Ethereum

thegentleway

aaj123 said:

Frequentlyhere said:

aaj123 said:

You are also wrong that all of the yield on eth is from other holders. Infact most of it comes from new issuance. It's the burn that occurs due to fees paid by anyone transacting and this is a benefit to all and not just stakers. The fact that burn is higher than new issuance is not inevitable part of the design but rather because usage of eth has become high enough to generate so much burn. 

Yeah this still very much sounds like one ETH person passing "yield" to another. Just because it's a new person doesn't make it not someone also doing stuff in the ETH system.

I am inclined to believe most crypto skeptics do not do an iota of research before replying with an answer that suits their preconceived notions. 

I freely admit that I don't know huge amounts about Ethereum, which is why I've been asking you basic questions about it. What I do know about though is financial products and economics.

So whilst I don't know the ins and outs of Rocketpool as @theGentleway seems to, what I do appreciate is that you don't get yield without risk. So if I hear answers along the line of "high returns, no risk", then there's BS involved somewhere.

Above said, we're at least not in the territory here of Celsius and the like (I had several discussions with people angrily insisting their 15% yield was zero risk - lol).

In this case, returns are at least coming from somewhere. As I said before however, the question is utility:

They pay fees because they see value in transacting with eth to gain access to buy nfts, defi products,  dexes, etc

So, fees to trade jpegs, fees to trade crypto. OK, yes there is some demand here, but it is yet more of the type " we just need more and more people to keep on joining....."  which when the products are NFT's and the promise of more crypto trading, I just don't feel convinced there's going to be widespread demand for it.  Just my view though, and there are lots of things people part money with that I can't fathom.

I have never claimed staking in any form is zero risk. Only that the risk is very different from the typical counterparty risk in traditional lending. The whole basis of staking is to put up your money as collateral and accept responsibilities. That obviously means your money is at a type of risk that you have to work to manage. 

You didn’t explicitly claim it but it was implied when you did a sales pitch for ETH. I’m glad we are clear there’s plenty of risk and can live with you not calling some of them counterparty risks.

aaj123

thegentleway said:

aaj123 said:

Frequentlyhere said:

aaj123 said:

You are also wrong that all of the yield on eth is from other holders. Infact most of it comes from new issuance. It's the burn that occurs due to fees paid by anyone transacting and this is a benefit to all and not just stakers. The fact that burn is higher than new issuance is not inevitable part of the design but rather because usage of eth has become high enough to generate so much burn. 

Yeah this still very much sounds like one ETH person passing "yield" to another. Just because it's a new person doesn't make it not someone also doing stuff in the ETH system.

I am inclined to believe most crypto skeptics do not do an iota of research before replying with an answer that suits their preconceived notions. 

I freely admit that I don't know huge amounts about Ethereum, which is why I've been asking you basic questions about it. What I do know about though is financial products and economics.

So whilst I don't know the ins and outs of Rocketpool as @theGentleway seems to, what I do appreciate is that you don't get yield without risk. So if I hear answers along the line of "high returns, no risk", then there's BS involved somewhere.

Above said, we're at least not in the territory here of Celsius and the like (I had several discussions with people angrily insisting their 15% yield was zero risk - lol).

In this case, returns are at least coming from somewhere. As I said before however, the question is utility:

They pay fees because they see value in transacting with eth to gain access to buy nfts, defi products,  dexes, etc

So, fees to trade jpegs, fees to trade crypto. OK, yes there is some demand here, but it is yet more of the type " we just need more and more people to keep on joining....."  which when the products are NFT's and the promise of more crypto trading, I just don't feel convinced there's going to be widespread demand for it.  Just my view though, and there are lots of things people part money with that I can't fathom.

I have never claimed staking in any form is zero risk. Only that the risk is very different from the typical counterparty risk in traditional lending. The whole basis of staking is to put up your money as collateral and accept responsibilities. That obviously means your money is at a type of risk that you have to work to manage. 

You didn’t explicitly claim it but it was implied when you did a sales pitch for ETH. I’m glad we are clear there’s plenty of risk and can live with you not calling some of them counterparty risks.

I appreciate that for once, someone on this forum has engaged in an informed conversation. Since you have raised interesting points, I will make a separate reply on this and in a manner that makes it understandable to others on this forum. 

aaj123

thegentleway said:

aaj123 said:

Frequentlyhere said:

aaj123 said:

You are also wrong that all of the yield on eth is from other holders. Infact most of it comes from new issuance. It's the burn that occurs due to fees paid by anyone transacting and this is a benefit to all and not just stakers. The fact that burn is higher than new issuance is not inevitable part of the design but rather because usage of eth has become high enough to generate so much burn. 

Yeah this still very much sounds like one ETH person passing "yield" to another. Just because it's a new person doesn't make it not someone also doing stuff in the ETH system.

I am inclined to believe most crypto skeptics do not do an iota of research before replying with an answer that suits their preconceived notions. 

I freely admit that I don't know huge amounts about Ethereum, which is why I've been asking you basic questions about it. What I do know about though is financial products and economics.

So whilst I don't know the ins and outs of Rocketpool as @theGentleway seems to, what I do appreciate is that you don't get yield without risk. So if I hear answers along the line of "high returns, no risk", then there's BS involved somewhere.

Above said, we're at least not in the territory here of Celsius and the like (I had several discussions with people angrily insisting their 15% yield was zero risk - lol).

In this case, returns are at least coming from somewhere. As I said before however, the question is utility:

They pay fees because they see value in transacting with eth to gain access to buy nfts, defi products,  dexes, etc

So, fees to trade jpegs, fees to trade crypto. OK, yes there is some demand here, but it is yet more of the type " we just need more and more people to keep on joining....."  which when the products are NFT's and the promise of more crypto trading, I just don't feel convinced there's going to be widespread demand for it.  Just my view though, and there are lots of things people part money with that I can't fathom.

I have never claimed staking in any form is zero risk. Only that the risk is very different from the typical counterparty risk in traditional lending. The whole basis of staking is to put up your money as collateral and accept responsibilities. That obviously means your money is at a type of risk that you have to work to manage. 

You didn’t explicitly claim it but it was implied when you did a sales pitch for ETH. I’m glad we are clear there’s plenty of risk and can live with you not calling some of them counterparty risks.

So on the matter of Rocketpool:
1. You do NOT handover withdrawal keys to any third party but rather only the ability to validate using your ETH i.e to stake your ETH. That means it is not possible for your coins deposited on rocketpool to be stolen. The smartcontract issues back rETH to any address that deposits ETH to the pool
2. The smartcontract where you send your ETH will release ETH back to any address that sends it rETH. Hence rETH is fungible and gives you liquidity even while your ETH is staked (one advantage over solo staking)
3. The node operators who actually run the hardware and stake using ETH deposited on the pool have to necessarily contribute their own ETH plus additional RPL collateral. Thus they have skin in the game due to their own ETH (and not to mention the fees they earn from the others who just contribute ETH) and collateral that first takes the hit of any penalities / slashing due to suboptimal staking
4. Holders of RPL have a say in setting minipool fees on new pools only and cannot change the fees on existing minipools.

Overall, Rocketpool is about as decentralised in its operation as staking could get and while some risks always remain (for example smart contract risk), it is a far cry from the risk involved in lending to a counterparty and being at risk of default. On that basis, I say the 5% or so yield one gets on this staking model is pretty attractive not least because it is accompanying the upside exposure on ETH itself. Ofcourse if you don't believe in the first place that ETH upside is far more likely than downside then no point examining this staking yield.

aaj123

Meanwhile there is a lot more happening on ETH even post the Shapella upgrade. Scalability is of key importance given that the ETH thesis is about usage (and hence burn) induced scarcity. How then to keep usage incentivised and not have it taper off due to high blockchain fees?

https://www.bankless.com/whats-next-for-ethereum-danksharding-dvt-pbs-shapella

aaj123

ETH chugging along beautifully last couple of weeks with high gas usage and a consequent supply burn that is effectively giving a real yield even to those simply holding (and not even staking).

https://ultrasound.money/

As for stakers, the yield has been close to 6% due to the tips paid over and above gas fees and the MEV that has been on the table due to heavy DEX usage.