The Breakdown cover image

A Legal Argument for Why Staking Doesn’t Make ETH a Security

The Breakdown

00:00

Staking ETH Does Not Entail Horizontal Commonality

Some have mistakenly argued that staking ETH implies horizontal commonality because validators deposit ETH into a single smart contract address, which allegedly entails a pooling of assets. As shown below, these arguments are conclusory and misunderstand the mechanics of staking in Ethereum. The purpose of staked ETH is to create an incentive mechanism that secures the network. It ensures that validators have some skin in the game so that they can be penalized or slashed for behaving dishonestly.

Play episode from 06:55
Transcript

The AI-powered Podcast Player

Save insights by tapping your headphones, chat with episodes, discover the best highlights - and more!
App store bannerPlay store banner
Get the app