If a target was to be set, the nominal yield at this point (let’s say 1/4, though this number is still very much to be discussed) would be quite different from what it is today, meaning that Coinbase depositors would be faced with a new decision of whether to stake or not, and Coinbase itself would need to decide what to do with custodied ETF ETH, so I am questioning here the assumption “The market forces imply that all the ETH in Coinbase Custody, Coinbase Prime and future Coinbase ETF Custody will be long-term staked”.
A new equilibrium would be found, where the share of Coinbase in the staking set would likely not simply be their custodied amount at stake under the previous configuration with non-targeting issuance curve (so 15m staked, say) divided by the target (30m). I would expect the net effect to be a reduction of Coinbase’s nominal amount of ETH at stake. This demands of course more analysis to understand the magnitude of the effect, but is in my opinion a more reasonable hypothesis than the nominal amount at stake remaining constant.
edit: Reminding myself that this post is actually not about targeting, better discussed there, but the argument also stands for a reduction in yield with this new moderate curve.