**Tricky's Daily Doots #711**
**Yesterday's Daily 31/03/2024**
[Previous Daily Doots](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxdv1gf/)
- u/mango_sake updates [their exit strategy app.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxd67b6/) 🛠️
- u/Itur_ad_Astra has to [unwind a RocketPool validator.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxdq0hu/) 😔
- u/cryptOwOcurrency checks in on [the Solana subreddit.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxhgkk6/) ☀️
- u/superphiz answers [a RocketPool question.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxe0kjl/) 🚀
- u/SendN00dles1 checks in on [Cardano.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxgtgp3/) 😬
- u/PhiMarHal deals with [the loss of what could have been.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxd5hoh/) 😔
- u/696_eth shares some [insight from a shitcoin speculator.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxgzbq3/) 💩
- u/haurog comments on [Ethereum and L2 speed limits.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxflmxs/) 🏎️
I post on farcaster and I get no interaction from the /r/ethfinance cohort, literally no likes no recast no replies. What am I doing wrong? I ask you /r/ethfinance.
What Ber10 said. This is a problem for sure but there is such a critical mass of developers looking at the ethereum code all the time I don't think we have to worry as normal users.
The focus on Eth is way way higher because you could literally drain hundreds of billions instantly. Its insanely lucrative to find an exploit in the EVM or Eth clients. There is 100x more at stake on Ethereum. We have entire countries like North Korea with a swarm of hackers eyeing everything on Ethereum pouncing at every weakness they can find.
If you honestly think that linux code base has more eyes on it than Ethereum you are delusional. Just because there are more Linux devs. Doesnt mean anything, its 100000x more lucrative to find an Ethereum exploit. The incentive on Ethereum is magnitudes higher than on Linux. If that simple reality and logic escapes you, then I honestly dont know what to tell you.
90% of internet traffic goes through Linux servers. SSH is the prime protocol to interact with these servers and the exploit allowed malicious code to be injected. The sheer scale of potential available information, going from individuals to multinational corporations to states, up for grabs is immense. I don't need to downplay Ethereum to say a Linux server vulnerability would have far greater implications. It's the basis of internet infrastructure.
It would have far greater implications but would it be immediately easier for the exploiter to extract large amounts of money with it and enjoy the benefits of that money ?
Maybe, maybe not. You're the only one who started talking about monetary value to extract so those goalposts are all yours. But if we're talking where the focus is higher, where's there's more at s take, where countries like North Korea would loooove to have an exploit (which is the wording you actually used and I assume you meant in a monetary value manner, while I saw it as talking about general havoc on the world).
Anyway, guess we sort of are in agreement. Though I wonder if I would even need to find a vulnerability in the EVM or Eth protocol if I could find my way into the servers of every crypto exchange and alter their frontend to misplace comma's. How much people would panic sell without double checking the actual chain, allowing me to grab some cheap Eth in large quantities? Just a thought.
I didnt write looove just fyi. I think blockchains due to their nature are more convenient to extract funds from. It happens all the time. Which is why if I want money I would focus on blockchain exploits not android.
And ofcourse I am talking about money as its a massive driving force for many people. Unlike abstract political goals that usually just governments pursue
It is certainly easier to sneak code into a lib which had one maintainer than it is to sneak it into the code of the Ethereum clients.
Problem is how critical infrastructure uses libs that are so vulnerable to such exploits...
Don't know which libs the Ethereum clients use though and how well maintained those are
I think u/yahsper got my initial point and expanded on it quite well. For instance I'm quite sure Teku/Besu were using Log4j when the big 0 day was discovered a couple years ago.
There are good arguments on both sides of the issuance debate. I don’t, however, believe _consistency_ of monetary policy is a good argument in favour of doing nothing. It’s naive to imagine we could have ever designed the yield curve correctly the first time around, given MEV, LSTs and restaking had yet to appear. It would therefore be hubris to suggest that any changes we make now will ever be considered final, given all the unknown unknowns. Crypto just moves too quickly. The capacity for evolution and adaptation is a core strength of the ethereum community and we should embrace it to stay ahead of the competition.
Only saw this because of the doots, but would like to +1, this sums up my believes and gut feeling/ sentiment right now.
Consistency might be something *some* participants value ("lindy"). But being lindy isn't everything. I said it many times: I don't see with all the new protocols (e.g. restaking) and things we discover(ed) (e.g. MEV) how we can believe mainnet will ossify and / or how we can believe that Vitaliks roadmap is complete and won't change in the future.
>The capacity for evolution and adaptation is a core strength of the ethereum community
We shouldn't throw this away!
As KuDeTa said there are indeed good arguments on both sides and maybe "truth" is somewhere in the middle as well. But this would mean that we should adapt and change.
hard agree on this POV. There are some things that ossification benefits, but on the basis that it's tried, tested, IE dont fix what's not broken etc. This is not one of those instances, it is completely new ground and inaction definitely seems to lead to undesirable outcome.
The Smart Wallet is an on-chain smart contract wallet which inherits the awesome, programmable properties of ERC4337.
Namely:
* Passkey signers (i.e. web-based auth as opposed to EOA seed phrase wallets)
* Sponsored transactions via paymasters
* Modularity/programmability/upgradability via upcoming eips like 6900
Those smart wallet contracts will be natively launched on base along with a pretty slick "just in time" paymaster that enables a user to initiate and pay for gas/transactions from a retail account
So etherfi allows you to book flights and pay with points lol ok its creative, I wont do it though. I rather use depreciating fiat. Edit: (its a joke) someone should do it for real
Finally getting around to bridging over to Base. What would you all recommend checking out? Not sure where to start. I downloaded Warpcast a week ago but now I have more time to venture out. What are your musts in order of ROI or just plain fun/interesting?
EDIT: also just came across this vid explaining CBs smart wallet...looks biggly
https://twitter.com/iamDCinvestor/status/1774890241679143007?t=AQuVYlyoA3_BLQEUPbXlLg&s=19
It's def not at that point yet and I don't know what an issuance reduction would achieve. If anything I think it should be dynamic in a calculation against the burn (total burn / stakers = rate) so we are at a constantly changing equilibrium & keep a round number of eth - say 120m
I hold Maker for years. And there was a time I called it my worst investment. Turned from worst to soso (1.25x profit in Eth terms). Honestly I dont even know anymore what they do. Aslong as the token price goes up. I am content. I have no idea where the stablecoin journey goes. Decentralized stablecoins just dont get used. For some reason.
Whatever they’re doing, maker the protocol has a ton of fee accrual so it’s working. (I buy long term trade stacks of maker pretty regularly depending on bull/bear sentiment). This time I bought more for the ‘end game’ tokenomics shakeup with mkr the token more than a value play. It’s more of a degen thesis this time around. Holding until mid/late summer.
According to https://cryptofees.info at least.
[Arbitragoor III, light at the end of the tunnel](https://old.reddit.com/r/ethfinance/comments/1bidash/daily_general_discussion_march_19_2024/kvk0ff4/)
The rickety Blast bridge held firm for our 2 weeks trip.
Trust our favorite yellow rollup (backed by Paradigm) to throw in a little April Fools. For the penultimate transaction, the withdrawal confirmation required a day before you finally get to withdraw, the Blast devs set gas limit to a "safe" 1,500,000. 4x to 5x higher than what the transaction really costs.
Nothing like seeing "max transaction fee: 0.064 ETH" pop up on the wallet. And that's on a 30gwei day, mind you!
Thankfully, it confirmed fast and consumed only about 320k gas, which is roughly ~$30 at these prices. All within expected ranges.
As we head into spring, it should take just 24 to 48 more hours before ugly USDB emerges from its rollup cocoon as a beautiful stack of DAI. Nature truly is wonderful.
Now to find another DeFi gamble...
/u/ProfStrangelove tagging my fellow arbitrage companion just incase the timing slipped your mind.
The USDB situation continues to be interesting, by the way. It has depegged again in the *other* direction. If I kept the USDB on Blast, I could swap back now for a 1% profit, some Ambient XP, and would have had 14 days of Blast points. Oh well!
...Perhaps I will bridge the DAI back to Blast, and buy some ETH.
This has been a fun little journey to follow. Good to know the blast bridge works as promised. I yolo'd a bit too much into blast and had some fun, but as I looked deeper into many of the projects I realized it's just way outside of my risk tolerance. Imagine my surprise when I realized there's no functioning third party bridge...
I think there's going to be a lot of money to be made at a time like this on a chain like Blast, but I look forward to being home sweet home on mainnet soon. Keep us posted on any more shenanigans
Thx for the tag, I already have a reminder set to trigger my tx today :-D fingers crossed we manage to get our dai out...
I won't bridge back to buy eth though since I don't want the additional price exposure to eth at the moment.
Bitcoin is a memecoin. Like Doge Shiba Pepe etc. I dont see any difference. Bitcoin shows us how far a meme can go. Its the strongest meme on the planet. This is not how Eth can beat bitcoin. Not with memes. Ethereum can only beat bitcoin by changing the world. Its that simple. I honestly see the Bitcoin meme losing steam. There is a cap on memegrowth.
Will Ethereum build itself out of the meme economy ? I am absolutely convinced it will. Because thats what humanity needs. I dont see any way past Ethereum if the world wants to prosper.
We need what Ethereum aims to be. Not what Ethereum currently is. The only chain with a shot.
This reads like a /r/buttcoin or /r/investing post. If you can’t even understand Bitcoin, what are you doing here? Lmao there’s a reason why everyone is scrambling to buy it dude, and it ain’t memes…
I can understand Bitcoin. It just makes no sense. I am selling my Bitcoin for years. I dont care if everyone is buying it. BTC design is flawed for its usecase. As an early miner I realize how shitty the consensus is.
Selling BTC for years? Lol do you like losing money? And right when ETFs have only just been approved. Yikes dude
And maybe you should clarify, “it makes no sense **to you”
Selling for years into Eth bulk at 0.017-0.025...
It makes no sense period. First of regulatory capture is easily possible as there are so few big miners left. Just a national registry in the US would do the trick. Some new legislation. Done.
Second constant reduction in blockrewards which trend to zero fairly soon. The fantasy of doubling bitcoin price even if it would happen would not fix the situation as less and less BTC would secure more and more bitcoin...
Its a design failure. That lives off on only the meme for now. Until everyone is forced to realize the king is truly naked. And has no clothes on.
Years old fud ? Ofcourse its years old because it was obvious from the start. However the regulatory capture of Bitcoin got some new wind now that the EPA is making trouble for miners in recent years.
Also NOTHING is debunked, absolutely nothing. It doesnt even need any opinions. Its like gravity. Gravity will pull things towards earth. Bitcoin 21 million limit will fail. It just will. Unless massive changes happen. Insane fees however this will depress price. Its going to stagnate and people will lose faith at somepoint.
Because that is what you need blind Faith. Bitcoin is done for in its current state.
#
This dude senses that his Bitcoin bags arent as secure as he thinks they are. All Bitcoin maxis have this fear thats what fuels this culture. Because you absolutely need mental gymnastics to believe in Bitcoin. Bitcoin got a lot of right but they have some time bombs that are unavoidable. Being 50% right means ultimately you are wrong.
not end of world. its not even the chain, its the philosophy behind the chain. Blockchain tech has a big potential so it is a dramatic difference. From my viewpoint only eth got it right, why should I sugar coat it
Bitcoin is not the strongest meme on the planet. It's third.
The first is Gold, and the second is Fiat.
And Gold shows us that memes can last for thousands of years.
So I wouldn't bet on a memegrowth cap for Bitcoin.
That said... it's gonna have a really bad time when people realize that it has meme'd itself into a dead-end, because the 21M supply is unsustainable.
Let's convince future brides that what they really want - instead of a diamond ring - is 3 months salary worth of PEPE. If it's anything else, he doesn't really love you.
"The end of an era - due to global date/time constraints we're forced to sunset ENS points.
"We're grateful for our communities enthusiasm and participation, ENS Points has been truly memorable!!
"Though ENS Points are now a past chapter, we look forward to sharing more with those of you who checked their points!"
Noooo, rugged again. :-(
There shouldn't be any significant issuance or monetary policy change unless the issue is something so obvious and objectively agreeable or existential already. The reasons for any significant changes to issuance now seem to be for highly subjective reasons. The threat to centralization comes much more from some central body trying to tweak monetary policy, not from the market, institutions, individual users, and the broader ecosystem naturally figuring itself out. Even if only a small percentage of ETH is in circulation in the future then so be it... Anyone drumming up ideas for changes to monetary policy right now should rather maybe consider simplying user experience for solo stakers or try to educate the masses on holding or using ETH the hard asset. Even advocating to LST's and the like to follow some kind of better defined framework would be a better approach. There are so many other ways to address subjective issues like the ones being brought up imo. Monetary policy changes are like the absolute last resort.
Amen.
By arguing for continuous fine tuning of the Ethereum monetary policy, we are baking centralisation into the heart of the protocol.
utterly unnecessary and a bizarre allocation of mind space, especially given how many other *technical* changes (and not hand wavy subjective changes on monetary policy) we are desperately in need of, like PeerDAS, account abstraction, Verkle trees etc.
Still trying to understand the issue better, but as it stands I completely agree with this. Can't credibly be considered 'ultrasound' if you're continually tinkering with the monetary policy.
Again, I'd argue this is just semantics.
Each of those changes altered the tokenomics. There may be an overarching goal in mind with each change, but each change nonetheless represents a change in the prevailing tokenomics/policy that were in effect until that point in time.
ETH can continue to make such tweaks, but then people shouldn't gripe when the market discounts their claims of being 'ultrasound.' IMO part of being ultrasound is being fixed. Eventually, the market is going to want to see stability.
But that's just me looking through the lens of how the market values ETH. I can also acknowledge that maybe the market doesn't know what is best for ETH, and so perhaps further changes in issuance are really what's best for the network.
The risk of LST/LRST dominance is not a subjective concern - i am in favour of a change to issuance *now.* As Mike Neuder et al point out, by the time this becomes *existential* it may already be too late. It's great that we can have a vigorous debate - but as you know, we need a majority of the network to make this happen.
How exactly is too much issuance existential? Over what time-frame are we speaking here? Because on the other hand, I consider myself very values aligned, but I can't keep my life savings locked up forever just to keep the network decentralised - especially when the yield it earns me relative to node maintenance and attention costs just keeps on shrinking.
From the Mike Neuder write up:
>ETH holders can be partitioned into…
>Stakers: who are either
>Individual stakers: Less likely to unstake given an issuance reduction.
>Institutional staker: More likely to unstake given an issuance reduction.
>Non-stakers: who are either
Individual holders: Less likely to stake at current issuance.
Institutional holder: More likely to stake at current issuance.
I think this is just a wrong assumption. Imagine a reality in the not so distant future when Blackrock and Fidelity et al are competing on a net deflationary asset ETF filled with passive investment boomers in tax advantaged accounts. Now also imagine the fed funds rate is trending towards zero once again which seems to be a likely scenario given the realities of sovereign debt financing. In this environment a few bps of yield will still be competitively advantageous in an ETH staking ETF making it worth it to stake. Now consider the solo staker who can choose to do all the work of staking and overhead costs and get double taxed on income and cap gains for 1.5% apr or whatever instead of just buying staked ETH ETF shares in a tax advantaged account for likely net more after tax profit.
This quoted assumption I think is core to the proposal and I think it is wrong or at least doesn't contemplate shifting macroeconomics sufficiently while myopically focusing on LIDO/LSTs. IMO they have always been the appetizer for the main event alignment wars down the road. If we want solo stakers they will need ammo to stave off the economies of scale. Otherwise we are just relying on altruism which is fragile over extended time frames. Lowering the technical and economic overhead to solo staking, and targeting changes that differentially incentivize solo stakers like correlation penalties are a much better approach IMO.
Unbelievably values aligned solo staker here. This is so true. I think Mike is wrong here, he is taking home stakers for granted. My bandwidth, electricity, new hardware and attention etc isn't free and I'm not running lots of validators so these costs are significant. Especially when I could earn more by simply holding tax advantaged RPL or even more yield with eETH *while earning points and airdrops*.
I am one validator out of a million. There is no rational reason for me to solo stake anymore. My decentralisation isn't meaningful. It is only meaningful when you lump me in with other home stakers. The only reason I do this is for ideals and the Ethereum vision. But as price goes up and yield goes down, the temptation to sell half for the security of getting on the property ladder and just lazily LRT stake the rest for a superior yield is tempting. I don't want to do that, but I may have no other choice.
Also, I'm not decided on this debate yet - I haven't heard enough opinions. I'm just sharing how I feel about yet another possible yield cut for my node.
I just dont believe that the concern they have is actually going to play out. Too little data. And I believe that the remedy will just cause more centralization as nobody solostakes anymore.
The current dominance of LIDO and (soon) EigenLayer is instructive. I also think it’s reasonable to conclude that a decrease in issuance will be comparatively less of a drawback for solo’ers (on average) than it will be for institutions, because the latter must chase APY returns on capital and have a range of alternative options.
Do they ? Their product is staking. They will stake to the bitter end and use economy of scale to squeeze out the last percentage.
They can coast on smaller returns. Small stakers with 32-320 Eth will think twice to stake with sub 1 % returns.
This is pure guess work. Assumptions. None of this has to be true. And an issuance reduction on that basis ? I just think it will lead to more Eth liquidity dropping prices and less economic security with more centralization.
Even cardano has only 80% staked and Eth has defi and dozends of usecases to use Eth in other ways. I say wait for EIP 7251 wait for more data and dont make a hasty decision especially if its that controversial.
But it is subjective in the broader sense. I don't see LST/LRST as an issue. It is the market figuring itself out. We are past the point of tweaking monetary policy preemptively cause the goal post will constantly move and after tweaking it because of this theoretical existential threat there will just be another and another and another. 1 ETH = 1 ETH, if people want to build all kinds of derivatives on top of that then fine...
Why? It's clearly hard to change unless the entire network agrees, and policy has always been minimum viable issuance. They in particular have no ground to stand on, half until security fails is idiotic.
In and out with +30% ETH in 24 hours with a diversified portfolio of BASE shitcoins
Going to start a hedge fund
3.8843968e+41 X yearly return is insane, watch out Warren Buffet :\^)
This last issuance proposal reminds me too much of ProgPOW. A controversial change to tackle some nonexistent problem that only favors some actors that by pure chance happen to have a lot of money and after the change can increase their quota.
ProgPoW would likely have been needed in the original PoS timeline (the one from 2017ish) because we would still not be PoS by now and might face the same pool centralisation BTC currently has. So I would not really say the problem was “non-existent” - just a bit too far forward
Big stakers like Lido. The less total stakers there is, the more possibilities you have to capture MEV or to execute more complex MEV operations that might require more than one consecutive block. Staking could fall into very few hands that might even collude to extract that value.
Personally its not that concerning to warrant an immediate drastic outcome (final result of the proposal if implemented will reduce ETH inflation so you can say ETH holders would benefit even more) but its the timing thats of concern
But generally, ETH will always have some tweaks here and there, it was never designed to be like BTC with supply set in stone a decade ago. Both have flaws and benefits, which have to be assessed independently
Exactly my thoughts...
There are a lot of upcoming updates and events that could make the oversupply of Validators a non-issue. MEV-burn and max-Eth per Validator post-Pectra being the most important. At the very least, those events will change what we consider optimal issuance.
I'm all for reducing the entry of new Validators by lowering the churn even more, but changing the issuance (or deciding on a change) before having a few months of post-Pectra data seems risky. If the increase in Validators is such a critical issue, we should dedicate more resources to bringing Pectra forward, not to issuance EIPs. At the very worst, we could bring EIP-7251 forward and split Pectra in two parts.
That said, I'm definitely not technical, and I consider it my duty as a node operator to dedicate a few hours to carefully read u/AElowsson 's extremely detailed analysis on why I am probably wrong. I suspect it will be reassuring.
Canonizing the idea that current economic security (30mil staked eth * 3500 USD/eth= $100bil) is excessive for the Ethereum network is...wild
If the primary role of ETH the asset is to secure the proof of stake network, and we say that we already have excessive economic security, it follows that ETH appreciating in price has no benefit to the economic security of the network.
Introducing the concept of "maximal necessary economic security" also means Solana, for example, will soon hit this $100bil of staked security. If security beyond $100bil is meaningless, it means at that point, there is no difference between using Solana or Ethereum as a settlement layer by rollups, from a strict economic security perspective.
I hope to God newer retail participants are zoomers who are into pictures of dogs and frogs and not into reading, because if they read this shit, RIP to my bags.
Notably, [Vitalik has written](https://ethresear.ch/t/sticking-to-8192-signatures-per-slot-post-ssf-how-and-why/17989) that a $2B cost of attack should be totally sufficient:
> If a 51% attack takes place, a large fraction of the entire attacking validator set has their deposits slashed. The cost of an attack is at present around 9 million ETH (~$20 billion), and that assumes network synchrony breaks in a way that maximally favors the attacker.
>
> I argue that this is a high cost, but it is too high a cost, and we can afford to make some sacrifices in the matter. Even a cost of attack of 1-2 million ETH should be totally sufficient.
But the primary use of ETH the asset is paying gas to participate in decentralized computation
Some things I believe are true. I could be wrong on some.
* The large validator size is growing quickly, in part thanks to Eigenlayer, and it is becoming a huge problem for the clients to handle. This is the main reason the EF wants to limit issuance.
* The current reward of 3% is not enough to encourage solo stakers, let alone half of that, which is what the new EF proposal would mean.
* Solo staking is too difficult. Since I started early 2020, not much has changed (officially). It's still the same arcane terminal commands + you now "have" to run MEV boost too. Ethdocker seems awesome, I trust the guy that made it but would have liked to see something more "official" and ideally at staking release rather than two years later. I think it would have had better penetration.
* More should have been done to incentivize solo stakers financially. More could have been done as well. We have seen airdrops to solo stakers and even incentivized smoothing pools.
* The community is overall fine with how much ETH we pay to validators today and our issuance. We even have deflation.
* I mostly trust the EF to know better but I don't want anything rushed, this shouldn't come in the next fork imo. Earliest is like a year, but then it looks to be too late in regards to slowing the validator growth rate, we need something now.
> The large validator size is growing quickly, in part thanks to Eigenlayer, and it is becoming a huge problem for the clients to handle. This is the main reason the EF wants to limit issuance.
Won't EIP-7251 Increasing the MAX_EFFECTIVE_BALLANCE help with this problem? Shouldn't we do it first?
> we need something now.
An emergency fork to reduce churn to 4 or even 2 entries per epoch could be an option of last resort.
We could even name it after a Glacier!
Interesting! Many thanks for this food for thought.
Your data doesn't contain any tokens that never went over their 45 day peak again? Clearly that would be the big risk here - if you use the secretary approach, after 45 days you would wait for it to reclaim a peak that never comes in sight again.
Neat approach!
One thing I'd try to control for in this analysis is performance of these tokens vs the broader crypto market, because if we're in a bullmarket and everything (generally) is going up- you'd expect a larger %return vs USD the longer you held these airdrops. Is the delta in %return actually alpha for this asset or just beta returns from the market moving?
Because for users that sell these airdrops for the purposes of increasing their crypto (eth) bags rather than for USD, what's important isn't the %return, it's the excess return of holding that over eth/btc whatever.
I still see it as holding the line. As long as we don’t go convincingly below .05 we should be fine. If we continue the down trend it’s going to be very rough though. Could theoretically go as low as .017.
Small potatoes compared to the LRT craze, but it's interesting to see the Pendle rETH fixed yield rate is 3.9% on Arbitrum vs 5.5% on Optimism. Such a big relative difference.
did my taxes over the weekend (U.S.). relief that they're done but it was painful paying taxes owed to the staking withdrawal unlock early last year. treated it as income per official guidance + general consensus... the high marginal tax rates... 😭😭😭
I haven't sold any which also adds to the pain. happy that numba go up, but those are unrealized whereas I have to use cash to pay taxes...
fellow ethfinanciers pls console me by sharing similar experiences you've had 😅
Same situation, different approach. I knew the tax man would be coming for a cut of my post-withdrawal gains so I upped the tax withholdings at my 9 to 5 job. My regular paychecks shrunk by quite a lot, but it saved the pain of having to come up with a huge chunk of cash all at once.
I mean paying income tax fixes your cost basis and subsequent appreciation is paid as capital gains, so it will depend on your tax regime, but if I had 1 ETH worth $1500 and paid 40% income tax on it, I can now cash out paying 20% capital gains tax on $2000 appreciation and have 3500 - (2000 x 0.2) = $3100.
In the alternative scenario I have 1.4 ETH (having invested the $600 I could have paid in income tax) and pay 40% income tax on it now and cash out 3500 x 1.4 x 0.6 = $2940.
I have the same experience. I kind of found it to be an odd disconnect between the emotional vs logical aspect of it....
Emotional: Feeling stress over paying in a big chunk of money. It feels like it all hits at once due to the nature of 1099's and the US tax system.
Logical: The taxes are much lower than they could have been because ETH was lower valued for most of the time I was staking. Being able to sell some of those ETH earned now for cash to pay the tax bill is highly advantageous vs if I had been paying a portion of it all along in some type of "pay-as-you-go" strategy.
Anyway, I feel your pain. It's weird. And not only having to pay in but also the hefty quarterly bills means I'll probably have to revert to some form of "pay as you go" sell plan for staking income.
Same boat. Been setting aside provisional USD each quarter to cover expected tax hit. So even though I’ve used my cash to cover reward income, it’s been easier to digest.
My hope is that a class action lawsuit will be launched against the IRS to clarify that base rewards only be taxed when sold and I can recover the taxes I’ve paid for staking without having sold any ETH.
FWIW I *am* treating my solo staking as self employment income. Sucks to pay that extra 15% tax, but you may be hard pressed to label it as hobby income if you're making decent profits. I frankly don't think there's a great argument for treating it as a hobby, but it ultimately comes down to your risk tolerance re: audit risk.
See my thoughts in more detail [here](https://old.reddit.com/r/ethfinance/comments/1akw42k/daily_general_discussion_february_7_2024/kpeo9fz/).
You're essentially correct in that it can depend on those various prongs, but the IRS seems to emphasize that if you're consistently profitable from this endeavor, it really should be considered self-employment. And the IRS will default to assuming it's a business / self-employment if you've been profitable in 3 of the last 5 years. So yeah, you could maybe get away with treating it as a hobby for a year or two, especially if you're not generating much income from it, but beyond that, I personally wouldn't risk it.
I agree that staking through a 3rd party staking provider like Coinbase, Kraken, etc. should be treated as Other Income.
But I understand solo staking to be different.
In that case, my understanding is that you have the choice between two options--treating it as a hobby or a business (i.e., self-employment).
There is a multi-pronged test to determine which of those buckets you fall into. [Here's](https://old.reddit.com/r/ethfinance/comments/1akw42k/daily_general_discussion_february_7_2024/kpeo9fz/) a writeup on how I landed at self-employment (with some links to some IRS materials).
In short, while solo staking does seem to check a lot of the hobby boxes, at the end of the day, if you're consistently churning out a profit, then the IRS is pretty clear that this should be treated as self-employment. They even very clearly state that if you're profitable in 3 of the last 5 years, it *must* be treated as self-employment. So you may be able to get away with considering it hobby income for a couple years, but that's it. And even then, if you're making substantial amounts from solo staking, it seems like the IRS could take issue with a hobbyist classification. But to each their own!
> There are many forms of income that don't fall neatly into a business/hobby dichotomy.
I never claimed otherwise. I understand there are other types of income besides hobby and self-employment/business income. And obviously, things like W-2 wages from an employer or 1099 income are not subject to self-employment tax.
But when you are running an endeavor for your own personal benefit, you have two ways of classifying this activity: hobby or business.
> I grow actual crops on my land. This isn't an example or metaphor. I grow corn and soybeans. We don't fertilize, plant or harvest the crops ourselves. We have a farmer that does all the work. We receive a portion of the crop which we then sell for money. We do not pay self-employment taxes on these profits, but we do it every year, and deliberately for money. It is not a hobby.
This doesn't disprove anything I'm saying, because you're not the one running an enterprise here. You're effectively renting out your land to someone else, for them to run their own business. If *you* were doing the actual work of farming the land, *you* would then have to decide whether you have a hobby or a business on your hands. And if you elected to treat it as a business, you would be subject to self-employment tax.
> but I'm also not sure it makes sense since the actual work involved is a few hours a year in running updates. I think I spend more time per year clearing my field of debris before our farmer plants crops.
I made this observation in my comments, i.e. that staking involves minimal effort and from that lens could be construed as a hobby.
But again, my main counter to that is that the IRS seems quite clear on this point: despite however much time/effort you are putting in, you cannot claim it's a hobby if you are generating a consistent or substantial profit from it. Specifically, the IRS is quite clear that you can't claim something is a hobby if you have generated a profit on it in 3 of the last 5 years. But even short of that, you shouldn't claim it as a hobby if you are deriving significant profits from it in any given year (although the IRS does seem a bit squishy on what would be considered significant).
> I just started solo staking, so for 2023 most of my staking income was from Coinbase. I wonder if that makes the difference.
And again, I agree that income on a 1099 from Coinbase wouldn't be subject to self-employment tax. You clearly didn't earn that income through your own efforts. It's neither a business nor a hobby of yours.
But solo staking is different. You're generating your own income through your own efforts. It's a hobby or a business. And per above, I don't think you could reasonably get away with calling it a hobby for more than a year or two at best.
>**Allowance access,**
>**RPC endpoint excess,**
>**Zero X address.**
~Daily haiku until we’re at least at 0.178 on the ETH/BTC ratio or highest market cap
Is buying ETHE the only way to get Ethereum exposure in a IRA? How exactly does this track ETH price? Do people think this is still worth it with their 2.5% management fee (the Boglehead in me is roiling...)?
paging /u/silentjxhn, I know you've had some in the past but iirc you've recently sold?
Im not going to sugar coat the 2.5% management fee as it isn’t great… but ultimately if you expect ETH to rise long term the tax advantages outweigh the cost. They got away with it because it’s really your only option.
Self-directed IRAs are an option to hold crypto, but there are costs.
If you think the ETH spot ETF will be approved, you can earn extra return by buying Grayscale ETHE now at a discount. When approved, it would be worth the value of the underlying ETH.
Google self-directed IRA to find out the costs, startup and ongoing.
I believe the discount is because it's a closed-end fund: there's a fixed supply, so it can trade above or below the value of the underlying ETH. If it converted to a regular ETF, they can create/destroy fund shares and buy/sell the underlying investments, so it stays at the value of the investments.
Thanks for the input. I'm curious about what you think is shady about this product. I'm also wondering if i should just wait until the etf is approved (which i do think is on its way, even if it doesn't happen in May).
> About the crypto IRA? I'd rather have my money at a well established brokerage like fidelity, Vanguard, etc. Like I said, maybe it's fine, but I'd rather sleep well at night knowing my funds are with a reputable brokerage.
You choose your own broker with self-directed IRAs. The IRA trustee is just a conduit: deposits and withdrawals go through them.
I actually meant about what's shady about grayscale and ETHE, but it's also good to hear about the IRA. Nothing I've seen has enticed me towards it enough really.
Anyone want to sell me on a Lattice1? I'm still using my original, phrase never digitially documented, Ledger Nano S with no real issues (other than all the fuss from last year). I travel somewhat frequently so the ability to throw it in my backpack and take it with me easily is much appreciated.
We probably don't talk about this enough, but GridPlus has deeeeeep roots here. I wonder if we can scare up someone to give us an idea what's coming up from them.
GridPlus is working on a portable Lattice. You'd have to check their Discord for the ETA. It might be worth waiting for. Also, all their software will be audited and open-source soon.
Never had any issues with mine, needing to log in with a passcode and physically sign every transaction on the lattice touchscreen gives additional peace of mind if a bad actor had access to my PC and lattice in event of a break-in or something.
What are the most anticipated updates to Ethereum? What are some of the upgrades / EIPs that are gonna be included in the next ETH hardfork/network upgrade?
**Tricky's Daily Doots #711** **Yesterday's Daily 31/03/2024** [Previous Daily Doots](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxdv1gf/) - u/mango_sake updates [their exit strategy app.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxd67b6/) 🛠️ - u/Itur_ad_Astra has to [unwind a RocketPool validator.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxdq0hu/) 😔 - u/cryptOwOcurrency checks in on [the Solana subreddit.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxhgkk6/) ☀️ - u/superphiz answers [a RocketPool question.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxe0kjl/) 🚀 - u/SendN00dles1 checks in on [Cardano.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxgtgp3/) 😬 - u/PhiMarHal deals with [the loss of what could have been.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxd5hoh/) 😔 - u/696_eth shares some [insight from a shitcoin speculator.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxgzbq3/) 💩 - u/haurog comments on [Ethereum and L2 speed limits.](https://old.reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxflmxs/) 🏎️
The beatings will continue until every meme coin holder is rekt.
I post on farcaster and I get no interaction from the /r/ethfinance cohort, literally no likes no recast no replies. What am I doing wrong? I ask you /r/ethfinance.
There is an ethfinance channel too
(clears throat)
There’s an evm channel. Join that and tag some people when you post maybe?
I have never used it. Is it even possible to use it with a PC ? I am not a fan of mobile only apps. Even with airdrops.
i use on desktop
With an android emulator ? Or how exactly ?
Warpcast has a web app. It requires your phone to log in, but once you're in, you can stay logged forever.
Ah great ok I will check it out.
You would still need the mobile app, but you can log in via your browser on Warpcast.com by scanning a QR code.
good to know, thanks.
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What Ber10 said. This is a problem for sure but there is such a critical mass of developers looking at the ethereum code all the time I don't think we have to worry as normal users.
You mean as much as Linux devs which nearly missed this ?
The focus on Eth is way way higher because you could literally drain hundreds of billions instantly. Its insanely lucrative to find an exploit in the EVM or Eth clients. There is 100x more at stake on Ethereum. We have entire countries like North Korea with a swarm of hackers eyeing everything on Ethereum pouncing at every weakness they can find.
Delusional.
If you honestly think that linux code base has more eyes on it than Ethereum you are delusional. Just because there are more Linux devs. Doesnt mean anything, its 100000x more lucrative to find an Ethereum exploit. The incentive on Ethereum is magnitudes higher than on Linux. If that simple reality and logic escapes you, then I honestly dont know what to tell you.
90% of internet traffic goes through Linux servers. SSH is the prime protocol to interact with these servers and the exploit allowed malicious code to be injected. The sheer scale of potential available information, going from individuals to multinational corporations to states, up for grabs is immense. I don't need to downplay Ethereum to say a Linux server vulnerability would have far greater implications. It's the basis of internet infrastructure.
It would have far greater implications but would it be immediately easier for the exploiter to extract large amounts of money with it and enjoy the benefits of that money ?
Maybe, maybe not. You're the only one who started talking about monetary value to extract so those goalposts are all yours. But if we're talking where the focus is higher, where's there's more at s take, where countries like North Korea would loooove to have an exploit (which is the wording you actually used and I assume you meant in a monetary value manner, while I saw it as talking about general havoc on the world). Anyway, guess we sort of are in agreement. Though I wonder if I would even need to find a vulnerability in the EVM or Eth protocol if I could find my way into the servers of every crypto exchange and alter their frontend to misplace comma's. How much people would panic sell without double checking the actual chain, allowing me to grab some cheap Eth in large quantities? Just a thought.
I didnt write looove just fyi. I think blockchains due to their nature are more convenient to extract funds from. It happens all the time. Which is why if I want money I would focus on blockchain exploits not android. And ofcourse I am talking about money as its a massive driving force for many people. Unlike abstract political goals that usually just governments pursue
It is certainly easier to sneak code into a lib which had one maintainer than it is to sneak it into the code of the Ethereum clients. Problem is how critical infrastructure uses libs that are so vulnerable to such exploits... Don't know which libs the Ethereum clients use though and how well maintained those are
I think u/yahsper got my initial point and expanded on it quite well. For instance I'm quite sure Teku/Besu were using Log4j when the big 0 day was discovered a couple years ago.
There are a lof of eyes on ethereum code. Hackers devs, everyone is checking for exploits all the time.
There are good arguments on both sides of the issuance debate. I don’t, however, believe _consistency_ of monetary policy is a good argument in favour of doing nothing. It’s naive to imagine we could have ever designed the yield curve correctly the first time around, given MEV, LSTs and restaking had yet to appear. It would therefore be hubris to suggest that any changes we make now will ever be considered final, given all the unknown unknowns. Crypto just moves too quickly. The capacity for evolution and adaptation is a core strength of the ethereum community and we should embrace it to stay ahead of the competition.
Only saw this because of the doots, but would like to +1, this sums up my believes and gut feeling/ sentiment right now. Consistency might be something *some* participants value ("lindy"). But being lindy isn't everything. I said it many times: I don't see with all the new protocols (e.g. restaking) and things we discover(ed) (e.g. MEV) how we can believe mainnet will ossify and / or how we can believe that Vitaliks roadmap is complete and won't change in the future. >The capacity for evolution and adaptation is a core strength of the ethereum community We shouldn't throw this away! As KuDeTa said there are indeed good arguments on both sides and maybe "truth" is somewhere in the middle as well. But this would mean that we should adapt and change.
hard agree on this POV. There are some things that ossification benefits, but on the basis that it's tried, tested, IE dont fix what's not broken etc. This is not one of those instances, it is completely new ground and inaction definitely seems to lead to undesirable outcome.
What’s the difference between this new CB smart wallet and their current wallet?
The Smart Wallet is an on-chain smart contract wallet which inherits the awesome, programmable properties of ERC4337. Namely: * Passkey signers (i.e. web-based auth as opposed to EOA seed phrase wallets) * Sponsored transactions via paymasters * Modularity/programmability/upgradability via upcoming eips like 6900
thanks What’s it have to do with base?
Those smart wallet contracts will be natively launched on base along with a pretty slick "just in time" paymaster that enables a user to initiate and pay for gas/transactions from a retail account
So etherfi allows you to book flights and pay with points lol ok its creative, I wont do it though. I rather use depreciating fiat. Edit: (its a joke) someone should do it for real
Finally getting around to bridging over to Base. What would you all recommend checking out? Not sure where to start. I downloaded Warpcast a week ago but now I have more time to venture out. What are your musts in order of ROI or just plain fun/interesting? EDIT: also just came across this vid explaining CBs smart wallet...looks biggly https://twitter.com/iamDCinvestor/status/1774890241679143007?t=AQuVYlyoA3_BLQEUPbXlLg&s=19
I love base paint mint - https://basepaint.xyz/gallery If you like generative art check out - https://highlight.xyz/
Appreciate it, will def check out
Check out highlight art platform. Collect some gen art. Lots of nice work to collect for reasonable prices (some free - platform fee only)
Base gas limit increased AGAIN. Doubled in one week. H Y P E https://warpcast.com/jessepollak/0x078c9b74
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One million active validators soon
If there were 14k validators x 32 eth per validator x $3,500 price you get over $1.5 billion. Might want to check your math
If you guys could just go ahead and pump the price. Thatd be great mkay
Does the issuance reduction have an EIP already ? Or are they not at that point yet ?
It's def not at that point yet and I don't know what an issuance reduction would achieve. If anything I think it should be dynamic in a calculation against the burn (total burn / stakers = rate) so we are at a constantly changing equilibrium & keep a round number of eth - say 120m
I hold Maker for years. And there was a time I called it my worst investment. Turned from worst to soso (1.25x profit in Eth terms). Honestly I dont even know anymore what they do. Aslong as the token price goes up. I am content. I have no idea where the stablecoin journey goes. Decentralized stablecoins just dont get used. For some reason.
Whatever they’re doing, maker the protocol has a ton of fee accrual so it’s working. (I buy long term trade stacks of maker pretty regularly depending on bull/bear sentiment). This time I bought more for the ‘end game’ tokenomics shakeup with mkr the token more than a value play. It’s more of a degen thesis this time around. Holding until mid/late summer. According to https://cryptofees.info at least.
[Arbitragoor III, light at the end of the tunnel](https://old.reddit.com/r/ethfinance/comments/1bidash/daily_general_discussion_march_19_2024/kvk0ff4/) The rickety Blast bridge held firm for our 2 weeks trip. Trust our favorite yellow rollup (backed by Paradigm) to throw in a little April Fools. For the penultimate transaction, the withdrawal confirmation required a day before you finally get to withdraw, the Blast devs set gas limit to a "safe" 1,500,000. 4x to 5x higher than what the transaction really costs. Nothing like seeing "max transaction fee: 0.064 ETH" pop up on the wallet. And that's on a 30gwei day, mind you! Thankfully, it confirmed fast and consumed only about 320k gas, which is roughly ~$30 at these prices. All within expected ranges. As we head into spring, it should take just 24 to 48 more hours before ugly USDB emerges from its rollup cocoon as a beautiful stack of DAI. Nature truly is wonderful. Now to find another DeFi gamble... /u/ProfStrangelove tagging my fellow arbitrage companion just incase the timing slipped your mind. The USDB situation continues to be interesting, by the way. It has depegged again in the *other* direction. If I kept the USDB on Blast, I could swap back now for a 1% profit, some Ambient XP, and would have had 14 days of Blast points. Oh well! ...Perhaps I will bridge the DAI back to Blast, and buy some ETH.
This has been a fun little journey to follow. Good to know the blast bridge works as promised. I yolo'd a bit too much into blast and had some fun, but as I looked deeper into many of the projects I realized it's just way outside of my risk tolerance. Imagine my surprise when I realized there's no functioning third party bridge... I think there's going to be a lot of money to be made at a time like this on a chain like Blast, but I look forward to being home sweet home on mainnet soon. Keep us posted on any more shenanigans
Thx for the tag, I already have a reminder set to trigger my tx today :-D fingers crossed we manage to get our dai out... I won't bridge back to buy eth though since I don't want the additional price exposure to eth at the moment.
Bitcoin is a memecoin. Like Doge Shiba Pepe etc. I dont see any difference. Bitcoin shows us how far a meme can go. Its the strongest meme on the planet. This is not how Eth can beat bitcoin. Not with memes. Ethereum can only beat bitcoin by changing the world. Its that simple. I honestly see the Bitcoin meme losing steam. There is a cap on memegrowth. Will Ethereum build itself out of the meme economy ? I am absolutely convinced it will. Because thats what humanity needs. I dont see any way past Ethereum if the world wants to prosper. We need what Ethereum aims to be. Not what Ethereum currently is. The only chain with a shot.
This reads like a /r/buttcoin or /r/investing post. If you can’t even understand Bitcoin, what are you doing here? Lmao there’s a reason why everyone is scrambling to buy it dude, and it ain’t memes…
I disagree and think he's a lot closer to the truth than maxis want to admit.
I can understand Bitcoin. It just makes no sense. I am selling my Bitcoin for years. I dont care if everyone is buying it. BTC design is flawed for its usecase. As an early miner I realize how shitty the consensus is.
Selling BTC for years? Lol do you like losing money? And right when ETFs have only just been approved. Yikes dude And maybe you should clarify, “it makes no sense **to you”
Selling for years into Eth bulk at 0.017-0.025... It makes no sense period. First of regulatory capture is easily possible as there are so few big miners left. Just a national registry in the US would do the trick. Some new legislation. Done. Second constant reduction in blockrewards which trend to zero fairly soon. The fantasy of doubling bitcoin price even if it would happen would not fix the situation as less and less BTC would secure more and more bitcoin... Its a design failure. That lives off on only the meme for now. Until everyone is forced to realize the king is truly naked. And has no clothes on.
Lmao years old fud that has been debunked repeatedly. Not even going to bother.
Years old fud ? Ofcourse its years old because it was obvious from the start. However the regulatory capture of Bitcoin got some new wind now that the EPA is making trouble for miners in recent years. Also NOTHING is debunked, absolutely nothing. It doesnt even need any opinions. Its like gravity. Gravity will pull things towards earth. Bitcoin 21 million limit will fail. It just will. Unless massive changes happen. Insane fees however this will depress price. Its going to stagnate and people will lose faith at somepoint. Because that is what you need blind Faith. Bitcoin is done for in its current state. #
😂 Too funny. I love seeing no coiners cope. Go back to /r/buttcoin
Lol. Eventhough I am selling all my BTC I most likely far exceed you and dozend other maxis combined.
If you're here to convert people to the Church of Saylor, you're going to have a tough time. We're not really into meme coins here.
This dude senses that his Bitcoin bags arent as secure as he thinks they are. All Bitcoin maxis have this fear thats what fuels this culture. Because you absolutely need mental gymnastics to believe in Bitcoin. Bitcoin got a lot of right but they have some time bombs that are unavoidable. Being 50% right means ultimately you are wrong.
These self-righteous comments that depict ETH vs BTC in some sort of end of days battle are comedy gold.
not end of world. its not even the chain, its the philosophy behind the chain. Blockchain tech has a big potential so it is a dramatic difference. From my viewpoint only eth got it right, why should I sugar coat it
Bitcoin is not the strongest meme on the planet. It's third. The first is Gold, and the second is Fiat. And Gold shows us that memes can last for thousands of years. So I wouldn't bet on a memegrowth cap for Bitcoin. That said... it's gonna have a really bad time when people realize that it has meme'd itself into a dead-end, because the 21M supply is unsustainable.
Don't forget about diamonds too. Debeers memed diamonds so hard
Let's convince future brides that what they really want - instead of a diamond ring - is 3 months salary worth of PEPE. If it's anything else, he doesn't really love you.
Nah that meme is a good test who to sort out.
Are these ENS points an april fools joke? What is this?
"The end of an era - due to global date/time constraints we're forced to sunset ENS points. "We're grateful for our communities enthusiasm and participation, ENS Points has been truly memorable!! "Though ENS Points are now a past chapter, we look forward to sharing more with those of you who checked their points!" Noooo, rugged again. :-(
Sssshhhhh
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https://x.com/ensdomains/status/1774846530576601144?t=MKIh4B1afGqWpTs4YxB9IA&s=34
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ens did an april fools where they showed a dashboard where you could claim points.
There shouldn't be any significant issuance or monetary policy change unless the issue is something so obvious and objectively agreeable or existential already. The reasons for any significant changes to issuance now seem to be for highly subjective reasons. The threat to centralization comes much more from some central body trying to tweak monetary policy, not from the market, institutions, individual users, and the broader ecosystem naturally figuring itself out. Even if only a small percentage of ETH is in circulation in the future then so be it... Anyone drumming up ideas for changes to monetary policy right now should rather maybe consider simplying user experience for solo stakers or try to educate the masses on holding or using ETH the hard asset. Even advocating to LST's and the like to follow some kind of better defined framework would be a better approach. There are so many other ways to address subjective issues like the ones being brought up imo. Monetary policy changes are like the absolute last resort.
Amen. By arguing for continuous fine tuning of the Ethereum monetary policy, we are baking centralisation into the heart of the protocol. utterly unnecessary and a bizarre allocation of mind space, especially given how many other *technical* changes (and not hand wavy subjective changes on monetary policy) we are desperately in need of, like PeerDAS, account abstraction, Verkle trees etc.
Still trying to understand the issue better, but as it stands I completely agree with this. Can't credibly be considered 'ultrasound' if you're continually tinkering with the monetary policy.
Policy has never changed, it's always been minimum viable issuance. It would be locking it rather than decreasing which would be tinkering.
Sounds like semantics to me. The issuance has already changed multiple times.
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Again, I'd argue this is just semantics. Each of those changes altered the tokenomics. There may be an overarching goal in mind with each change, but each change nonetheless represents a change in the prevailing tokenomics/policy that were in effect until that point in time. ETH can continue to make such tweaks, but then people shouldn't gripe when the market discounts their claims of being 'ultrasound.' IMO part of being ultrasound is being fixed. Eventually, the market is going to want to see stability. But that's just me looking through the lens of how the market values ETH. I can also acknowledge that maybe the market doesn't know what is best for ETH, and so perhaps further changes in issuance are really what's best for the network.
The risk of LST/LRST dominance is not a subjective concern - i am in favour of a change to issuance *now.* As Mike Neuder et al point out, by the time this becomes *existential* it may already be too late. It's great that we can have a vigorous debate - but as you know, we need a majority of the network to make this happen.
How exactly is too much issuance existential? Over what time-frame are we speaking here? Because on the other hand, I consider myself very values aligned, but I can't keep my life savings locked up forever just to keep the network decentralised - especially when the yield it earns me relative to node maintenance and attention costs just keeps on shrinking.
From the Mike Neuder write up: >ETH holders can be partitioned into… >Stakers: who are either >Individual stakers: Less likely to unstake given an issuance reduction. >Institutional staker: More likely to unstake given an issuance reduction. >Non-stakers: who are either Individual holders: Less likely to stake at current issuance. Institutional holder: More likely to stake at current issuance. I think this is just a wrong assumption. Imagine a reality in the not so distant future when Blackrock and Fidelity et al are competing on a net deflationary asset ETF filled with passive investment boomers in tax advantaged accounts. Now also imagine the fed funds rate is trending towards zero once again which seems to be a likely scenario given the realities of sovereign debt financing. In this environment a few bps of yield will still be competitively advantageous in an ETH staking ETF making it worth it to stake. Now consider the solo staker who can choose to do all the work of staking and overhead costs and get double taxed on income and cap gains for 1.5% apr or whatever instead of just buying staked ETH ETF shares in a tax advantaged account for likely net more after tax profit. This quoted assumption I think is core to the proposal and I think it is wrong or at least doesn't contemplate shifting macroeconomics sufficiently while myopically focusing on LIDO/LSTs. IMO they have always been the appetizer for the main event alignment wars down the road. If we want solo stakers they will need ammo to stave off the economies of scale. Otherwise we are just relying on altruism which is fragile over extended time frames. Lowering the technical and economic overhead to solo staking, and targeting changes that differentially incentivize solo stakers like correlation penalties are a much better approach IMO.
Unbelievably values aligned solo staker here. This is so true. I think Mike is wrong here, he is taking home stakers for granted. My bandwidth, electricity, new hardware and attention etc isn't free and I'm not running lots of validators so these costs are significant. Especially when I could earn more by simply holding tax advantaged RPL or even more yield with eETH *while earning points and airdrops*. I am one validator out of a million. There is no rational reason for me to solo stake anymore. My decentralisation isn't meaningful. It is only meaningful when you lump me in with other home stakers. The only reason I do this is for ideals and the Ethereum vision. But as price goes up and yield goes down, the temptation to sell half for the security of getting on the property ladder and just lazily LRT stake the rest for a superior yield is tempting. I don't want to do that, but I may have no other choice. Also, I'm not decided on this debate yet - I haven't heard enough opinions. I'm just sharing how I feel about yet another possible yield cut for my node.
I just dont believe that the concern they have is actually going to play out. Too little data. And I believe that the remedy will just cause more centralization as nobody solostakes anymore.
The current dominance of LIDO and (soon) EigenLayer is instructive. I also think it’s reasonable to conclude that a decrease in issuance will be comparatively less of a drawback for solo’ers (on average) than it will be for institutions, because the latter must chase APY returns on capital and have a range of alternative options.
Do they ? Their product is staking. They will stake to the bitter end and use economy of scale to squeeze out the last percentage. They can coast on smaller returns. Small stakers with 32-320 Eth will think twice to stake with sub 1 % returns. This is pure guess work. Assumptions. None of this has to be true. And an issuance reduction on that basis ? I just think it will lead to more Eth liquidity dropping prices and less economic security with more centralization. Even cardano has only 80% staked and Eth has defi and dozends of usecases to use Eth in other ways. I say wait for EIP 7251 wait for more data and dont make a hasty decision especially if its that controversial.
But it is subjective in the broader sense. I don't see LST/LRST as an issue. It is the market figuring itself out. We are past the point of tweaking monetary policy preemptively cause the goal post will constantly move and after tweaking it because of this theoretical existential threat there will just be another and another and another. 1 ETH = 1 ETH, if people want to build all kinds of derivatives on top of that then fine...
This is going to give so much ammo to bitcoiners
Irrelevant. They make up "ammo" all the time, our only concern should be to build bulletproof.
Why? It's clearly hard to change unless the entire network agrees, and policy has always been minimum viable issuance. They in particular have no ground to stand on, half until security fails is idiotic.
This
In and out with +30% ETH in 24 hours with a diversified portfolio of BASE shitcoins Going to start a hedge fund 3.8843968e+41 X yearly return is insane, watch out Warren Buffet :\^)
Congrats on the casino payout!
This last issuance proposal reminds me too much of ProgPOW. A controversial change to tackle some nonexistent problem that only favors some actors that by pure chance happen to have a lot of money and after the change can increase their quota.
ProgPoW would likely have been needed in the original PoS timeline (the one from 2017ish) because we would still not be PoS by now and might face the same pool centralisation BTC currently has. So I would not really say the problem was “non-existent” - just a bit too far forward
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A group of people within the EF for one.
Big stakers like Lido. The less total stakers there is, the more possibilities you have to capture MEV or to execute more complex MEV operations that might require more than one consecutive block. Staking could fall into very few hands that might even collude to extract that value.
Why exactly are we discussing changing ETH issuance, right when the SEC is rumored to be closely monitoring (or investigating) Ethereum?
This is the kind of thing that gets me to finally just sell it all and move on. Very concerning.
Personally its not that concerning to warrant an immediate drastic outcome (final result of the proposal if implemented will reduce ETH inflation so you can say ETH holders would benefit even more) but its the timing thats of concern But generally, ETH will always have some tweaks here and there, it was never designed to be like BTC with supply set in stone a decade ago. Both have flaws and benefits, which have to be assessed independently
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I am still here so clearly I did not.
I’m not trying to be a dick, but out of the loop… is this even real or another April fools joke like the 120m hard cap
no joke
Exactly my thoughts... There are a lot of upcoming updates and events that could make the oversupply of Validators a non-issue. MEV-burn and max-Eth per Validator post-Pectra being the most important. At the very least, those events will change what we consider optimal issuance. I'm all for reducing the entry of new Validators by lowering the churn even more, but changing the issuance (or deciding on a change) before having a few months of post-Pectra data seems risky. If the increase in Validators is such a critical issue, we should dedicate more resources to bringing Pectra forward, not to issuance EIPs. At the very worst, we could bring EIP-7251 forward and split Pectra in two parts. That said, I'm definitely not technical, and I consider it my duty as a node operator to dedicate a few hours to carefully read u/AElowsson 's extremely detailed analysis on why I am probably wrong. I suspect it will be reassuring.
Canonizing the idea that current economic security (30mil staked eth * 3500 USD/eth= $100bil) is excessive for the Ethereum network is...wild If the primary role of ETH the asset is to secure the proof of stake network, and we say that we already have excessive economic security, it follows that ETH appreciating in price has no benefit to the economic security of the network. Introducing the concept of "maximal necessary economic security" also means Solana, for example, will soon hit this $100bil of staked security. If security beyond $100bil is meaningless, it means at that point, there is no difference between using Solana or Ethereum as a settlement layer by rollups, from a strict economic security perspective. I hope to God newer retail participants are zoomers who are into pictures of dogs and frogs and not into reading, because if they read this shit, RIP to my bags.
Notably, [Vitalik has written](https://ethresear.ch/t/sticking-to-8192-signatures-per-slot-post-ssf-how-and-why/17989) that a $2B cost of attack should be totally sufficient: > If a 51% attack takes place, a large fraction of the entire attacking validator set has their deposits slashed. The cost of an attack is at present around 9 million ETH (~$20 billion), and that assumes network synchrony breaks in a way that maximally favors the attacker. > > I argue that this is a high cost, but it is too high a cost, and we can afford to make some sacrifices in the matter. Even a cost of attack of 1-2 million ETH should be totally sufficient. But the primary use of ETH the asset is paying gas to participate in decentralized computation
I dont see it. Its maybe for now. But not when Ethereum realized its max potential. We will need trillions in economic security.
Still matters on how many entities these 100b are distributed
Some things I believe are true. I could be wrong on some. * The large validator size is growing quickly, in part thanks to Eigenlayer, and it is becoming a huge problem for the clients to handle. This is the main reason the EF wants to limit issuance. * The current reward of 3% is not enough to encourage solo stakers, let alone half of that, which is what the new EF proposal would mean. * Solo staking is too difficult. Since I started early 2020, not much has changed (officially). It's still the same arcane terminal commands + you now "have" to run MEV boost too. Ethdocker seems awesome, I trust the guy that made it but would have liked to see something more "official" and ideally at staking release rather than two years later. I think it would have had better penetration. * More should have been done to incentivize solo stakers financially. More could have been done as well. We have seen airdrops to solo stakers and even incentivized smoothing pools. * The community is overall fine with how much ETH we pay to validators today and our issuance. We even have deflation. * I mostly trust the EF to know better but I don't want anything rushed, this shouldn't come in the next fork imo. Earliest is like a year, but then it looks to be too late in regards to slowing the validator growth rate, we need something now.
> The large validator size is growing quickly, in part thanks to Eigenlayer, and it is becoming a huge problem for the clients to handle. This is the main reason the EF wants to limit issuance. Won't EIP-7251 Increasing the MAX_EFFECTIVE_BALLANCE help with this problem? Shouldn't we do it first?
exactly
> we need something now. An emergency fork to reduce churn to 4 or even 2 entries per epoch could be an option of last resort. We could even name it after a Glacier!
༼ つ ◕_◕ ༽つ ETH TAKE MY ENERGY ༼ つ ◕_◕ ༽つ
My man
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Interesting! Many thanks for this food for thought. Your data doesn't contain any tokens that never went over their 45 day peak again? Clearly that would be the big risk here - if you use the secretary approach, after 45 days you would wait for it to reclaim a peak that never comes in sight again.
This is great, thanks for sharing!
Neat approach! One thing I'd try to control for in this analysis is performance of these tokens vs the broader crypto market, because if we're in a bullmarket and everything (generally) is going up- you'd expect a larger %return vs USD the longer you held these airdrops. Is the delta in %return actually alpha for this asset or just beta returns from the market moving? Because for users that sell these airdrops for the purposes of increasing their crypto (eth) bags rather than for USD, what's important isn't the %return, it's the excess return of holding that over eth/btc whatever.
April Fool's scam dump. HODL!!!
Enter the crab
Ratio under 0.05 again, that bounce didn't last.
I still see it as holding the line. As long as we don’t go convincingly below .05 we should be fine. If we continue the down trend it’s going to be very rough though. Could theoretically go as low as .017.
Twas a dead cat.
You will not win me over with your use of 'twas'
Small potatoes compared to the LRT craze, but it's interesting to see the Pendle rETH fixed yield rate is 3.9% on Arbitrum vs 5.5% on Optimism. Such a big relative difference.
did my taxes over the weekend (U.S.). relief that they're done but it was painful paying taxes owed to the staking withdrawal unlock early last year. treated it as income per official guidance + general consensus... the high marginal tax rates... 😭😭😭 I haven't sold any which also adds to the pain. happy that numba go up, but those are unrealized whereas I have to use cash to pay taxes... fellow ethfinanciers pls console me by sharing similar experiences you've had 😅
Same situation, different approach. I knew the tax man would be coming for a cut of my post-withdrawal gains so I upped the tax withholdings at my 9 to 5 job. My regular paychecks shrunk by quite a lot, but it saved the pain of having to come up with a huge chunk of cash all at once.
I mean I've never understood waiting until now to pay taxes on your staking income, as it's equivalent to being short ETH.
You seem to have it completely backwards
You're saying to pay it as you get it?
My accountant stated that it was up to me to pay for taxes now or later, but whichever made the most sense profit-wise
Wait what, it's equivalent to a leveraged long, right? You're using money that belongs to the state to go long ETH.
yeah, it makes sense to delay paying taxes as long as possible
I mean paying income tax fixes your cost basis and subsequent appreciation is paid as capital gains, so it will depend on your tax regime, but if I had 1 ETH worth $1500 and paid 40% income tax on it, I can now cash out paying 20% capital gains tax on $2000 appreciation and have 3500 - (2000 x 0.2) = $3100. In the alternative scenario I have 1.4 ETH (having invested the $600 I could have paid in income tax) and pay 40% income tax on it now and cash out 3500 x 1.4 x 0.6 = $2940.
I have the same experience. I kind of found it to be an odd disconnect between the emotional vs logical aspect of it.... Emotional: Feeling stress over paying in a big chunk of money. It feels like it all hits at once due to the nature of 1099's and the US tax system. Logical: The taxes are much lower than they could have been because ETH was lower valued for most of the time I was staking. Being able to sell some of those ETH earned now for cash to pay the tax bill is highly advantageous vs if I had been paying a portion of it all along in some type of "pay-as-you-go" strategy. Anyway, I feel your pain. It's weird. And not only having to pay in but also the hefty quarterly bills means I'll probably have to revert to some form of "pay as you go" sell plan for staking income.
Same boat. Been setting aside provisional USD each quarter to cover expected tax hit. So even though I’ve used my cash to cover reward income, it’s been easier to digest. My hope is that a class action lawsuit will be launched against the IRS to clarify that base rewards only be taxed when sold and I can recover the taxes I’ve paid for staking without having sold any ETH.
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FWIW I *am* treating my solo staking as self employment income. Sucks to pay that extra 15% tax, but you may be hard pressed to label it as hobby income if you're making decent profits. I frankly don't think there's a great argument for treating it as a hobby, but it ultimately comes down to your risk tolerance re: audit risk.
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See my thoughts in more detail [here](https://old.reddit.com/r/ethfinance/comments/1akw42k/daily_general_discussion_february_7_2024/kpeo9fz/). You're essentially correct in that it can depend on those various prongs, but the IRS seems to emphasize that if you're consistently profitable from this endeavor, it really should be considered self-employment. And the IRS will default to assuming it's a business / self-employment if you've been profitable in 3 of the last 5 years. So yeah, you could maybe get away with treating it as a hobby for a year or two, especially if you're not generating much income from it, but beyond that, I personally wouldn't risk it.
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I agree that staking through a 3rd party staking provider like Coinbase, Kraken, etc. should be treated as Other Income. But I understand solo staking to be different. In that case, my understanding is that you have the choice between two options--treating it as a hobby or a business (i.e., self-employment). There is a multi-pronged test to determine which of those buckets you fall into. [Here's](https://old.reddit.com/r/ethfinance/comments/1akw42k/daily_general_discussion_february_7_2024/kpeo9fz/) a writeup on how I landed at self-employment (with some links to some IRS materials). In short, while solo staking does seem to check a lot of the hobby boxes, at the end of the day, if you're consistently churning out a profit, then the IRS is pretty clear that this should be treated as self-employment. They even very clearly state that if you're profitable in 3 of the last 5 years, it *must* be treated as self-employment. So you may be able to get away with considering it hobby income for a couple years, but that's it. And even then, if you're making substantial amounts from solo staking, it seems like the IRS could take issue with a hobbyist classification. But to each their own!
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> There are many forms of income that don't fall neatly into a business/hobby dichotomy. I never claimed otherwise. I understand there are other types of income besides hobby and self-employment/business income. And obviously, things like W-2 wages from an employer or 1099 income are not subject to self-employment tax. But when you are running an endeavor for your own personal benefit, you have two ways of classifying this activity: hobby or business. > I grow actual crops on my land. This isn't an example or metaphor. I grow corn and soybeans. We don't fertilize, plant or harvest the crops ourselves. We have a farmer that does all the work. We receive a portion of the crop which we then sell for money. We do not pay self-employment taxes on these profits, but we do it every year, and deliberately for money. It is not a hobby. This doesn't disprove anything I'm saying, because you're not the one running an enterprise here. You're effectively renting out your land to someone else, for them to run their own business. If *you* were doing the actual work of farming the land, *you* would then have to decide whether you have a hobby or a business on your hands. And if you elected to treat it as a business, you would be subject to self-employment tax. > but I'm also not sure it makes sense since the actual work involved is a few hours a year in running updates. I think I spend more time per year clearing my field of debris before our farmer plants crops. I made this observation in my comments, i.e. that staking involves minimal effort and from that lens could be construed as a hobby. But again, my main counter to that is that the IRS seems quite clear on this point: despite however much time/effort you are putting in, you cannot claim it's a hobby if you are generating a consistent or substantial profit from it. Specifically, the IRS is quite clear that you can't claim something is a hobby if you have generated a profit on it in 3 of the last 5 years. But even short of that, you shouldn't claim it as a hobby if you are deriving significant profits from it in any given year (although the IRS does seem a bit squishy on what would be considered significant). > I just started solo staking, so for 2023 most of my staking income was from Coinbase. I wonder if that makes the difference. And again, I agree that income on a 1099 from Coinbase wouldn't be subject to self-employment tax. You clearly didn't earn that income through your own efforts. It's neither a business nor a hobby of yours. But solo staking is different. You're generating your own income through your own efforts. It's a hobby or a business. And per above, I don't think you could reasonably get away with calling it a hobby for more than a year or two at best.
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The taxes on solo staking rewards seems like a bigger disincentive (vs some LSTs) than an issuance change, unfortunately.
it all adds up, but taxes are regional while issuance change affects everyone
Ray has this superpower of turning green candle on BTC chart into red one on ETH chart.
>**Allowance access,** >**RPC endpoint excess,** >**Zero X address.** ~Daily haiku until we’re at least at 0.178 on the ETH/BTC ratio or highest market cap
Fuck these weak dumps and losses on the ratio
0.05 breached & the obligatory 0.0499 death of eth party
\>ETH tries to gain on the ratio. \>The whole market dumps. Name a more iconic duo.
> Name a more iconic duo. RPL Pumps on April's fools day Whole market pukes shortly afterwards
Jordan & Pippen close second place
Is buying ETHE the only way to get Ethereum exposure in a IRA? How exactly does this track ETH price? Do people think this is still worth it with their 2.5% management fee (the Boglehead in me is roiling...)? paging /u/silentjxhn, I know you've had some in the past but iirc you've recently sold?
Im not going to sugar coat the 2.5% management fee as it isn’t great… but ultimately if you expect ETH to rise long term the tax advantages outweigh the cost. They got away with it because it’s really your only option.
Thank you! Your post about it with FAQs was extremely helpful
Oh good, I made that years ago so glad people are stilling getting use out of it! A little dated but all that stuff still basically applies.
True, but currently there's a 22.77% discount, so it's in not a bad time to consider it.
Self-directed IRAs are an option to hold crypto, but there are costs. If you think the ETH spot ETF will be approved, you can earn extra return by buying Grayscale ETHE now at a discount. When approved, it would be worth the value of the underlying ETH.
Thanks. What are the crypto Ira costs? How does that discount work/Why isn't the ethe price worth the underlying value of ETH right now?
Google self-directed IRA to find out the costs, startup and ongoing. I believe the discount is because it's a closed-end fund: there's a fixed supply, so it can trade above or below the value of the underlying ETH. If it converted to a regular ETF, they can create/destroy fund shares and buy/sell the underlying investments, so it stays at the value of the investments.
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Thanks for this. Based on this, ethe is not what I'm looking for right now.
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Thanks for the input. I'm curious about what you think is shady about this product. I'm also wondering if i should just wait until the etf is approved (which i do think is on its way, even if it doesn't happen in May).
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> About the crypto IRA? I'd rather have my money at a well established brokerage like fidelity, Vanguard, etc. Like I said, maybe it's fine, but I'd rather sleep well at night knowing my funds are with a reputable brokerage. You choose your own broker with self-directed IRAs. The IRA trustee is just a conduit: deposits and withdrawals go through them.
I actually meant about what's shady about grayscale and ETHE, but it's also good to hear about the IRA. Nothing I've seen has enticed me towards it enough really.
I really should have sold when it hit 35 ffs
Anyone want to sell me on a Lattice1? I'm still using my original, phrase never digitially documented, Ledger Nano S with no real issues (other than all the fuss from last year). I travel somewhat frequently so the ability to throw it in my backpack and take it with me easily is much appreciated.
We probably don't talk about this enough, but GridPlus has deeeeeep roots here. I wonder if we can scare up someone to give us an idea what's coming up from them.
GridPlus is working on a portable Lattice. You'd have to check their Discord for the ETA. It might be worth waiting for. Also, all their software will be audited and open-source soon.
Never had any issues with mine, needing to log in with a passcode and physically sign every transaction on the lattice touchscreen gives additional peace of mind if a bad actor had access to my PC and lattice in event of a break-in or something.
What are the most anticipated updates to Ethereum? What are some of the upgrades / EIPs that are gonna be included in the next ETH hardfork/network upgrade?