1/9 Is it ideal that more than 40% of the blocks created on #Ethereum in the hours following #TheMerge belong to just two staking service providers: Lido (DeFi) and Coinbase (CeFi)? No
Am I worried? No. Here’s why👇
Am I worried? No. Here’s why👇
https://twitter.com/koeppelmann/status/1570436882483523585
2/9 First, it makes sense that the largest staking service providers have the advantage early on, particularly in the hours & days following Ethereum’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS)...
3/9 After all, most stakers experiencing issues during the transition to PoS will be the individual stakers running their own validators, not the prominent service providers with full-time teams & resources dedicated to staking operations.
4/9 Over time, I expect today’s leaders of the staking sector to struggle with preserving this level of market share dominance as more competitors enter the space & as additional decentralized staking solutions like Rocket Pool become more popular & user-friendly.
5/9 New staking service providers will likely adjust a couple of economic parameters, including the fee structure and rewards distribution model:
1) Fee structure
2) Reward distribution model
1) Fee structure
2) Reward distribution model
6/9 Fee structure
Lido charges a 10% fee on staking rewards, Coinbase charges 25%, and Binance charges 0%. New entrants could create tiered fee structures or fall somewhere in the middle.
Lido charges a 10% fee on staking rewards, Coinbase charges 25%, and Binance charges 0%. New entrants could create tiered fee structures or fall somewhere in the middle.
7/9 Reward distribution model
Distributing rewards as earned vs. at once (impacts taxes). I also expect to see more creative models, like lottery-style staking pools where the rewards of all staking participants are paid out to one randomly selected winner, like Pool Together.
Distributing rewards as earned vs. at once (impacts taxes). I also expect to see more creative models, like lottery-style staking pools where the rewards of all staking participants are paid out to one randomly selected winner, like Pool Together.
8/9 Many new services will go to market via vampire attack on the sector leader, plus farming incentives, as we've seen before:
1) DeFi: Uniswap ➡️ Sushiswap (airdrop+incentives)
2) NFTs: OpenSea ➡️ Looksrare (airdrop+incentives)
3) Staking: Lido ➡️ TBD (airdrop+incentives)
1) DeFi: Uniswap ➡️ Sushiswap (airdrop+incentives)
2) NFTs: OpenSea ➡️ Looksrare (airdrop+incentives)
3) Staking: Lido ➡️ TBD (airdrop+incentives)
9/9 I expect the staking sector to become more competitive (& therefore, more decentralized) as new providers rush in to take advantage of the opportunity staking represents.
That’s good for crypto—increasing the network's resiliency & diversifying risk among more participants.
That’s good for crypto—increasing the network's resiliency & diversifying risk among more participants.
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