In this podcast, they debate changing Ethereum's monetary policy, comparing it with Bitcoin's. They discuss M1 and M2 charts, inflation, and purchasing power. The conversation covers Ethereum's social contract, its evolution from undefined issuance to a structured policy, and ongoing debates about ETH's issuance curve and staking incentives.
Read more
AI Summary
AI Chapters
Episode notes
auto_awesome
Podcast summary created with Snipd AI
Quick takeaways
Debate over ETH's monetary policy focuses on balancing solo staking and liquid staking service providers.
Preserving raw ETH as base money is crucial to maintaining its value within Ethereum ecosystem.
Importance of consensus on targeted staking rates to enhance Ether's monetary properties and network security.
Deep dives
The Debate on Ethereum's Monetary Policy
The Ethereum community is engaged in a debate about potentially changing the monetary policy of Ethereum. There are discussions around the percentage of ETH that should be staked and concerns about the increasing shift towards liquid staking service providers versus solo staking. The debate considers the impact of these changes on the overall security and decentralization of the Ethereum network.
Critique of Liquid Staking Service Providers
One of the concerns is the rising dominance of staking service providers like Lido, Rocketpool, and LRTs, offering simplified and low-cost staking options compared to solo staking. This trend towards liquid staking could potentially lead to a scenario where a majority of ETH is staked with service providers, reducing the engagement of solo stakers and impacting the censorship resistance and decentralization of the network.
Importance of Protecting Base Money
There's a growing emphasis on protecting the raw 'vanilla' ETH as base money of the Ethereum ecosystem rather than moving all ETH to the more intermediated M1 category. The debate aims to ensure a balance where the value of raw ETH is preserved, leading to discussions on constraining the supply of ETH staked to maintain the integrity and value of base money within the Ethereum network.
Challenges in Ensuring Network Security and Decentralization
As the Ethereum community navigates the complexities of its monetary policy and staking dynamics, there are challenges in balancing the participation of solo stakers with the rise of liquid staking service providers. Ensuring network security, censorship resistance, and maintaining a healthy distribution of staked ETH are key considerations in shaping the future of Ethereum's monetary policy.
Ethereum Monetary Policy Debate
The podcast delves into the ongoing debate surrounding Ethereum's monetary policy adjustments, particularly focusing on two key options proposed. The first option aims to reduce total ETH issuance while maintaining the supply curve, slowing down the approach to 100% staked ETH. The second, more aggressive option suggests altering the supply curve to incentivize staking and maintain a controlled issuance, preventing excessive dilution. The discussion highlights the importance of striking a balance between incentivizing staking for security and preserving raw Ether's value.
Targeting Ether Staking Rates for Long-Term Stability
The conversation explores the rationale behind targeting specific staking rates for Ether to enhance its monetary properties and ensure longevity. Advocates of a targeted staking rate argue that it strengthens Ether's base money status, allowing the protocol to control issuance and guard against over-securing the network while avoiding excessive dilution. The podcast emphasizes the need for community consensus and thorough debate to determine the optimal staking rate that aligns with Ethereum's long-term objectives.
The Ethereum community is currently in debate, are we going to change the monetary policy of ETH? Why should we? Who gets to decide? What should it be?
Today's episode of Bankless Takes is a masterclass on monetary policy for Ethereum and beyond. ------ ➡️ Apply to the Cartesi Grants Program here: https://bankless.cc/Cartesi ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium