skregon retweetledi
ok, i'm going to share my rough thoughts on the proposals for ETH issuance reduction. it looks like a discussion is being had, and i feel the need to share my views on it more clearly
first, the potential (or really the NEED) for a change in issuance must DRAMATICALLY outweigh possible harm in order to achieve the social consensus needed to make a change to a parameter like this. and making changes to issuance now seems to suggest (to me) more potential harm than indisputable good at this point
you can craft "macro" theories on why you think it will be a good thing, but if you miss the "micro" perception part of ETH as credibly neutral programmable money by the market, you'll fail to see that many who stake ETH or just hold ETH have no desire for researchers or anyone else telling us what the "ideal" issuance curve should be in every hard fork. they would rather be slightly diluted everyday rather than see this outcome
decrease today, increase tomorrow. i say *no thanks* (unless there is a clear and defined existential risk to the protocol)
i've seen some folks who propose this change try to create a burning platform for it based on liquid staking token (LST) dominance, but this makes absolutely no sense to me and i suspect it would do THE OPPOSITE and encourage MORE stake proportionately in LSTs. most of the demand for LSTs comes from:
1) some vanilla ETH holders want ANY amount of yield, and yield even from MEV and other exogenous rewards would be enough for them to deposit anyway
2) people want to use staked ETH as a productive asset in DeFi, restaking, etc.
3) home staking is too technically difficult for a lot of people, so most don't even consider doing it
reducing the issuance marginally will not change these sources of demand at all. if anything, what it is likely to change is the number of people who currently find it worthwhile to home stake who might incrementally decide it's no longer worth their effort and also throw in with an LST
further, the LST ecosystem is shifting rapidly and we now see more competition by more parties for staking/staked ETH. we should let this competition play out and perhaps even encourage it
and saying we need to slash rewards solely because we think some people are being overpaid doesn't make sense. if we were in an inflationary ETH environment, i might agree with you. but the reality is the protocol keeps burning more ETH than it is issuing. the urgency is not there, not even even for big vanilla ETH holders whose ETH becomes more scarce everyday
based on the current state of play, i don’t even see this being as contentious as ProgPoW as i can’t think of even ONE STAKEHOLDER GROUP who would clearly benefit from a marginal change to issuance at this point when considering all of the other negative factors a change might introduce. and saying we can change it again if we're wrong isn't a winning position- it's a losing one
i'd be in favor of decreasing issuance possibly if i knew we could do it safely and never have to increase it again, but i don't see credible evidence for those assurances yet. we are in the middle of a bull market, and we have NO IDEA what an unwind of staked ETH might look like if/when we shift back to more bearish conditions. a desire for austerity now could put us at risk later requiring further intervention to ETH issuance which would be BAD
so i respectfully ask those who are proposing this to read the room and take this back to the research table for the day we might actually need it, but afaict, today is not even close to that day
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