Endgame Staking Economics: A Case for Targeting

Adietrichs and Caspar Schwa argue that Ethereum's current issuance policy lets all ETH eventually be staked, which over-secures the protocol and creates negative externalities, and that endgame staking economics should instead target a staking ratio range, such as around 1/4 of all ETH. They note that about 30M ETH, or 1/4 of all ETH, is staked today, and that most new stake will likely come through liquid staking tokens (LSTs), which gain money-ness with adoption and time. The authors say LSTs create winner-takes-most dynamics from liquidity network effects, increase competitive pressure on solo staking, and expose users to inherited counterparty risk. They also describe MEV yield of about 300,000 ETH annually as a constant share of staking incentives.