyone because what happens is that these are removed and we have fewer newly Meed tokens and everyone gains from it right so perhaps it's nice that everyone can share equally in in this but this is the key aspect we're reducing the cost and so so I just wanted to be clear about the main reason for doing the the the isons reduction of and then there's um how to explain this so this a this's an equation from uh my thread on minimum viation that sort of started this whole conversation and it looks like this you have a change in what you you call it proportional yield or real yield or change in you know uh the ownership of the protocol how the the attainable change in the proportion of the circulating supply for us as user I refer to and it equals um 1 + y divided by 1 + S where s is the inflation rate and Y is the yield minus one and so this this equation specifies how a change initials affect you as a user why yield that is issuance yield and me yield inflation rate that is the issuance rate the newly issued tokens is a plus and the burn rate is a Min a minus right and so if we we we have this this financial equation what happens here is that if you are a Staker and you are positioned here what happens to you is that you remain staking because the yield has not fallen down to your the new yield is here here is the new yield so the yield has not Fallen below your reservation y so you remain as a ster your gain your gain is this area plus that area spread out over everyone your loss is this distance here this is the reduction in yield for you so y goes down and S Goes Down And if s goes down more then you gain if y goes down more you lose and it depends on the slope of the supply curve that is what affects your you as a user and so we should be clear here about uh talking about why we're doing it we're doing it because of the cost reduction it's not specifically that we're doing it to increase the real that depends on the slope of the supply curve you could you could express it as sort of like the yeah the whatever yeah so and the point being that how should I say this the point being that that the red yield is always constant when taken in aggregate because if you are stake and you are here you you previously earned this much yield why was pretty high for you now it's zero it's nothing you earn no yield at all you go down there right but if you take it in ag what actually happens is that these are all the only losses that happens these people here margin distributor here on the supply cve they lose a distribution whereas these might gain or lose depending on the the shape of the supply card how Y and changes and everyone here who didn't stake before they gain of course because there only they have y Zero from the beginning so it doesn't matter to them but and so it encapsulate that wipi YP is in aggregate doesn't change you know the real yield is always constant for in aggregate because you're just string tokens around right it is it's affected by the revenue of the protocol the burn rate and so that's like the main what we're trying to do is we're trying to increase sort of the the the revenue of the protocol what we do the isance reductions to reduce the cost yeah that's it perhaps yeah or I want to make one short thing more yeah okay 30 seconds so that's one reason the cost reduction the second being uh the the macro perspective once we reduce is chance when not everyone is taking the consensus layer become protecting users in the case where the the social layer needs to step in because if everyone is taking you know there's a problem because then we cannot rely on the social area because they have stake everyone has stake in the game you know and once there's initial censorship you know something where we would like the social to step in we have a problem so that's the other reason thank you yeah oh you can join us so I guess um as a non researcher and someone who spends a lot of time on Twitter um my sense is um there's one of the I know biggest push backs or concern is just like should we change the curve at all right like uh sort of criticism you can make of ethereum is you know we constantly fiddle with these things and it whether or not we get an actual like a net better curve um we sort of degrade the overall perception of ethereum uh Josh uses the term hardness right it's like we degrade the hardness of the network because we're changing the assurances we've done to not only stakers whose yield is affected um but also to um everyone else who uses the protocol because they think well if this fundamental thing can be changed you know can they change something else um so I'd be curious to hear you know from from each of you like ideally minute or less um like what's the what's the case for changing the curve or like what should the burden of proof be um and how do you feel about I the overall perception that like touching this in and of itself is is a risk and and like opens up a can of worms um and made damage like ethereum's perception hello yeah I think like we all agree actually there are macro risks and um macro level risks whether we we might disagree on like the relative um weight we attach to macro level outcomes but there are macro level risks that like feels like it's within the scope of issuance to avert you know like if you have um a macro level outcome that looks like an existent it could be an existential threat to ethereum and issuance can do something about it then you know you'd be pretty stupid not to like I think where we disagree on is I think maybe burden of proof as well like how much do you wait for real world more real world Data before uh shifting versus like saying okay I'm actually going to try and predict the future and that level of confidence I think is maybe where we like fundamentally philosophically disagree yeah um I think that's somewhat right but I think basically what because we've had obviously quite a few conversations also you know like we get along quite well like I think we all kind of want what's best for ethereum we just kind of disagree or like try and come from different starting points of what that is and I think one of the big disagreements that we keep running into is just like the difference in opinion of like what would the pre precautionary principle here be like what is the risk averse thing to do and uh I think your position is more like let's just wait and see that's the that's the the the the the thing and I'm I'm personally just very worried that like there's a lot of effects that are going to be very hard to reverse once once we see them for for example um I didn't quite get to around saying that at the end of my my part but like um I'm personally like I think both I mean solo stickers are amazing they are like the best that we can get in terms of stake but also like most of the current LST participation like if you stake with Lio today you're probably a good guy you're probably someone who actually is pretty aligned and made that choice because you actually thought there was a pretty decentralized ethereum aligned like option if you stti with coinbase a little bit less clear maybe you just wanted to press the button get money right but like that will get worse over time like the capital that's not yet in is this stake e ET like the eth ETFs that were not allowed to stake in the past that will be allowed to stake they do not care about what is best for ethereum they do not care about contributing to security they just want to purely ruthlessly profit maximize right once you have a situation established where like the major the the the the normal form of participating in ethereum in eth upside on Wall Street is the state e ETF that's never going to go away again right like once that's set up it's not going to like be taken off the market but you can prevent it from being set up in the first place by just signaling hey we are changing the issuance we're basically like it's not just like massive free money we pushing towards you like it's not it was never supposed to reach Wall Street right this is not money for Wall Street this is money for the small guys at home that tried to right I mean easier said than done but like I'm just saying right or like Layer Two Bridges same thing like I've there's one I don't want to name them but like one layer two that does the thing where like if you stake if you if you if you move your eth to them they still call it eth but actually what happened is under the hood they take it and they stake it and if something goes wrong I guess too bad for you you know like um but but basically like for now that's only the ruthless L2 that do that but like if ever this kind of is some sort of like Cascade of like well the semi- ruthless L2 does it and then the next one feels pressure to do it and the next one like once you set that up in your logic you're never going to undo it again right so either we basically send a clear signal now like stop that's not where we are trying to go or I think a lot of these effects will be almost impossible to undo and that's why to me the precautionary principle is like let's try to hold staking like at the current rough level figure out what to do in the long term or maybe even you know like try to jump there now but like just doing nothing is not the risk averse thing to do so I I just want to like because I think there's some great points there but I think we do have a fundamental disagreement on like a subset of them like I think if we did have like some sort of staking yield whereby okay or or curve where we're sure this does not centralize the valid dat set forever and we're sure it avoids taking ETFs from you know people from participating staking ETFs I think we would do it right I think what we disagree on is like we don't know what that uh yield is for staking ETFs to say we're not going to come in right like these customers are pretty you you look at coinbase they take 25% fees I doubt most people staking on coinbase have any idea how many you know that that I I think they could raise it to 50% people wouldn't care they just know they're making something you know as opposed to nothing and so like this is where we disagree on it's like I think having some more real well data on this would help us make a more confident decision and I think it's not irreversal POS as long as we don't surpass this sort of 50% threshold and we have a few years to get to there so that's kind of where well I mean we can disagree on this but that's kind of where we we know reasonably disagree that's where we yeah yeah I mean this is why we're here yeah um so couple things first yeah as an answer to Tim's question I think you know the right thing is to do the precautionary thing agree there um but yeah so the fundamental disagreement is of course in in like precautions against what and this comes back to what I sort of started with is what are we optimizing for is it is it network security or is it asset and uh you know like to me it's really non obvious like what are the problems with full with large amounts of e staked so we can discuss that but like to like for for me for example it's it's pretty let's say from from from where I stand and what I see of the stake Inc is that the issuance cut will only exacerbate the issues that you that you that you were talking about about staking ETFs stay concentration Etc so to me the precautionary thing actually would be to not like not do that be and the reason is because uh customers of um let's say coinbase are very inelastic how do I how do we know that they're inelastic is because they pay 25% on their yield and everyone else pays Max 10 so well okay Max 14 I guess but uh it's a different two different market segments and the issuance cut will will be felt by the market segment which is not coinbase is the sophisticated actors with decentralized pools with staky service providers those will be scratching their head and thinking what can I do with my money and Retail institutions on coinbase they will not um okay I mean some of them will but to a much less degree they will be thinking what to do after issuance cut so this is the precautionary principle for me is to is to by default not do it and then I'm in principle not against actually changing it but I I would say that we need to do way more research and way more real world like research and go out and talk to these people and that's why a cyber we we had a MBI grants program uh we have five teams doing uh doing exactly that talking to various people and projecting you know thinking what what will actually happen and also yeah but also come circling back to the main issue I would actually like would love to ask you uh ask you and maybe like the audience do what do you feel like we need to optimize for is it Network or the asset I would call that a leing question which one sorry which one I just say like I would call that a leading question I don't I think I don't think those are in conflict and I don't think it is like for example just to briefly mention right like one of the main reasons to move from proof of work to proof of stake in the first place was that on paper you can make the argument that proof of stake has massively higher efficiency and that's specifically because on proof of work the money you you you spend as a minor actually goes into like Hardware that then deprecates and appreciates and like basically just like all of the money actually is is is is an expense whereas in proof of stake yes you put that money at risk to be slashed but you only actually pay the opportunity cost of like the the extra yield you could earn on top right so basically there's this factor of 20 or so in efficiency of capital or like 10 dep depending on the how quickly the the asset depreciates but like you you have this massive efficiency gain and then on top of that proof of work once it's broken it's broken like if the attacker controls 51% of the money they can always reack and re attack and attack in Pro of stake if you attack you get targeted and like you can you can only punish the attacker which you can't do in proof of work so for these two reasons in principle proof of stake is like massively more efficient if you look at the real numbers today Bitcoin has a net inflation of 9 0.

9% which of course will go to zero over time and then they just don't pay for security anymore whatever but like ethereum 8% oh so we are actually and and and Rising right so like soon we'll cross over and we'll have higher of course pre-b burn like Bitcoin just doesn't have the burn so like yes we kind of nicely on the account like in the net you know like it it looks nicer but in terms of how much we pay bit ethereum currently pays $3 billion every year for security right we actually looked at the at the list of countries by government budget um and actually that would put us above 60 countries on Earth like 60 countries have an entire government budget that's below $3 billion a yearly so we we pay and I would argue like in terms of just the the pure um um money at stake side and that's of course only half of the picture the other half is the distribution but like we literally cly overpaying by a factor of 10 20 50 100 on ethereum we could literally like purely on that like we could if we only shrink down you know again we can't there's no way to do that but if we only shrink down through the solar stakers like yeah so so I'm just saying it's not like we're getting we are close to break to a breaking point we are massively currently what's your ideal staking ratio and what's your ideal answer ideal ideal 3% 5% 3% there like we can get there but aideal yeah you know that coinbase controls 15% right of the steak teeth a beautiful world where like we can pick the 3% yeah but the market I mean how what what you going to do in the to the market the market has its own preferences and its own incentives yeah so I wanted to uh sort of go back to the beginning of this uh conversation like uh uh let's talk about first uh the was there was a statement that there's no risk really if everyone stakes and I mention one one aspect in the in the end sort of like you're saying it's better for for security yeah I mean you know from the asset perspective you know there there there's different thing but from the security perspective yes yeah so so my point will be it's not just about I mentioned one of the macro perspectives being that we should have you know a neutral social layer ready to intervene in the case that that we have censorship or we have some you know client bar or whatever there's also there's also several other reasons for for for not wanting to have all e State first of all it's easy to understand that you know if everyone if you you increase the number of attestations and we're already trying to do ssf so if we can decrease the number of uh the the the the total aggregate number of attestations by a factor of five relative to if everyone Stakes then of course we we're moving to faser security just just from that angle so to speak or you can you can always substitute that for having lower lower stake minimum Stakes yeah does it work I'm not sure how much people here understand idea that ssf is found by the am ofip all right so we we are trying to do something called single slots finality and want to finalize the Shain in one single slot but it's not really single slot anymore it's several slot finality so that's a new meaning of ssf and and we are bounded by the number of attestation that we have to process and if we reduce the quantity of stake of course then we would we would suspect that the the the number of attestations that we have to to process in agregate goes down at least to the to to the proportion that we reduce the stake and then so that's the second reason then the third reason being that if you are you are also not just compromising the consensus layer you are compromising the C the up layer because if you have this situation where where one or a few lsts comes to dominated money they will have you know if you have the power of the money you get sort of a power of overuses and you get sort of power over the applications and it can be rather subtle but but it it's going to creep in everywhere you know and the fourth reason being that if you have if you have people then starting building on top of the LST you know not on top of eth but on top of the LST and then there is an issue you're compromising you know the entire ecosystem and I wanted to oh no we can you can intervene if you I guess one thing I was gonna say on that is yeah so um if you have all these uh liquid staking tokens people treat them as money um you know in a world where like 100% of of eth is stake um maybe there's like one that's dominant that has half of that so like half the eth is like a single LST if I'm like a new user I open coinbase and it's like coinbase is selling me you know eth but it's actually you know I know rapid stake eth or you know wrapped coinbase e or whatever um there's a sense of like if there's ever a bug in that contract the user will like think that's ethereum right and it's it you know say in a world where there's like 3% stake um you really have to go and find that LSD right like if you're if you're there and you know youve you've like I don't know bought bought it on some Unis swap pool and like hopefully you know what you're doing and if you don't um and there's some bug with that LSC 97% of people will just tell you well you know you put your money in a sketchy app and you lost your money and that's unfortunate but it is what it is um but there's a risk if it's the opposite you know if there's 97% in now's a bug um then as much as you know we want to say like well it was just an app um it's like less credible to say that as a user um and so what you're I guess getting at with the social L year is like as long as you're like under 50% you're kind of in a good spot because half the eth is like raw eth um so maybe like why is the strowman proposal of like having a curve that I don't know it's like a very sharp Parabola that like I know we we want like some security so it like goes up really quick in the beginning and then drops like down and goes like Ultra negative past 50% like why wouldn't that be the like PE is off theable like no one wants negative well if we're saying that we don't want you know more than zero let's say what is the yeah yeah well well me is like a think any okay but anyway I guess the point is like why shouldn't we just have a curve that like goes up a ton in the beginning does whatever in the middle and then like sharply discourages uh right before 50% um why don't we just ship that like what's the issue with that curve yeah well so so I wanted to talk about the curve and relate it to the coinbase comments so the curves that we are discussing they aren't they aren't as such as so the comment saying that that there are 15 million e at coinbase or from sample something like this the curse the the primary curves that we're discussing wouldn't like make it impossible to stake Beyond 50 million e they they're just they just the yield the yield Falls slightly but it's not like like like the yield goes negative of 50 million 50 million each state or something like this so it's not like coinbase can just push all their eat into the the the deposit contract and push out everyone else uh and so that's the reason why we would like to have a little bit more than 15 million e a negative or zero yeld because then we are taking away this power from one actor to sort of push everyone out for for whatever reasons they would they would have for doing so so so so the the curve the curve is is slightly falling because it sort of let us balance these different forces uh and yeah I wanted just a short intervene another thing also and it's nice nice when we're talking about proof of stake and we referring uh comparing it to proof of work if you remember I talked about a cost and a surplus and it's only half if you have a supply C it's only half that is a cost the other half is a surplus so when we say that okay if ethereum issues as much uh tokens as Pro of work on the half of that is is actually a cost to the uses the other half or something like this will be a surplus depending on the slope of the supply curve so that's something to to to remember also in terms of welfare yeah just very for context like yeah we we there different curves being discussed um some of them that are more gradual to like avoid anyone being able to push extra eth in and push other people out others that are more kind of um more more like opinionated in going to zero or something I don't think I think the focus on the curves is a bit premature because I really think I mean a I hope again like we refocused a little bit on just like trying to more just raise awareness because it turns it really turns out that like it's it's a fundamentally hard problem to solve it is just not obvious what what we could just pick and then everything is fine right like I think hopefully we convinced most people here or like maybe you were already convinced pre today that like there is a problem but it does not mean necessarily convince you that even we would have to do anything maybe today's kind of path is still the the best out of B bad outcomes basically um I don't think so but like it's definitely not obvious which one is the best path um but fundamentally I I do I I'm I I more and more strongly get this feeling that like you know basically we we wanted again when when the mechanism was designed we really it was really only designed with Solo stakers in mind that would have been like 3 5% participation it turns out that that attracted a lot of like professional capital I don't even like you know like I I like like I would a world where no lsts exist given that lsts have to exist I like that Li exists so I don't want to you know like Li is great but but still you know like um it attracted a lot of like mercenary capital and like now out of those $3 billion we pay like maybe 300 million 10% go to solo stakers and 2.7 billion just goes to people who don't care about ethereum right or like at least care less or like basically like don't add to the security I i' feel much more comfortable with just the 10% of solo stakers right so like most of our payment already goes kind of is wasted in that sense right and so the the problem is how do we de def financialized in a sense right like staking while keeping it attractive for solar sters they are like ideas so for example it's not a good idea but like one thing we could do is we could like really have a very narrow yield at the same time remove all of the concerns of solar Staker so like for example make the the slashing penalty if it's not correlated very very low basically almost non-existent um keep reducing the hardware requirements like really keep like say with something like APS where you you no longer participate in Block proposing so like there's no timing issues you don't have to have like a really Ultra fast bandwidth to make sure that you know you're like not too late with the block and stuff so make it as friendly to solo stickers as possible bring the yield quite a bit down and then ramp up the correlated penalty even more so that like someone like coinbase right basically would I think they even have some sort of slashing insurance or something like would have to pay so much for that because you know like in if they do something wrong it really blows up right the coration correlation penalty is just like if you run a bunch of validators that have the same voting behavior or like say you all double sign at the at the same time then basically like your per validator penalty is much much much higher than if it was just a single person doing a mistake right because anyone who would attack the network would have to do it with a bunch of stake and so the The Accidental Mistake by an honest person just we don't want to punish so so in that world right you could make it so unattractive to be a concentrated entity and at the same time coinbase you know they have to actually pay professional people run this in a professional data center that is extra cost that an Enthusiast just doesn't have so I think that corner it's not a super attractive corner but at least like it is plausible that you could reach some sort of point there where the only people staying in are the 3 5% of solo stakers maybe you can make that work and I think the only alternative that I see that is attractive is the just enshrined delegation into the protocol and stop completely remove staking rewards like no one earns anything from staking anymore it just becomes a duty if you want to participate in ether in in ethereum you want to hold eth now you just have to delegate to like make a delegation decision and um right and and basically participate in securing the network I think those extremes are the only stable potentially stable points that we can choose from but genuinely honestly if we come out of this and we just all agree there's a problem and it's generally hard to find a solution then we should definitely keep working on it and maybe our disagreement is not so much that we could should keep working on it just like what do we do in the meantime can I comment um yeah so actually I mean you know one thing that I want to also say that we should search for the end game right and that's what we're doing right now but I'm not sure if there is an end game so we need to keep keep this in mind that actually we are like in a very Dynamic industry where things didn't shake out completely so that's just a philosophical remark but uh towards the points that you discussed so um yeah like so first you know we want a decentralized validator set how can we achieve it and there there's one sort of clear thing that uh that we can say is that the centralized staking provider Solutions are way cheaper they're extremely cheap and decentralized are expensive because you run it on on multiple on multiple nodes and that's that's the reason why L1 market market cap is so high is because the costs that l1's in Q are just immense in general okay so given that you know the question let's say let's just hyp let's do hypothetical we uh we have the market we cut the issuance okay what will be the effect and in my mind um it's it's just completely un like we cannot hope for like professional people to leave and then only Enthusiast stay I don't see this happening I think you know whatever is the table will be uh you know will be will be basically will go to majority will go to the market and then the rest uh will go to the Enthusiast so the kind of the distribution will be very similar if not worse and let me maybe go a little bit into detail like as as I I guess I'm I'm a yeah I'm I'm repeating this point but it's very relevant cut the issurance you you want to look at most inelastic people those are the ones who will stay and um I mean I I agree that for example solo sers are very diverse is a very diverse uh set of people um so their supply C is pretty steep you know that they are pretty you know it's likely that there will be in percentage wise less solo stakers leaving than let's say those who stake with lsds marginally that's prob yeah I like I agree with this analysis however what I I really uh want to point out point out that stakers with centralized exchanges I don't even think they will notice to be honest so they are the most inelastic people and we should be worried about those um and then also like solo Staker viability longterm not clear to me we did an analysis in our paper of cost structure of solo stakers and then our analysis basically implies that the solo Staker curve is rather steep at first margin Ally but then it flattens out at some point because of high fixed costs and they're just inflexible to to change their cost structure so yeah I mean and so maybe like let me end with a positive note because all I said is like you know it's not going to work or something uh here's here's a view that I have that I I personally think there is a sustainable equilibrium where we allow all market segments to coexist both uh let's say retail and then half institutional segment with centralized exchanges and then also the decentralized uh Market segment onchain Market segment the reason why I think it's sustainable to do to do so because I mean you know this this argument is thrown around a lot like margins will compress either way either way everything will St will centralize let's just accelerate this I don't think that's that's uh that's how it works and the reason is because a it's up to us right if we we want to uh the network to be decentralized we we we we want to keep you know finding a solution right so we it's it's really up to us and second I think the market is segmented as I said and for coinbase and binance right now the optimal strategy is not to uh lower their fees and compete with others it's actually to charge a lot of fees from their uh smaller customer base and if you think about Investments right investment industry as a whole like there's this passive investment industry where you are where your money is for for 1K or somewhere and then it goes to some other people those people send it to some other people and you really have no idea what's happening um this is like a I would say you pay like a lot of money when you do this and uh actually there's a lot of people doing that and then there's a professional segment Right Where You LP in funds etc etc so it's investment as a market is a very segmented market and I think there is a there's a good chance that actually staking Market will be a segmented Market with a decentralized component and the centralized kind of retail friendly component so that's a positive note I I feel like there's room for for segments um does it it's working um yeah so I want to like R of on the things that has been said like I was shaking oh yeah yeah by the way yeah uh so Sasha like the thing you said like oh we have some time like four years or like two years I was shaking my head because like it's hard to predict things on the past performance when you have bull runs and if you have if that stake ETF if like you know like if stake ETFs it's very hard to predict where it's going to go and we've seen even this week like what happened with Bitcoin was absolutely crazy and yeah this was just like just looking at the turn limit like it's actually like mathematically impossible to have more deposits technically impossible technically impossible you know that that's all it was just a comment oh okay but like my main point is we have these few parts like solo stickers Lio like liquid stickers and these as you said like very inelastic people who just want to get anything on coinbase and I think it's going to be the same with ETFs like if I can get if or I can get if plus 05% it doesn't matter for me because I don't have that much money but if I put a billion dollars 0.5% is a lot of money and I am actually that would be very pessimistic but I'm actually not sure what could we do with issuance and unless we go to zero to actually prevent that because if it really happens that these ETFs become the dominant Force because these people have a lot of money uh then even if it's 0.5% it's still a lot of money for them if you have like billion or 100 billion in the ATF that's like you know just print cash I guess one addition to your question is then why not go negative because if you oh sorry to to add to what you say it's like why wouldn't you then make the Assurance negative because imagine we have a prf equilibrium where it's at like 05 but then Black Rock looks at it and it's like well if we shove r we're going to bring it down to minus 5% and people are going to call us because they're losing East and that's not great so couldn't we just do that with negative issuance can I just mention that uh I I I don't I think that negative issuance but at a point that is Beyond 50% stake that you go to infinite negative Beyond 50% stake for me this is the second best option the first the best option is uh what I would like to I just want to show what I think is the best option oh that should be regular segment so in my perspective would be that uh this is the current issuance it rises all the way up to 1.8 million e right and so and so we find this problematic think because it will not uh it will not people are will be encouraged we we suspect to stay at a very high stake participation rate and so this is something that I find to be like the best option like what I would suspect suspect being the best option I don't know what where this is I was justy trying to draw it now but but you can look at the the Practical endgame post outlining this uh sort of Curves and and the point being that that we are when we are here somewhere uh we aren't really we would like we would like the equum to be here perhaps say that it's between 20 to 30 million something like this where we are just beyond this picker so this is what we would like but we are not like forcing the outcome that it has to be there it doesn't have to be there even if you go beyond here you are still issuing we are not forcing it and so so the second best option uh in my view would be that if you are going to force it if this is for sort of 0.

5 like half the half de or something like this maybe 0.6 actually yeah anyway if you're going to force it you force it somewhere above 50% so here somewhere you go to negative Infinity something like that but but but my preference would be to have it like this so that we always give the the the the solar Staker a small positive regular reward and to to be able to achieve this because we have to remember that the W curve is the max issurance then you would like to have slightly above zero the way we thought about it and like I think it's quite helpful is to say hey if we have a curve anything like this kind right just as an example either of the two like once you go beyond this point you're already in the failure case like you really try to prevent this range right you really want it to be somewhere over here so you have to kind of acknowledge hey I am already just I'm only designing here for like how do we want to fail and of course we always want to fail as Grace Grace graciously as possible and so here kind of like going to negative Infinity yes it might have like a nice scare effect once you get close but if you actually get there that's really not the most elegant failure case right like now you're like well if you're a solar Staker well sorry about you you know boom and so so I think actually just accepting that okay our you know our cap just didn't hold at much even though I don't love it i' I'd rather pick that failure case again assuming we never get there but like I think it m yeah so I think that mental model of just saying like this is this part of the curve is only about finding the best of ramp we have and if everything goes WR goes wrong yeah no I agree with that I just want to sure like do we actually like are not um as misaligned as as it seems like I was about to find your valid IDE and like like what I suggested yesterday in my talk and again this is is just like uh you know POS you know one is to actually okay the current stake what is like something like here let's say we're we're here on the curve 30% roughly yeah let's just say it's this curve is not quite you know proportionate but is to actually just like can we look at what Anders is done and he's done incredible work honestly and it's very beautiful read if you have a spare month to go through everything I highly recommend it um um is to just okay can we say okay we actually don't know if we shift now to this we don't know how that's going to centralize the set right we just don't have enough data to be confident can we do something whereby we stick as close as possible to the current reward curve at the current rate um of of staking ratio and then come back down uh towards joining uh you know an's uh curves if you look at it properly there's kind of like a range of Curves but to to sort of come in at around 50% similar to what he's suggesting like that's one possible way of doing it the other sort of suggestion is okay you keep going to closer to 50% stake along the current reward curve and then you have something more more more drastic right so for for me it's like it's more along what is the range here and and for for sort of Anders it's what of the range here and there is an intersection um at higher uh amounts stti why keep it at that current curve if not only to cater to the people who are supposed to be serving the network can sorry can you reformulate why why keep it to that curve because is it only to cater to saving those people's jobs no it it's it's just because we don't know what's going to happen if we shift the the the current yield at at the current staking rate like we could have a situation when this comes to sort of the market segmentation uh argument whereby we have a staking ETF um lios margins for example are compressed we cannot fund a distributed validator set and most of the stake ends up going to coinbase right like we don't know yet we don't haven't had enough research like I would prefer a wait and see approach where okay we acknowledge that we agree we don't want to get past this 50% or at least not overshoot a lot how how long do we have to gather enough data to see these staking ETFs go out to see what happens before we react very briefly because I think it's very important we talked about it earlier we actually re re looked at the numbers just to double check but at the current like because yes the system defines a maximum rate at which new eth is allowed to come into the system but it's actually quite a bit higher like we could we could rough we roughly could have 20% of extra stake inflow per year at the count maximum limit so within a single year we could go of course right now we are not at all at that level of inflow but say once Stak ETFs become a thing or something we could in principle go from today's 30% to 50% within a single year and if you have ever seen ethereum try to sh any feature like from even proposing a specific feature to it going life and impacting this that would be a year two years three years right so there is some emergency although I agree with you yeah so oh oh uh sorry I'm the what's the camera Bumble fet um I was just going to actually I actually loved the formulation of market segments and Market structure and I think like just like stepping back three steps I feel like like there's there's something interestingly uh like it's sort of like a central bank with one arm tied behind its back that like doesn't want to use half the terminology available to it so when I hear about like di Minimus thresholds or like uh molding Behavior to enable multiple market segments to have different reward structures feels like the political and to be blunt the regulatory has crept back in like everyone just sort of pretends if we don't call this a central bank it's not a central bank but this is a central bank you're talking about you're talking about like changing the rules of the game to keep the protocol healthy one thing I'll say on that though is the health of a market is a political question I agree with the uh political bit the big difference between a central bank and like ethereum is you know Anar or Sasha or Anders orm can write a blog post WR an EIP uh we can get on all CVS and accept it but we do need the validators and the users to run the the code right like when the Central Bank decides to do a rate cut or like a rate hike you know they get in a room they decide it and you can't like use your dollars and like you know signal soy yeah but it is worth noting because I I think um a lot of the times when we put out the code the upgrade happens and people accept it and usually it's because there's been this feedback loop of like you know by the time we ship the thing hopefully people like the thing um but in the case where it's not you know say I don't know like got their way and like they convinced everybody and like or I don't know likef gets their way but EF gets I work at the EF right like we get our way we convince everybody like you know people read the blog post and they're like wow it comes from the EF got to trust it um it like you still choose to run the software or not and and I think that's like a super important part where yeah if if you don't recognize that it does feel like you know this thing is like okay literally this closed door meeting you we're like choosing the curve for the $300 billion Network um but yeah so sorry I didn't mean to completely deril but yeah no I mean I just think like of of all the options discussed it sounds like people are talking about different What in in a regulatory plan would be like circuit breakers like if a hugely capitalized if like a trillion dollar State actor swoops in and tries to break this how could what what sort of like emergency mechanisms are there to keep well how how would they break it they they they break it you mean by staking it or or getting the 51 % quickly for example like yeah we're modeling all this out assuming there isn't like drastically bigger people they take it and the yield goes down like right yeah I mean they're not and then it's just game over for a while and then it's game over for a while there's no yield for anybody there was a question I want make make one small comment about Central Banking uh what we're trying to do is to try to ship a one time we have like a receive the feedback from the community there's a onetime change that people people would prefer onetime change so we are discussing a onetime change right this is the forever change this is based on community feedback that this is what people want so I wouldn't I wouldn't refer to it at Central Bank Central Banking is the interv constant intervention of people you know in a in a closed St boardroom and so we're trying in a way to do the opposite and it's sort of the blockchain way to do it right I'm in the back hello okay uh yeah immediate response to that I would say that we need to make sure that the validators uh can bear the costs uh if if this is meant to be a onetime change and not to buy us time then we absolutely need to be certain that their cost floor is lower than coinbase and Lio no offense uh so that we don't end up with forcing the 51% attack but my real question was if you lower the issuance then a greater percentage of validator profit comes from me uh me is easier to centralize you could imagine flash Bots that sells only to hedge funds this I find very concerning because now the well okay I'll go ahead and let you respond before talking no sorry I didn't want to cut you off please no go Ahad flash it out I said enough yeah I said enough already respond to what I said I just I just wanted to Signal agreement because m is huge problem and I think I mean you know like it has been for for a long time um we we we all I think we all agree with with that there is this kind of this plan on the ethereum road map to do what we call me burn me capture basically that would solve that at least from it would not solve all problems with meev but it would solve the the the problems that me causes for staking incentives and in particular the nice thing is that currently we have an me pipeline that still gives solo sters access to me in principle but it comes of course with the huge variance right if you only propose a block once a year you just basically play the lottery your EV might be the same but your variance is terrible so and that becomes worse and worse the the the the fewer people um stake right because the fewer people stake the more concentrated the me payouts are for those people um so I agree with you ideally of course the problem is here the problem really is in general the timelines like yes we can basically just and that might be what ends up happening right we just do nothing until we have like the perfect solution completely locked in right but that and that that then includes me burn which is probably also still like one to one or two years away from actually being shippable and all these kind of things but you know at the same time there's also just a lot of pressure into the system right so so it really it really feels like basically the challenge for ethereum because yes the idea is not to be the fed and make changes every single year we do one one or I mean I don't know one or two changes right like either a shortterm change to pause the system and then a long-term solution or we wait and then ship one-term solution right either way but we have to ramp up our economic sophistication very rapidly and like and get to a solution Point as soon as we possibly can I I like to push back on this so I've personally worked on two or three difficulty bomb push backs that were the last one before the merge I think we have a very poor track record of um saying we're going to do things once and then uh realizing that you know the world was more complicated um so to use the the notepad myself um it seems like you know there's like a lot of like a or I know argument surface here um but one idea and I I mentioned this to you this week but it's like could we have like shorter term bounds right like saying look maybe the right curve is somewhere here but we like agree that like it's not going to be you know I don't know like beyond that area or something like that like and is there a way like and I'm curious to ask like all of you like is there some sort of like upper bound thing that we could agree to or get the consensus to such that um we clearly don't know the details there there'll clearly be like second order effects I think as you've mentioned a couple times um and but then say like okay we we can commit forever to not like going out of this box and you know as a holder of ether or like a Staker or whatever like I know that you know rewards will never exceed X or like never go below y like on said you know we don't want to do negative issuance like now we we trust Vibes to do this but it's like should we have like some sort of bounding box in the protocol that says this is the like design space we've agreed to and we'll probably get it wrong we we'll try really hard not to but um you know we're it's like I don't know we have like 99.9 confidence interval about this box and like maybe 95 about like the area within the Box yeah so I was trying to in my talk uh yesterday pitching this idea of having this social commitment to never issuing more than 0.5% of the circulating Supply each year so it's an issuance rate of 0.5% that goes there so and and this is a bound that from from the perspective of of secure securing ethereum there's there's this is at upper end of any any you know compromise we should ever consider I think so so in in my perspective 0.

5% would be that bound or if you want to go lower I know that there's been talk about 0.25 but but but we could also have 2 to the power of minus 8 if we want some sort of pure purely ethereum and that's 0.39% but it's I don't know if this is memic in terms of quality but it's very ethereum solution also I think this like gets to what you're getting at like Foundation Al we I think the close like we don't agree on this 0.5% for the reason that I think it it drastically changes the current uh yields at where we are now and we don't know what happens but I think what we're closest to agreeing on is like there is this kind of 50% uh thing where bad things could happen right that's the closest thing then we disagree on like whether that is more vertical whether we should um gradually soften way before whether we should gradually soften a little bit later and it does seem like there's something within this range I think we have made progress but I would say we're not like on the 0.5% I think it's it's I wouldn't say we have close to consensus on that but I just because you said we have agreement on something I just want to push back a little bit I don't I'm not saying we have agreement I don't say we have agreement I say this the closest thing no but what I'm saying is I just wanted to brief brief it because I think it's important like with the 50% range like yes I think we have a lot of concerns around like specific say for example this like really this concentrating pressure on around the single winning LST becomes much worse in this range that we that I think we we agree with that is much less of an issue over here um I just want to say as a questionary thing yes I think we can wait longer and then make you know make a onetime change I think the change will get more and more painful as the longer we wait and some of these processes might be very hard to reverse so it might be that even the post outcome will be still more staked e and or more more more like um Stak e ETF and less solo staking than if we do did it today doesn't mean maybe we still wait a little bit and make then then make a change but I will fundamentally say that any equilibrium close to 50% I'm personally very uncomfortable with specifically because that is still a world where if I'm a stake if I'm an EF it looks like oh I'm tempted to come in and be part of that 50% if it's 3% I'm not trying to be part of the 3% because I already have so much money under management that like I couldn't even get a sizable allocation in there right like at 3% we could go to coinbase and be like please just stop staking and be like yeah okay fair enough we have way too much volume we don't fit into the 3% we stop staking right like I'm not saying we should go to 3% is Extreme right I'm just using a written note from from Brian Armstrong and all his predecessors that that is true then maybe we agree actually what we disagree on is that this will happen well this is this is an action item you know let's get get right into like you're depending on one person that's the issue I'm I'm just I just wanted to give the intuition that like I think again we need more we need more iteration on this but like I'm personally very uncomfortable with like anything in that range will not stop that wave of deteriorating kind of mercenary capital inflow that I'm really afraid of over the next few years so something that I'm realizing here and like this goes back to his point about uh Central Banking is that we're effectively trying to change the rules of the game to control who the participants are and what their behaviors are why can't we just let the participants regulate this for themselves so as an example like participants today are uh we're talking about um you know Black Rock why not have Regulators basically control these sorts of things in this sort of way through taxing regimes and stuff like that that's how we currently do it today but effectively what we're saying is we're not going to change the rules we're going to let the participants change their strategies and behaviors within the game itself in order to self-regulate it rather than us changing the rules at which point we're basically going back to how central banks act today by effectively just changing the rules and having to consistently change them based upon the participants and actors and what they're doing yeah like the the bank of international settlements is probably a better analogy because it's already the SRO balancing central banks plural interesting I mean I'm not sure I fully got the question but I I I think the way I understood it is that like so my I would disagree with that and and specifically I disagree with that because I think fundamental fundamentally the blockchain approach to problems is to find like guarantee like basically and like guarantees invariance in the system that you can absolutely 100% rely whereas like the existing world the way you prevent a double Spenders if you double spend the government comes and knocks at your door that that is the self-regulation right that's the you know like the basically like oh B bad things could in principle happen but if they happen you know like hopefully like the society somehow deals with it right like I think we really need to find to find a a stable like an intrinsically stable end point and it's really hard to to see where that is right but like I think that is the only stable long-term solution rather than just to say well if an actor would misbehave then hopefully their government would punish them and so that's why they would never misbehave in the first place right I I just don't fundamentally think that's not the crypto way of solving challenges so I agree with you on that regard but I think where it's fundamentally different is with double spin it's a closed ecosystem we control the network as a whole but the reality is when we're controlling the economics and which participants choose to participate it's an open ecosystem so we have less control over it which is why I'm essentially pushing back on the idea of should we even be modifying the rules in the first place because we're setting precedents of the future that basically walk us down the same path of central banks today I think it's a great question I don't I don't think again the part of the question that is reasonable is that like how Willy neilly should etherum just like be willing to change its monetary policy and I think there we probably all roughly agree that like that should should not just happen on a whim all the time I think that probably is a baseline of agreement that we all have and then we probably disagree on like are we currently at that threshold like should we do it should we not do it that that we disagree um but I don't think I think fundamentally we have to consciously make like design an outcome for ethereum that works for the network and that is our responsibility we can't just like hope like sit back and pray we can't just like be like okay well look it might be that you know this this does not work for the network but hopefully people find a way to self-regulate into a place that works for us like I think we have to be willing to design to be willing to like you know on paper and that that's the Central Primary part of blockchains right like Satoshi sat down and designed on paper in theory an outcome and then build the rules the the part that's different is that it is something that like is one time done and then people can rely and can predict what will happen in the future and it's not just a backro dealing that constantly changes the direction right like I think the the good part of central planning is the designing the outcome the bad part is the constantly shifting directions in closed door meetings yeah sorry I just wanted to also like touch on something that was super important I think you know the the Poss the question of possibility like is this possible I think the question of possibility is you know we need to analyze what we want right and what we want is to save the decentralization of the validator and then based on that assess like and for example like we're talking about 50% 33% etc for in our pay we show we showed that 33% is almost uh you know hopeless 50% maybe there is a chance to save the decentralization uh part actually my hunch is that 60280 would be much uh healthier range in which there's a chance but uh yeah like also so and also by the way like a data Point there's no blockchain where where it is there is more stake than 66% but there's no there's no other blockchain as good as ethereum so uh we also have to be mindful of that and then lastly I want to M I want to mention something super important that we I think there needs to be like we need to agree on the underlying mechanism and currents like I'm sorry but I just cannot agree with the fact that we can hope uh to lower the issuance and then only enthusiasts are left like there's no place on Earth where the value is distributed and then only enthusiasts there are there there's just none so we I think we have to agree on the underlying currents the underlying current is that professionals will be there we cannot just like hope for only Enthusiast to be there and so you know the question is okay like hire uh more issurance therefore more decentralization or less decentralization in my mind it's more decentralization but we need to agree on all this because I feel like there's just not enough like straight up uh you know logic and Analysis so far thank you um I don't know so it says here we have zero minutes left but I don't know if we can stay until 4 we'll see if they kick us off um let's try to stay until 4 are there people who did not ask a question that had a question um okay you had one and we'll try to do like a minute each and get as many as we can hi um is there a reason why the design space is limited to a single issuance curve and not being able to partition kind of consensus roles so that you can identify these different types of people in power so there's two types of petitioning you could think of and one of them I I think is practical the other one isn't so the Practical part is like and that's called I think the idea is generally called rainbow staking the idea like hey right now you have one type of staking and everyone does that in the future you could imagine and that's already like things that are being discussed right we split off block production and that's one specific Duty then we have the normal attestations that would would be the the more traditional type of staking and then we about to ship this fossil inclusion list mechanism right where basically participating in the sensorship resistance of the of the of the network would be no new role that by default would just be filled by the same stakers but you could imagine having this different kind of subset of stakers participate in that and then you could have different ways of incentivizing the different kind of subset of staking and say okay well maybe it's it's more okay like say for sensor of resistance we really optimize that anyone even even if you just run it on your phone right and you only online 10% of the time you can still contribute because there it's like a very low like you can't really misbehave worst case you just submit rubbish and you don't actually help the sensor of assistance right but like that kind of thing where's attestations if you misbehave it actually hurts the network so maybe you know like we have more stringent rules there so that that type of like specialization within the staking set that one I'm optimistic about I think that one we might go towards the other side that I sometimes people propose is like what if we just pay solo stakers more and that sounds great it sounds great or like for example why what if we just explicitly pay geod diversity more right like if you are staking from a continent that like and then there are sometimes people even try to go into the technical details of like we just measure your ping and if you're like you know you're like in a place where you like and we try to map down where on Earth you are and like what not so basically a fundamentally these approaches are always unsustainable when you incentivize solo staking everyone will look like a solo Staker you know and secretly you know collaborate so that that's just like long-term not a not a thing we can always just in Shine the first 10,000 people that came into the Beacon chain they will just always get the yield and everyone else just goes to zero you know but like that's also not super sustainable they'll sell their seeds and then with Geo you know like incentivization and whatnot literally the only way to even remotely make that possible is by like 10 Xing the complexity of the entire network right which is just absolutely out of scope so I think while that is like I would love if if if we had the magic one that would be the first feature but that that type of of of of different treatment is I think completely impossible okay probably one last question someone who has hasn't had their question answered yet wow oh okay you oh sorry who was okay okay let's do two but quick so you blue shirt first and then we'll do you after yeah yeah so I I'm I'm myself a solo STI I just want to take a step back right so to understand if we reduce issuance wouldn't this drive me to the lower cost alternative liquid staking or centralized staking and then if we just extrapolate this further wouldn't the the centralized options be left remaining I know you mentioned um if there's not enough liquidity there then coin someone like coinbase can would not bother to do it but there will be smaller centralized players in that field and also if um my fear is that this would drive um everyone to pursue yield from other sources uh for example reaking and if we everyone pursues reaking we go from like a validated set of say like maybe 5,000 8,000 operators to 100 operators and and that I think is a worst outcome uh yeah and I I agree this is exactly why people are concerned with all of these potential Solutions the problem is if lower yield drives you to do that if we do nothing your yield also goes low lower and like it goes lower like of course at a slow con continuous rate instead of like a onetime cut but the end point will not be higher than if we do the one time cut like this is the fundamental problem that's why I was saying it's easier to all agree there is a problem then to agree on a solution like I think we unfortunately go to that world where you will be very tempted to do it either way and so that is why it's fundamentally hard to solve this problem like the the pressures the yield pressures will become very very very harsh even if we do nothing for the next few years to figure this out even if we double issue this is more of a comment actually but um about the segmentation um so one way of segmenting uh is the anti-correlation uh kind of penalties um I think that's probably a key aspect of this whole thing is to make sure that they are very high so that so that if if the uh if the ETF stake does come in then they will be punished severely if they if they do not decentralize their their stake and they ping Insurance yeah that's right exactly seems like ainer to raise those any no agree agree on that and I just want to do a quick anyone has changed their minds on anything after this raise your hand okay okay we have some we yeah okay cool cool okay and yeah we're at time yeah um thank you to all the panelists all of you for participating um