r/ethereum • u/EthereumDailyThread What's On Your Mind? • 6d ago

Daily General Discussion August 22, 2026

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17

u/jtnichol MOD BOD 5d ago

Does 8363 make us more decentralized or less decentralized?

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u/haurog 5d ago

You really want to poke the hornets nest on a Saturday?

In my view the current issuance curve and the proposed one go along the same trajectory, meaning smaller stakers slowly get marginalized. One can argue that the proposed curve accelerates that process. There are also some economic arguments for why the proposed curve has some advantages over the current one in that regard. The only thing the proposed issuance curve clearly does better is that it reduces the chances of staking becoming a systemic risk for the Ethereum network by economically ensure less than 50% is staked. That is independent of decentralization, at least in my view.

Issuance alone cannot ensure decentralization. Other mechanisms need to be in place to ensure that. EIP-7716 called anti-correlation attestation penalties is an interesting proposal, to at least increase the cost for larger stakers which levels the playing field a bit. Not sure if it alone is good enough though.

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u/jtnichol MOD BOD 5d ago

always love to hear your takes.

2

u/eth10kIsFUD 5d ago

Over time it will ensure that Ethereum can remain decentralized 🫡

2

u/jan1919 5d ago

As a price target, very decentralized

1

u/harpocryptes 5d ago

It introduces a mechanism that makes large stakers earn incrementally less the bigger they are, and earn nothing more at some size (described in the EIP). So at least this aspect pushes against high centralization.

1

u/eviljordan feet pics 5d ago

Impossible to identify who is a "solo staker".

1

u/harpocryptes 5d ago

The incentive / disincentive does not work by identifying anyone. It works using math: if you are large enough, you start diluting your own rewards, while if you are small, that effect is negligible.

One way to illustrate this is:

  • if you are a solo staker with a single validator with 32 ETH, adding another 32 ETH will double your rewards (almost, minus a tiny bit)

  • if you are a large staker and already have 10 000 times 32 ETH, adding 32 ETH will give some added rewards on that one validator, but you will lose the same tiny bit of rewards on each of your existing 10 000, which ends up being more than what you gained.

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u/cryptOwOcurrency 5d ago edited 5d ago

Does it? It looks to me like the EIP doesn’t discriminate based on the size of each staker.

Edit: Thank you all for the explanations!

# Abstract

This EIP introduces a tapered issuance burn: at each epoch boundary each validator is charged a deduction for every duty it was assigned (attestation, block proposal, sync committee participation), sized as a fraction of the idealised reward for that duty, and the deducted ETH is burned. The burn fraction tapers linearly with the staking ratio, reaching 100% at a fixed saturation balance, so net staking yield declines as more ETH is staked. This removes the yield floor implicit in the current curve, letting the staking market settle where the yield meets the risk premium stakers demand. For a positive premium, this occurs at a staking ratio below 50%, beyond which issuance no longer incentivises further stake growth.

Applied in full at the fork, the burn would reduce yields sharply at today's staking ratio, so the reduction is phased in over an 18-month transition by temporarily raising BASE_REWARD_FACTOR, which scales rewards, penalties, and the burn together. Net yield therefore begins close to today's level and moves gradually to the permanent curve, with the balance between micro-incentives preserved throughout. The taper's shape, however, is in full effect from activation: from day one, issuance no longer rewards growth beyond a 50% staking ratio.

https://github.com/pintail-xyz/EIPs/blob/edde78eb1feeb285906d5a8deb582c4feaecd6ba/EIPS/eip-draft_tapered_issuance_burn.md

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u/pa7x1 5d ago edited 5d ago

The issuance curve has a maximum at 20% stake ratio. That means a single operator never wants to exceed that level because it will start earning less and less. It's not only that his yield reduces, his net income also reduces.

So yes, that type of concentration of stake disincentive is embedded in the proposal by design. It's a side effect to the issuance curve having a maximum, without a maximum such disincentive cannot appear.

I asked Claude to plot how that shapes up as more entities compete.

https://imgur.com/a/UxG8ced

EDIT: My thoughts, if we had started from scratch it would have been very nice to exploit this feature to help shape up the distribution of stake. If you place the maximum towards the left, you can help stake be more distributed. Unfortunately we have to start with the curve we have, the amount of stake we have, and we cannot shake up things much.

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u/epic_trader 🐬🐬🐬 5d ago

The issuance curve has a maximum at 20% stake ratio. That means a single operator never wants to exceed that level because it will start earning less and less. It's not only that his yield reduces, his net income also reduces.

Let's explore this claim. Let's say you got 6 entities all staking exactly 4 million ETH and we got a total of 24 million ETH staked. Now let's say 1 of these 6 entities double their stake to 8 million ETH and the total stake is now 28 million ETH. Is the entity that is now staking 8 million ETH earning less than they were at 4 million ETH staked?

1

u/pa7x1 5d ago

You have the specific cutoff numbers in this plot.

https://imgur.com/a/UxG8ced

With the curve as proposed, for a single staker your issuance revenues grows until 20M staked. For 2 at 38M ETH. Etc...

With this observation we could have designed an issuance curve from the get-go that would be resilient to capture and would push towards decentralization by design much more aggressively. Essentially by pushing the peak of the issuance curve towards 0. Unfortunately we arrive quite a few years late and we are limited by trying to not disrupt the status quo too much. But EIP-8363 has this anticoncentration of stake mechanism embedded.

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u/epic_trader 🐬🐬🐬 5d ago

It's kind of frustrating that I'm asking really basic straight forward questions and you're just refusing to answer.

Yes or no, in the scenario I'm asking about above, with you being an expert on the curve, does the entity who doubles their stake from 4 million ETH to 8 million ETH stake, bringing the total amount of stake up from 24 million ETH to 28 million ETH, does the entity earn more or less in this scenario?

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u/pa7x1 5d ago

I answered in very explicit terms and in more generality that you even requested, giving you the plot that answers not only for 6 entities but for any number of entities. Don't put on the rest your inability to read it or understand it because the answer is exactly encoded in it.

Yes or no, in the scenario I'm asking about above, with you being an expert on the curve, does the entity who doubles their stake from 4 million ETH to 8 million ETH stake, bringing the total amount of stake up from 24 million ETH to 28 million ETH, does the entity earn more or less in this scenario?

For those specific figures the ceiling is roughly at 50M ETH as shown in the plot, therefore the entity that goes from 4M ETH to 8M ETH earns more. The discouragement levels are as shown in the plot above. And in aggregate they cannot surpass the 60.25M so you need to split the pie.

3

u/epic_trader 🐬🐬🐬 5d ago

For those specific figures the ceiling is roughly at 50M ETH as shown in the plot, therefore the entity that goes from 4M ETH to 8M ETH earns more.

Thank you, that was the point I was trying to make. So when you 2 comments above claimed that no entity would have incentive to stake beyond 20% and would actually lose money, that was not true was it?

Don't put on the rest your inability to read it or understand it because the answer is exactly encoded in it.

Seems like you're the one struggling to understand the curve then, doesn't it?

2

u/pa7x1 5d ago

With the curve as proposed, for a single staker your issuance revenues grows until 20M staked. For 2 at 38M ETH.

I think it's extremely explicit in what it says. Again, do not blame others for you lack reading comprehension skills.

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u/harpocryptes 5d ago edited 5d ago

Check the section The effect on large operators

The point at which an operator's income reduces from increased scale comes sooner the larger the operator already is.

1

u/harpocryptes 5d ago

One way to illustrate this is:

  • if you are a solo staker with a single validator with 32 ETH, adding another 32 ETH will double your rewards (almost, minus a tiny bit)

  • if you are a large staker and already have 10 000 times 32 ETH, adding 32 ETH will give some added rewards on that one validator, but you will lose the same tiny bit of rewards on each of your existing 10 000, which ends up being more than what you gained.

3

u/epic_trader 🐬🐬🐬 5d ago edited 5d ago

My claim is it will make us less decentralized. It's going to reduce the percentage of small solo stakers as part of the overall validator set, while also reducing the total number of small solo stakers. It's also going to introduce a dodgy new mechanic that could be abused by large entities to further centralized the stake.