DAOUSDT
DAO Maker / Tether USD
crypto Composite

Ya la integramos en la DAO

> does EF Protocol consider an unbounded staking ratio a problem
The following is my opinion, not an official EF Protocol take :)
I do see current staking incentives as problematic, unsustainable so. Regardless of total stake, Ethereum prints ETH to guarantee stakers at least 1.5%/year nominal yield. There is no market-driven backpressure, no price discovery driving the staking yield towards the organic cost of money.
In six years of proof-of-stake we have accumulated 43.2M ETH stake, about one third of the supply. It's economic quicksand. Year after year, increasing amounts of ETH held by rational actors is sucked down the staking pit. Net staking inflows have held surprisingly steady, at roughly 20K ETH/day.
As far as I can tell no defi application can plausibly compete in size with the 1.5%+/year subsidy: the opportunity cost of money simply isn't that high. This imbalance should continue pulling staking inflows. I expect we'll blow past 50% of the supply staked by decade end. Such high staking ratios are unhealthy for a number of reasons detailed below.
* **erosion of optionality**: Dilution is a transfer from non-stakers to stakers. So as the staked share grows, abstaining from staking gets more expensive and staking gradually shifts from an option to a rational imperative. This is especially detrimental with smaller stakers that can't afford the 32 ETH minimum deposit to stake natively. Those are naturally funnelled to staking pools like exchanges and LSTs.
* **processed ETH**: The staking industrial complex can be viewed as a machine turning pristine ETH into processed ETH. This processed ETH is of a lower grade, encumbered by counterparty risk, governance risk, smart contract risk. It creates fragmentation (stETH, rETH, cbETH) which erodes network effects for ETH as a unit of account and a unit of collateral. Large pools of processed ETH also bear systemic risks. Lido is a $23B pool backed by a $280M governance token, the kind of concentration that made The DAO systemic.
* **stakefi crowds defi**: Collateral-intensive defi products, like decentralised stablecoins, can't compete with 1.5%/year. Stakefi, i.e. the subset of defi pertaining to the tokenisation and distribution of staking yield, is sucking up the air for broader defi innovation. Things like LST looping, i.e. the leveraged extraction of staking yield, are symptomatic of an Ethereum-native Cantillon effect and distorted incentives.
* **special interests**: Cantillon effects breed lobbies. Similar to the banking world, those lobbies form to defend special interests. The ETH holderbase foots the bill despite stakefi being a cottage industry with a combined marketcap less than 1% of ETH's marketcap.
* **tax drag**: In various jurisdictions staking is taxed as income. For example, in the UK I pay 50% income tax on my staking rewards. While it's impossible to precisely measure income tax across stakers, estimating a double-digit percentage blended tax burden seems reasonable. For the sake of argument, call it 20%. That's hundreds of millions of dollars of yearly sell pressure from unnecessarily high staking yields, potentially billions per year should ETH surge.
* **too-big-to-slash**: Proof-of-stake enjoys social slashing as a powerful deterrent from 51% attacks. A high-stake environment erodes the credibility of this last-resort recovery mechanism because of too-big-to-slash dynamics.
> unbounded staking ratio a problem
Today's unbounded staking is a Moloch trap for stakers. When total stake is low there's an incentive to join early, but as more stake accumulates the diluted yield tends to zero. Eventually the nominal yield loses it's meaning, and externalities like like taxes flip the whole staking game into a lose-lose situation.
> is there a level at which it would become urgent?
Unlike the switch to post-quantum cryptography, changing the issuance curve is not urgent to Ethereum's survival. I do however believe fixing issuance is necessary for Ethereum and ETH to thrive. IMO the current issuance is bad enough that issuance as a topic will get louder and louder. I'm optimistic a fix is a matter of when, not if.

Security initiatives in this space are long overdue, but execution is what matters. The DAO situation burned a lot of people, and the lesson wasn't just about smart contract vulnerabilities. It was about how fast things unravel when there's no clear response framework in place. Curious how this round actually structures accountability compared to last time, because vague commitments don't hold up under pressure. Anyone tracking whether there are concrete audit requirements tied to this, or is it still voluntary?

Overcollateralized lending is clearly the default and it works, but it also means you need capital to access capital. I’ve been looking at the undercollateralized / reputation-backed side of this and I’m curious how people here actually feel about it.
A couple things I wonder:
1. Would you ever fund a stranger’s loan based on on-chain reputation (wallet history, DAO activity, repayment record) instead of collateral?
2. If no, is it the default risk, sybil issues, or just “I’ve been rugged too many times”?
Not looking for protocol recs unless you’ve actually used something. More interested in the mental model of it. Would you lend to a person on-chain the way you’d lend to someone in your network IRL?