, 13 tweets, 2 min read Read on Twitter
An important decision that the devs and community need to correctly arrive at for ETH2.0 in the long term is its inflation rate, validators (V's) are going to be receiving an interest rate relative to ETHs inflation and how many V's are actively staking. 1/
A quick run-through for the uninitiated, the current plan is, assuming 10 million ETH is staked, meaning 312,500 V's that would each get about ~2.54% annual interest. At current price ETH ($165), that amounts to about 0.8 ETH or $11 a month. 2/
Now why am I bringing this up? Because it's an issue that devs have a different perspective on than investors and dapp users. Yet, it's essential to the security of the network. 3/
The numbers are currently fine as is but I just want to make sure people understand the difference between the inflation rate's effect on the networks security compared to Bitcoin. 4/
Will 0.8 ETH per V a year be affordable enough to encourage people to bring in the expected 312,500 V's? And if that's not reached, the "minimum" security (to make 51%s difficult) relies on at least 128 V's for each of the 1024 shards, meaning just over 130K V's. 5/
In this case a V would each be getting ~4% interest or 1.28 ETH per year. Which sounds much better but that is at the bare "minimum" for security. We want to stay comfortably above that. But not extremely above (like 1Mil) or else the node clients may have performance issues. 6/
Now what if ETH were to supposedly return to $1000? More V's would probably join to get in on the attractive high fiat rewards for staking. We'd most likely be safely above both the minimum V count. 7/
We would also reach above the estimated 10M ETH staked mark, meaning the individual interest rate would be lower, but since the price of ETH is nice, rewards fiat-wise are still profitable. People are earning good money. Security is intact. 👍 8/
Of course, this does largely depend on price. One problem I foresee is that people will work hard to collect the 32 ETH minimum, only to be disappointed that it's not profitable for those who wish to host on a provider like DigitalOcean or AWS 9/
If the price stays below ~$300 ETH, people staking only 32 ETH will most likely not be interested in staking on their own or will resort to a pool. I personally don't like the message that sends. 10/
However, I think the rise of staking services like Coinbase Custody and easier access to pools (due to no techy setup, unlike PoW), will ease the issue of "no single V's staking". However this could result in large pools. Hopefully there will be several options for pooling 🙂 11/
I don't have any formal opinion on changing these numbers but I just want to make sure everyone knows how they change things so far in ETH2.0 😁

Thanks for reading though! 12/
One more note! The spec is still being worked on, I'm not sure if the reward numbers have been formally decided on yet so they may still be subject to change. However, we have had them set for more than a few months now.
As with the rest of Eth2.0, debate is welcome 🙂
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