I have only one thing to say. Solostakers are extremely important for Ethereum. Any proposal that harms them harms Ethereum credibility and makes the network more fragile. Think about a solution how solo staking is being incentivized. At the very least do not harm solo staking incentives compared to what they currently are.
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Disclaimer: I stake from home.
Can you explain this point in more detail?
It’s clear that at the equilibrium of ~every ETH being staked, home stakers are further-disadvantaged-than-today relative to holding LSTs (as their hardware costs are not offset by the very low levels of issuance). But this proposal is specifically meant to be a stopgap until a targeting policy is instituted, so this hypothetical equilibrium is beyond the span of time that this proposal aims to address. It seems to me that the correct span of comparison is Ethereum 2-3 years into the future, where this proposal would imply lower real yields.
I believe this is where the concerns from home stakers in this thread come from. They would be seeing their yields compress further in the short/medium term, and rightfully worry that this means less incentive to solo stake. This also means a lower influx of new home stakers (lower yields), and less development of home staking software (worse UX). Staking providers, meanwhile, can continue to scale operations and UX profitably at lower real yields.
(Ultimately, in the equilibrium, it is my belief that Ethereum cannot simultaneously (a) preserve a large base of home stakers (who cannot amortize costs as efficiently as large providers) and (b) reward all stakers equally. This is why I’ve proposed to make staker information legible to the protocol.)
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It’s an interesting topic, however there is something puzzling me and I’m curious of hearing your thoughts.
It seems the main concern is around LST. However, by targeting a staking ratio, are you not going to exacerbate the preference for adopting a LST solution? What I mean is that, the way rewards are distributed to validators tend to follow skewed distributions - essentially, larger entities tend to earn more on a percentage basis. This is mainly due to the fact that larger entities are pooling rewards coming from long-tailed (i.e. positively skewed) distributions. Thus in the end, it would always be more profitable to pool rewards, meaning it is more profitable to joining a LST solution (unless you are not a whale, so you can pool with yourself). You can find a more clear visualization of what I’m saying you can look at Figure 9 of research by Anders Elowsson, where you can see that higher is the stake higher is the median of the distribution and lower is the variance.
In other words, how can you be so sure that targeting a staking ratio doesn’t tend to make things worse?