Wanted sentiment check on all of the following:
In my opinion, objectives of monetary policy - in decreasing order - are as follows
- Chain security
- Compensating validator costs
- Minimise delegation
- Do what ETH holders like
10% of all ETH in existence being staked feels like a sufficient defence for chain security against double-spends and block reorgs. Firstly because that already exceeds bitcoin as well as ethereum PoW chain’s security, which has proven sufficient till date. And secondly because automatic slashing of any greater amount than 10M ETH will anyway be socially contentious and a non-slash fork can emerge - so we might as well take such decisions via manual social coordination.
Another major problem with having more ETH staked is there is a finite amount of ETH that is owned by both technically and politically motivated actors who are willing to solo stake. Having too much ETH staked dilutes the fraction of ETH being staked by people who actually own the ETH. Actors with ETH being delegated to them have less skin-in-the-game economically, they also reduce the number of distinct human and conceptual entities involved in staking (sybil resistance).
I feel like solo stakers are more altruistic and less profit-motivated as compared to users who delegate their ETH to these pools who accept delegation. Hence we shouldn’t assume that more staking rewards is always better; it might be possible that less rewards ensures only the altruistic stakers remain.
Delegation involves some counterparty risk (measurable economically), in equilibrium, the yield for each validator will anyway be lower than this counterparty risk due to market efficiency.
I just wanted to know how much of these statements the overall community agrees with.
[My post covers all this in more detail: ETH 2.0 monetary policy and delegation - Noma ]