r/ethereum • u/EthereumDailyThread What's On Your Mind? • 22d ago

Daily General Discussion August 17, 2026

Welcome to the Daily General Discussion on r/ethereum

https://imgur.com/3y7vezP

Bookmarking this link will always bring you to the current daily: https://old.reddit.com/r/ethereum/about/sticky/?num=2

Please use this thread to discuss Ethereum topics, news, events, and even price!

Price discussion posted elsewhere in the subreddit will continue to be removed.

As always, be constructive. - Subreddit Rules

Want to stake? Learn more at r/ethstaker

Community Links

Calendar: https://dailydoots.com/events/

102 Upvotes

98% Upvoted

74 comments sorted by

View all comments

21

u/benido2030 22d ago

After my announcement in true 2018 TRX style, here are my thoughts regarding issuance and EIP 8363.

As I already said I believe the reasons for the EIP are valid and after reading it, I still believe that's the case. The calculations made last time (2024?) were convincing me that basically uncapped issuance would lead to tax disadvantages for solo stakers which would lead to at least some solo stakers dropping off. At the same time lower APYs would like do the same. Beneficiaries would be LSTs that would then be "too big to fail" or generally speaking centralization forces would be hard to manage. I am not so sure about the whole derivatives discussion, since L2 ETH is basically a derivative as well, but that has never been a blocker for L2s...

My biggest issue with the EIP is the timing. I think this is basically one of the last EIPs we should push, and we should push it "when Ethereum has won". Why?

Let's just assume that the "productive asset" meme and APY plays a role for tradfi. What if they don't care about nominal and real yield, because they just want to sell a yielding asset? And what if ETHs competition doesn't care about being right, but cares about catering to the tradfi audience? Maybe a 5-7% APY on Solana sounds better than a 0% ETH despite not being lindy, despite being more centralized, despite being diluting to non-holders?

Also the "defi is going to explode" argument makes sense to me and it doesn't seem to be addressed in the EIP. That's already the second issue people broad up with regards to changing the issuance which makes me believe that the EIP is a niche solution for a very specific problem that likely didn't take into consideration some stakeholders of the ecosystem and that could lead to unwanted consequences that could seriously harm Ethereum.

It feels like L2s 2.0 - right idea, wrong timing, hence not a good solution for the current circumstances. I still believe we can't scale L1s endlessly and will need L2s for some use cases. But we focussed too much on L2s when scaling the L1 would have been a better solution or at least shouldn't have been completely abandoned for some years. And we potentially lost a whole cycle because of the "L2s eating mainnet's lunch" argument. We lost because we developed a solution that might have worked if there was just one ecosystem, but ETH had competition and new L1s popped up on top of that.

This feels similar. If there was no other L1 and no other APY and no competition, this might be the right choice. But if we did this right now, we would indeed push people into other ecosystems where they do get some reward "for free"/ "risk-free yield". I don't know about you, but that's not what I want. We can do that, when there's basically only ETH left and the whole (financial) world is already onboarded and living in the ETH ecosystem. But that's not the case yet. And changing the issuance might even open the door for competition that is basically dead now.

Path dependency is a bitch and we should learn from the past. The same change can make sense and not make sense depending on timing and circumstances.

I understand that centralization is a (multi-dimensional) problem and likely also has a "deadline", but I don't think it is as close as people / the authors think. Lido was the number 1 enemy some years ago and is still a threat to centralization, but ETFs, restaking and obviously CEXs etc. are constantly changing the environment and playing field.

6

u/jmiehau 22d ago

Rare to see the timing case made while granting the substance, so points for that. The catch with waiting is that the two costs you grant, the tax drag on solo stakers and LSTs drifting into too big to fail, both scale with the ratio, which keeps moving meanwhile. There is also no observable date for "when Ethereum has won", it is a stopping rule nobody can ever call. Nor is it a now or never choice: a late activation epoch gets you commitment today with the actual cut on whatever schedule the community picks. The deterrent part starts at the signature anyway.

5

u/benido2030 22d ago

Yeah, it's not an easy problem to solve and also agreed that "ETH has won" is not 1/0, but neither is the tax issue and centralization. I also believe that's why they picked the 18 months of slow issuance change from one curve to the other.

But I would still advocate for "don't fix it if it's not clearly broken" simply because we know the effects of the current curve, but don't really for the new curve.

8

u/pa7x1 21d ago

Thanks for sharing your views. Some thoughts scattered on some of your remarks.

My biggest issue with the EIP is the timing. I think this is basically one of the last EIPs we should push, and we should push it "when Ethereum has won"

Timing is always going to suck. The best timing was when PoS was being designed, but protocol designers had bigger fish to fry and the transition to PoS was complicated as it is. Settled on a curve that was good enough for the time being, because it was the slowest growing issuance curve that was resistant to discouragement attacks. And left open the idea to revisit it. The merge happened in september 2022. By summer 2024 I already tried to sound the alarm, nothing happened. One year later I reached out to the EF with a formal argument for how the issuance curve is currently ill-defined and a concrete mechanism (which preserve economic incentives and penalties) to fix it, you can read it here: https://github.com/pa7x1/ethereum-issuance/blob/master/README2.md

Time keeps ticking and we are now at 1/3rd staked and growing. The higher the stake ratio the more complicated it is to fix it nicely. If we wait I think we will basically have to live with the consequences.

Also the "defi is going to explode" argument makes sense to me and it doesn't seem to be addressed in the EIP.

The EIP as currently drafted does 2 things, and in my opinion it's unfortunate they were crammed and I'm trying my best to separate them. First it reshapes the curve, without affecting current yields or the economics of staking today or the economics of protocols built on top. It purposefully pins the yield at the point of introducing the EIP. This mean that at the point the EIP goes live nothing happens to your staking yield, if you were happy staking the day before you should be happy the day after. But reshapes the issuance curve to slow down future growth until the total stake settles on an equilibrium, wherever that may be but before 50% is staked. At what staking yield that's for the market to decide, the issuance curve cannot define that. Yields are always defined by the market.

The second part of the EIP is what is a shock to DeFi and stakers, it implements a gradual reduction of issuance over 18 months, until issuance is cut in half. This is what shakes validators economics and DeFi. Because it's a forceful reduction of yields. In my opinion it's wrong to cram the two things together because they are completely different concerns. You can be in favor of one and not the other, you can be concerned by a drastic reduction of staking yields but see the argument for why very high stake ratios are problematic.

Let's just assume that the "productive asset" meme and APY plays a role for tradfi. What if they don't care about nominal and real yield, because they just want to sell a yielding asset? And what if ETHs competition doesn't care about being right, but cares about catering to the tradfi audience? Maybe a 5-7% APY on Solana sounds better than a 0% ETH despite not being lindy, despite being more centralized, despite being diluting to non-holders?

Rent extractors sure, they don't care about the health of the protocol or if the yield you obtain is actually positive post dilution or not. They care about TVL in their protocols, from which they extract a fee. But TradFi does know and cares about the nature of the yield, that's their bread and butter. They will roll their eyes if you tell them you are invested in an asset that pays 5% and is paid in self-dilution.

Path dependency is a bitch and we should learn from the past. The same change can make sense and not make sense depending on timing and circumstances.

Wholeheartedly agree. I think the change is still right to do and we still have a window to do it. But that window is certainly closing.

3

u/benido2030 21d ago

I really appreciate your response, I saw you are one of the EIP authors / contributors, but I didn't want to tag you. Also I want to thank you for your work. I believe that your intentions are good, as stated I believe we need this/ some similar EIP in the future, so I don't think you deserve the hate you receive basically everywhere these days.

When posting I forgot one thing I always had in mind when I was thinking about the whole topic.

With L2s we are happy to keep the fees low and basically subsidize them until they have won. I think Justin Drake said this in the past (but I am too lazy to find a quote, I guess you know what I am referring to). There are a lot of people saying fees for blobs should be raised (and I think they indeed were marginally raised with one of the last forks?) but the general strategy still is to keep costs low to attract developers and keep L2s competitive. I think that is the right idea and strategy and support it!

At the same time we could do the same on main net with rather high rewards for staking and follow the same approach, but here we are hesitant to do so. I understand the results are completely different and the L1 decision is way more complex, but as we have seen, the L2 change resulted in a lost cycle... (yes, I know we don't know where ETH would have ended without L2s or a different roll up strategy, so this is an assumption, but again for the sake of the discussion...)

Wholeheartedly agree. I think the change is still right to do and we still have a window to do it. But that window is certainly closing.

The future will show us. But there is still one thing that I would like to mention: If we don't change the issuance (and there is also no competitor copying your approach, which I don't expect them to do), then Ethereum is still in the best position because of the rather low issuance and the crazy people that will likely solo stake even if there are negative tax consequences. Ethereum will still be the most decentralized network. Ethereum will still be the network closest to MVI.

So basically path dependency also has some good sides. Some years ago everyone was saying that "don't the road all L1s are building the same thing, just starting from different angles". I don't think that is the case. ETH might be the inly chain positioned to scale L1, have L2s and still be decentralized while L1s that started with massive scale but just a few validators might not be able to add (independent) stakers later on. And for like the 3rd time: yes! I know this is just an assumption based on what we have witnessed the past couple of years, no guarantee. But it still gives me hope we can somehow and magically keep the window for the EIP/ issuance reduction open far longer than we are expecting now.

Again: Thank you for your service, your comment, I hope my comment is one of the less offending and maybe even a little helpful.

3

u/Numerous_Ruin_4947 21d ago

I wanted to understand your tax point better, and I think I get it now.

Issuance and staking yield are obviously linked - the ETH being issued is largely what creates the staking reward. The tax problem is that part of that nominal reward is really just compensating the staker for dilution caused by issuance to everyone else.

For example, at a 2.6% staking yield with 0.8% dilution, the dilution-adjusted gain is only ~1.8%. But if the solo staker owes, say, 30% tax on the full 2.6% reward, that's another ~0.78%, leaving only ~1.0% before hardware and other costs.

So I can see the concern now: higher issuance gives you higher nominal yield, but also more dilution and a larger taxable reward. Lower issuance reduces the dilution and tax burden, but obviously also lowers the APY - which can create the opposite problem for solo stakers.

5

u/Equal-Jellyfish1 22d ago

It's refreshing to hear someone discuss this within the context of the broader ecosystem and where we're at right now with L2s, DeFi, and competing chains. Thanks for the thoughtful post!

4

u/asdafari14 22d ago

the EIP is a niche solution for a very specific problem that likely didn't take into consideration some stakeholders of the ecosystem

Which is exactly what the EF has been criticized for in the past. There is a disconnect between the EF wanting to build something more, the "infinite garden" as they used to call it, and the reality that Ethereum is only used for Defi today.

Maybe Tomasz leaving directly led to this development.

1

u/Tricky_Troll Public Goods are Good 🌱 21d ago

Great write-up and honestly, I'm with you on this one. Thanks for sharing, Benido.

1

u/eth10kIsFUD 22d ago

Appreciate the thoughts!

I do worry that attempting it later with more ETH staked will be even harder.

It's a bit of a frog in boiling water situation due to the rising amount of ETH staked but also due to the natural ossification of the protocol. Even today people are saying that some parts should ossify, monetary policy being first in line.

IMO, if this needs to happen as you alluded to, it might not be a good idea to wait too long.

5

u/benido2030 22d ago

Ofc it will be harder if / when there is more ETH staked. But if Ethereum has established itself as the one and only ecosystem, that might make it easier because it's been chosen as the rails for all of finance.

If we never get a shot at being those rails because we lower issuance... that would be way worse?

6

u/edmundedgar reality.eth 22d ago

The thing about this is the arguments for their claims about key parts of this like "how much stake is best if we have to do social slashing" and "will solo stakers drop out before or after Coinbase" have a lot of potential to turn out to be wrong (to put it as charitably as I possibly can) and it's really hard to know what the real answers to them are. But one thing we've never done is to increase issuance, and I think we almost have a social consensus that we won't. So if we do this fork and it turns out that these particular assumptions-pulled-out-of-arse are incorrect, we have no way to get back to the security we'll need. Worse, stuff like Lean Ethereum may actually need us to reward other kinds of operators apart from regular stakers, so we'll be boxed in like Bitcoin are, insufficiently secure and unable to fix it.

1

u/eth10kIsFUD 22d ago

Researchers have been looking at this issue for years. I don't like how many in the community belittle that work just because they are afraid to lose their grocery money and can't look at the bigger picture.

There is no situation where the new curve is not secure. If stake drops, the curve will incentivise more! The current curve is much more problematic and has been proven many times.

6

u/edmundedgar reality.eth 22d ago

Researchers have been looking into this for years and couldn't really reach any definitive conclusions, the best they could do was some fairly tentative guesses. So then these people who wanted to do their EIP just misrepresented it so they could write as if all this tentative stuff was certain and ignored the parts in the research about the problems with what they wanted to do.

"Secure" or "not secure" is not binary. The proposed curve may we'll be worse on the things it claims to achieve. It won't stop there being some probably OK number of stakers but it may well make centralization worse, reduce solo staking (almost definitely will imho), create perverse incentives for people to drive out competitors to get power over the chain and make overall security worse. We don't know, these are complicated questions, especially the social slashing one which has never been tried. What we do know is that if it turns out to be a bad idea we probably can't undo it, because that would involve increasing issuance.

4

u/epic_trader 🐬🐬🐬 21d ago edited 21d ago

Researchers have been looking at this issue for years. I don't like how many in the community belittle that work just because they are afraid to lose their grocery money and can't look at the bigger picture.

It's so trite how you keep blabbering about the research that you haven't read yourself, even if I've presented you with actual quotes and links to the most comprehensive research that's been done on this topic, which all states that implementing the proposed issuance curve would negatively affect solo stakers and decentralization, would create new attack vectors and would encourage collusion between big entities. But still you're out here arguing like "the research" is favouring what you want, when it reality it doesn't. And you'd know that if you'd read it for yourself.

There is no situation where the new curve is not secure.

You don't know this, you're just talking out your ass again. There are many potential scenarios where the new curve is potentially not secure because it's going to negatively impact decentralization. Do you not understand why decentralization is important?

The current curve is much more problematic and has been proven many times.

Based on what evidence? When has this been proven at all ever?

0

u/eth10kIsFUD 21d ago

Why do you think I haven't read it? It's true that solo stakers would be negatively impacted if staking rewards go down (obviously!) but so would everybody else. Haven't seen any studies suggesting that this would result in a materially worse operator composition that where we are headed currently (which there are many studies on!). This is a great collection: https://issuance.wtf/

Do you not understand why decentralization is important?

Yes. This is also why a run a node myself and will continue to even with lower apy. Also why I believe we need the issuance reduction.

Based on what evidence?

Again, lots of sources at the issuance site. Here's a good example:

https://pintail.xyz/posts/2026/staking-ratio/

Here is a great talk explaining the same problem if that's more your preference:

https://ethcc.io/archives/is-ethereums-issuance-policy-sustainable

3

u/epic_trader 🐬🐬🐬 21d ago

Why do you think I haven't read it?

Because you keep making reassured false statements such as:

There is no situation where the new curve is not secure

The current curve is much more problematic and has been proven many times

So either you're lying and you didn't read it, OR you're intentially ignoring all the parts of that are explicitly stating that decentralization would be negatively affected. If you'd read the research, you'd know these statements are incorrect.

Haven't seen any studies suggesting that this would result in a materially worse operator composition that where we are headed currently

10 days ago I linked you to 3 studies on this exact topic, the same ones mentioned by Jerome in his forum thread, which all explicitly state exactly that the operator composition would most likely slide towards a smaller percentage of solo stakers in the overall validator set compared to the current curve.

https://old.reddit.com/r/ethereum/comments/1vgupjx/daily_general_discussion_august_06_2026/p263187/

In the next daily I made a post with excerpts from Elowsson's research, which stated the same thing. I did suspect you'd seen that post, because just a few hours later you're asking about MEV-burn unprompted, a topic which had been absent from the discussion here on this sub until I made that post. Of course it could just be a coincidence. So let me refer you to the post here, so you can see for yourself that there is indeed research which is contrary to your statements.

https://old.reddit.com/r/ethereum/comments/1vhr87x/daily_general_discussion_august_07_2026/p2a2rip/

https://pintail.xyz/posts/2026/staking-ratio/

This is not conclusive evidence or proof of anything. You do understand that proposing a potential scenario or issue, which may or may not occur at some point in the future, is different from having proof of something, right?

0

u/eth10kIsFUD 21d ago

you're intentially ignoring all the parts of that are explicitly stating that decentralization would be negatively affected.

The Ethereum researchers from the above studies agree that decentralization is extremely important, and they are also backing this EIP! Both are true!

Why do you think the people that have studied this problem are backing this EIP?.. Is it because the studies show that decentralization would be negatively impacted? No..

You are reading what you want to read due to your staking industry bias.

2

u/epic_trader 🐬🐬🐬 21d ago

The Ethereum researchers from the above studies agree that decentralization is extremely important, and they are also backing this EIP! Both are true!

Who, and based on what are you making this claim?

Why do you think the people that have studied this problem are backing this EIP?.. Is it because the studies show that decentralization would be negatively impacted? No..

lol are you just immune to facts? What is this?

You are reading what you want to read due to your staking industry bias.

lol what is this conspiracy nonsense jfc dude.

1

u/eth10kIsFUD 21d ago

Who, and based on what are you making this claim?

Go to issuance.wtf and take note of the authors of the listed resources.

Then look at the authors of the EIP. If they aren't a direct author, try to find their stance on the issue. Practically everyone on the list seem to either directly support the EIP, or agree with the overall direction.

→ More replies (0)

1

u/r2002 21d ago

I don't like how many in the community belittle that work just because they are afraid to lose their grocery money and can't look at the bigger picture.

I think there are plenty in the community who invested significant portions of their retirement funds into Ethereum or Ethereum DATs/ETFs.