Bankless - ETH Staking Panel | Coinbase, Lido, Rocket Pool

Episode Date: July 15, 2021

ETH Staking Panelists: Darren Langley (Rocket Pool) Vasiliy Shapovalov (Lido) Ejaaz Ahamadeen (Coinbase) With Ethereum's switch to Proof-of-Stake around the corner, a full spectrum of staking options has emerged. Many who want to participate will not be able to run their own self-custodied 24/7 validator node, and not everyone has the required 32 ETH. For these folks, Staking-as-a-Service allows broader participation in the PoS consensus mechanism. To discuss this, team members from Coinbase, Lido, and Rocket Pool come together in this panel to explore their approaches to the world of ETH staking! ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge  ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini  🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer  👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave  🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Hey, hey, bankless nation. It is time for another bankless panel. This one I'm super excited about, couldn't be more excited about. This is the ETH Staking Services Panel. David, the fact that we can even do this is so massive. After all the time we've been waiting for ETH staking, I came in December of 2020, and I just looked at the stats, over six million ETH stake, 6.3 million. We were just talking about this on the roll-up, David, about how at the very beginning when E2 went live and staking went live, we were worried that we wouldn't get enough stake. It took like half a million to launch the chain and there was some concern that we wouldn't get enough. Here we are with 6.3 million. We've got an expert panel. Why don't you tell us about the panel, David?

Yeah, we have the three staking as a service products, companies, teams, projects out there. we have Coinbase, we have Alita, Alito Finance, and then we also have Rocket Pool. And these are three different approaches to staking as a service or ETH staking. And so we are bringing in the people that are building out different projects, approaching ETH staking differently,

to ask them about their product and ask them about the tradeoffs that each product has made. And hopefully the listeners and the viewers come away with a little bit more information as to the world of staking from the Staking as a Service perspective and maybe staking as a service is the right product for them.

Maybe they want to stake themselves. But we are going to find out all the different, you know, variables and nuances and tradeoffs that go into the decision making behind e-staking. Guys, this is all about options. Optionality, of course, if you can stake at home, like stake at home, stake yourself. But this is another option for you. And as David said, it's kind of the spectrum of like custodied to more decentralized

and less custody. We're covering it all today. And these are really the experts in the field. Of course, these are not all of the staking service providers out there, but we picked these three because we feel like they represent different points on the spectrum of self-custody versus and more decentralized versus more custodial and a bit more centralized and kind of the full trade-off mix. So strapping, guys, this is going to be a super exciting panel. before we begin, we want to thank the sponsors that made this bankless episode possible. The AVE protocol is a decentralized liquidity protocol on Ethereum, which allows users to supply

and borrow certain crypto assets. AVE version 2 has a ton of cool features that makes using the AVE protocol even more powerful. With AVE, you can leverage the full power of DFI money logos, yield, and composability all in one application. On AVE, there are a ton of assets that you can supply to the protocol in order to gain yield. And all of those same assets can also be borrowed from the protocol if you have supplied collateral. One of my favorite AVE features is the ability to select a stable interest rate. Once I've selected a stable interest rate, I'm protected against any interest rate volatility that may happen in DFI and allows me to plan my DFI finances for the long term. V2 also features the ability for users to swap collateral without having to withdraw

your assets, trade them on Uniswap, and then deposit them back into AVE. With AVEI, users, can do this in one seamless transaction, saving you time and gas costs. Check out the power of AVE at AVE.com. That's Aave.aVE.com. Balancer is a powerful platform for flexible automated market makers. Typical AMMs just have two tokens inside of one liquidity pool, which can lead to fractured liquidity across the many pairs in Defi. With Balancer, you can access the full power of multiple tokens inside of one single AMM, which unlocks an entirely new playing field of possibility. This makes Balancer an awesome building block for so many different use cases. Balancer pools can make asset indices, but instead of paying fees to portfolio managers,

Balancer lets you collect the fees from traders who use your portfolio for liquidity. Additionally, Balancer smart pools can be programmed to have properties that change, according to predetermined rules, such as changing the swap fees based on market conditions, or even liquidity bootstrapping pools, which can help you launch and distribute your token with day one liquidity. At Bankless, we use, a liquidity bootstrapping pool to sell our BAPT shirts to much success. V2 brings powerful new features that makes your money work even harder for you. In V2, idle tokens are capable of generating yield in defy without sacrificing liquidity in the pool using asset managers. Balancer's vault

architecture lets you trade between balancer pools at a fraction of the cost versus other platforms, and you can even take advantage of dynamic fees which automatically adapt to changing market conditions. Balancer's mission is to become the primary source of liquidity in DFI by providing the most flexible and powerful platform for asset management and decentralized exchange. Dive into the balancer pools at app.balancer.fI. Welcome back, everyone. This is the banking staking services panel. So let me introduce the panelists for you here. We've got three staking service companies represented best in the business. We've got Coinbase. We've got Lido. We've got Rocket Pool.

EJAS is the product manager at Coinbase. We've got Veseli. He is the co-founder of Lido, and we've got Darren, who is the general manager of Rocket Pool. We are going to get into staking services first. Everyone, welcome. How's it going? Going well, thanks for having me. Great to be here.

It is so cool to have you guys. I think it was such a bear to schedule this, actually, because all of us reside in different time zones, in different corners of the world. This is maybe one of the most difficult bankless panels that we've ever scheduled. So like the timing is inconvenient for just about everybody on this panel, except to be David. He's smiling. I'm in the middle here. He's doing okay.

So I appreciate you guys. It's great for me. Well, it's good for Australia too. So it's good for Darren. But we appreciate you guys making time for this. We've never done a kind of a staking episode that's dedicated to it. So I think there's a lot to unpack for the bankless nation. I guess maybe I'll just throw an overview out here, both Lido, Rocket Pool, and Coinbase,

all three of them. They're all staking as a service products. Each of them have staking as a service products. Each approaches ETH staking a little bit differently. And as with everything in this world, in crypto, there are tradeoffs when it comes to eith staking of the various approaches. We want to dive into some of those tradeoffs and actually understand the points on the spectrum where you guys are coming at it from a staking solution perspective so that we can give bankless listeners some information when they are deciding who to

stake with. Let's start with some high-level introductions from each of you and your overall approaches. I want to start with Lido Vasili with you. How does Lido approach ETH staking Vassili? So what things are you guys prioritizing over other things? What tradeoffs have you made in your staking services designed Vassili? Why don't you kick things off? So LIDA is a DAO that builds liquid staking on different blockchains, including and starting with Ethereum. We have headquarters on Ethereum. that's our like homeland, hotland. So liquid stake means that people stake with LIDO

and get a token return and that token can be traded or used as collateral or used in other ways, it's liquid and transferable. So we think that for liquid staking, there is some kind of witness tax more situation, like with stable coins or roper coins like WBTC or stable coin, there will be one big provider of the thing and other smaller. So what we think we're doing is the best possible solution for liquid staking that can win.

That is actually can be at the same time a winning solution and also decentralized, say for Ethereum and easy to use. So that's what we're building here. That requires, I'm sorry, one one minute that requires like a number to make like to launch earlier we had to use a threshold signature for withdrawal that in that currently LIDO deposits are like under a risk of collusion for threshold signature cosinous and we we've got the permission validator set, not operator set for Lido, to make it safe through the initial period of Ethereum staking when the protocol is underdevelopment yet.

Yes, and we definitely want to go more into details on Lido specifically, because I think it's got some of the most nuanced position on the various spectrum. But Vassili, you emphasize liquid staking, and importantly, Lido is the only product that has a staking derivative token yet out onto the market. Would you say the main focus or main priority of the Lido ecosystem is really to produce that secondary staking token, a tokenized deposits of ETH? Would you guys say that that is your main priority or main focus?

So we want to make a liquid staking that is easy use, safe, and decentralized. So that's our mission. That's our goal. Yeah, we focus on liquid staking, yes. Cool. All right, guys, let's go ahead and move on to Rocket Pool. Rocket Pool. So, Darren, tell us a little bit about Rocket Pool, how Rocket Pool works and the tradeoffs that it has made in order to produce its staking as a service system. So our approach aligns with the principles of Ethereum. So we are fully decentralized, non-custodial, and open source. So essentially, Rocket Pool aligns the interests of people who have ether, but don't want to run a node. We call them stakers. and people who have 16-Eth, but have the technical capability to operate a node. So we call them node operators. So our smart contracts match a node operator with 16-Eth from stakers

to make up the 32-Eth needed for Ethereum staking. As a node operator, they only need 16-Eth, which is great. They earn commission on the matched ETH, which is even better. And they also get RPL rewards, which RPO is our token, but they get those rewards for providing RPL as collateral. As a staker, it'll be super simple. So you essentially just swap ETH for our liquid staking token, which is REath, and you can participate in all the defy glory. And then at any time you can swap it back for Ethereum plus the rewards. And that's essentially how that kind of works.

Very good. We'll get into all of this some more with Rock. I want to throw it over to EJAZ with Coinbase. What is Coinbase's approach to staking? What have you guys really optimized for EJAS? Yeah, so I think there's really two core principles we consider when we approach our staking products. And one of them is ease of use, so a simple UX minimum barrier to adoption. And I think the second one is security or safety.

And from there, we do our best to optimize between the two. example, how do we achieve minimum risk exposure without compromising the product experience for a user? So if we take examples of previous staking products that we already have launched, for example, Tezos and Cosmos staking for our retail users, the user experience is pretty intuitive. So you deposit into your account and you can start earning API periodically. You don't have to worry about running the infrastructure or delegating or anything. For ETH2, as you all know, there are some very unique challenges. that differentiates this from any typical staking product.

For example, there's a minimum 32 that you need to deposit typically, if you're running this on your own. You need to manage hundreds, potentially thousands of validators, instead of just a few. And there's a lockup for stakers until phase 1.5. There's massive risk of slashing, correlated slashing, and not to forget the centralization risks. So we need to take all of this into account when designing these products.

And I'd say that the kind of core problem that we've looked to prioritize above others in our staking solution for ETH2 is de-risking the staking implementation as much as we can. And I think that means decentralizing different layers of the infrastack as much as we can. And we can get into this later if that works. But ETH is one of our largest assets held under custody. So we need to make sure that user funds are safe. There are a few tradeoffs that this creates. largely a lot of them happen under the hood, so it's not actually exposed to the user. But one public example is we've launched a wait list, and we've been gradually rolling people

off of it as we scale up our service. We really want to make sure that our implementation can handle the volumes we're putting it through and that our quality of services is maintained. Just a quick follow-up on this. I'm curious since Coinbase has been staking with other proof-of-stake networks in the past. What would you say, are sort of the main distinctions between other proof of stake networks versus ETH 2 right now? What are some of the differences, the contrast points? Yeah, I'd say it's the two points that I mentioned earlier.

Let's take Tezos, for example, right? The way that it generally works is it's simple enough to delegate Tezos tokens to a baker, which is like a stake, right? And you typically only need to operate one or two of these things to accommodate quite a large amount of principle. And the slashing risk is much lower than eth, right? You can't get 100% slashing with TASOS. Now, when you compare this to ETH 2, you have a minimum deposit of 32Eth per validator. So now, if you want to scale this up massively, you now have to run thousands of these things, right?

And it's a non-trivial task to kind of maintain all of these validators to make sure that they're up kept at the same kind of quality and security bars that you have for some of these other staking chains, right? And I think just like in general, like the principle is so much more higher. The staking and slashing risk is so much more. So there's a lot more upon the pun at stake with ETH II versus some of these other chains. All right. Very cool. So I think I'm starting to hear some of the priorities. you guys are making, you know, Coinbase talking about user experience, ease of use,

UX, Lido talking about liquidity, making sure there's liquid, Rocket Pool talking about decentralization, making sure this is open, permissionless. Some of these things are starting to come through. Let's turn to business model for a second. I want to stay with EJAS on this because Coinbase, of course, just went public. Obviously, you've got shareholders. They're looking for profits. this sort of thing. What is Coinbase's business model when it comes to ETH staking? How is Coinbase expecting

to make money off this and give us some guidance on the fee structure that prospective stakers can expect? Yeah, absolutely. So put quite simply, for our retail consumers staking through our main up, we take a percentage of the rewards that they earn from their principle that's staked. Currently, that fee is set at 25%. We follow a similar model with institutional clients, but it varies depending on client and chain and through the path that they might stake with us. But for retail customers, it's 25% of rewards. Very good. And quick poll here, because I'm curious, I'll top my head. EJaz is a coin-based staking available to everyone, or is it kind of a select group right now? is it generally available

kind of weightless beta-ish yeah so yeah so for existing assets that we have right now Cosmos, Tezos and ETH2 for our retail consumers Cosmos and Tezos

are rolling out to the majority of the geographies that we support there are obviously some geographies that we can't always support jurisdictions within the US that we can't support but we're working very adamantly to be able to provide support to the users there. For ETH II, we've taken a more gradual approach. So we're currently serving users within the US off of our waitlist,

and we're very soon hoping to expand into international geographies as well. So as we get into the world of things on-chain with the world of Lido and Rocket Pool, we still have business models in the world of on-chain economics, but they're a little bit different. And so I want to throw this question to Vasili. What's Lido's business model? Where does it capture value? Who gets to earn rewards?

And what is overall the business model for Lido? Oh, Vassili, you are muted. Yeah. So Lido is pretty straightforward in that regard. We've got people stake with us. They receive stake at other tokens. And they receive rewards. And LIDO takes 10% fee.

That 10% fee is getting cut into three directions, basically. One is paying out the not operators because they do all the work here in validating the network, etc., etc. And they have to be paid. And currently, it's half of that 10% fee, so 5% goes to not operators. And the rest goes to LIDA Treasury that can be. use for different things for for example buying cover for stakers like we we do it at this point and the the maybe the development the personal costs etc etc so it's spending is voted on by the lGO token holders very cool way so you said they were split off into three directions one

direction goes to the node operation operators one goes into the community treasury what was the third um the cover one goes to the treasury straight and one goes to the to buy the cover okay so there's like a little bit of an insurance fund kind of like baked into the lido lido system yeah it's been discussed right now because it's been very expensive to buy cover lately and we might to switch to some kind of self-cover like Ava or something does, but that's currently on the discussion right now. And Vassili, when you say node operators, validators is also another term for that. One in the same? Yes? Or no? So when talking about Ethereum, we use not operators because validator is like one private key that is validating.

and one basically stream on signatures. So Ethereum has, what I don't know, 200,000 validators right now, but only maybe like a thousand node operators. So to be completely clear here, we use not operators as entities that manage validators, individual validators. Right, right.

So there are a handful of node operators in the Lido system, I think 10 or 11, but there are thousands of potential validators because that's the number of the deposits, the ether deposits into the Lido contracts. Yeah, we've got nine right now, but we are playing an expansion. Okay, cool. All right, let's turn the conversation to Rocket Pool and Darren. Darren, can you kind of give us the abroad, like overarching, what is the business model or the cryptoeconomic structure of the Rocket Pool system? Where does the value transfer? What's the fee structure?

Tell us about these details. So within Rocket Pool, value is captured in two ways. So we have Ethereum fees from Stakers, which I'll kind of touch on in a minute, and then RPL rewards. So RPL is our token, and it has a kind of inflation rate of 5%. And we use that to incentivise actors within the protocol to work in its best interest. So to break that down to the specific actors, so we've got Stakers who received Ethereum staking rewards from the beacon chain, as you'd expect.

Then we have node operators who are really the hero of our story. They provide the hardware and skill to operate a node. So they receive the majority of the value created by the protocol. They earn beacon chain rewards, commission from stakers, and then they get this share of the RPO inflation as well for providing RPL collateral. We also have two DAL. We have an Oracle Dow, which is a kind of a broad group of high-profile Ethereum stakeholders

from kind of three target areas, so community, ecosystem and industry. They play a supporting role. So essentially they Oracle information from the beacon chain into our smart contracts. And for that, they get a share of the kind of RPL inflation. The Protocol Dell, which is the other Dell, is basically to fund open source development of Rocketball going forward. So it gets a small kind of share of the rocket pool inflation to kind of drive that forward. In actual fact, we've actually got a really great explainer series on our medium about everything about how Rockypool works, specifically our tokenomics. And our fantastic community

have actually put together some videos. So it's made it really easy to digest. In terms of the fees, So node operators don't pay any fees, but they earn a dynamic kind of commission structure. So it's based on supply and demand, because we're a decentralized protocol, we have to kind of promote participation when we need it. So we have a commission structure that varies between 5% and 20%, but we target 10%, essentially. So stakers or RF holders, they actually get or they actually pay an average across the whole protocol, which should be around 10%. Okay, so you have the RPL token inflation to pay out certain parts of the rocket pool ecosystem, but the only people that are actually capturing ETH fees, fees denominated in ether, are the node operators. So the rocket pool Dow doesn't charge any ether fees. It's just the node operators, right?

That's exactly right. And we found that that's the kind of, you know, least rent-seeking sort of option. So we kind of stay out of it. And the money goes to the node operators. Because essentially, they are doing all the work to put this together. You said there's a supply, demand, balance equilibrium that needs to be struck. And I'm kind of reminded of,

the issuance schedule of ether, the asset, as a function of whether there are a lot of nodes on the system. If there's a lot of validators on Ethereum, Ethereum will actually issue more ether, but rates will be more competitive and therefore be lower, and then vice versa. If there's not a lot of validators in the available in the system, Ethereum will issue less ether, but it will be more rewards per validator. And that's how kind of Ethereum finds balance equilibrium between the supply and demand of security, Rocket Pool kind of follows that same sort of structure, right? Exactly, yeah.

So if the demand strips capacity for, so basically if there's more in our R-H deposit pool, then we have capacity on the operator, node operator's side, then the commission rates kind of go up so that it kind of incentivizes people to participate within. in the protocol and so level it out. So essentially we get this equilibrium, exactly as you said. So Darren, because I asked EJAVs, this question, I'm going to ask you the same question.

I know Lido is live and rolling right now accepting stakers. And it sounds like Coinbase is in kind of a limited rollout right now, rolling out fast. What is the status of Rocket Pool? When can folks start staking with Rocket Pool? Yeah, that's a great question. So we're not on Mainnet yet, as you've said, but we are one step away.

So we'll be releasing our release candidate to the Prater TestNet on the 2nd of August. And then following on from then, we'll go to Mainnet. So this is a massive milestone for us. And we're really excited to be able to finally share the kind of the work that we've been doing with the border community. Are you sharing that right now? So is that sort of an August date that you're sharing now? I wish I wish I could give that to you, but we actually announced it earlier on in the week. Just, just like, that's good.

I'm sorry. We do. We do love you guys, but no. Breaking news for some, but maybe some already saw that. All right, you know, I think this next question is really important. I'm going to keep with you, Darren, and Rocket Pool, because there is sort of, with staking, there is, I guess, incentive alignment and, you know, a selfish profit motive for the individual staker, right? But then there's also this public good that all stakers in aggregate are providing to Ethereum the network. Let's not forget why we

stake. Let's not forget why we are validating. It is for the continued decentralization of this Ethereum ecosystem, this Ethereum economy is super important. So I'm going to ask you this question. If Rocket Pool is successful, how does your project impact the centralization or decentralization of Ethereum, that public good that I was just talking about. Yeah, so obviously we spent a considerable amount of time building this decentralized staking protocol because we strongly believe that centralization is a huge risk.

And that problem you can see in the beacon chain deposit address graphs. With rocket pool, anyone can operate a node. So essentially, we're going to be mobilizing, a decentralized army of individual node operators to perform validation. So rocket pool is permissionless. So anyone with 16th and 1.6th worth of RPL can operate a node and be in the rocket pool protocol. So from an Ethereum perspective, we are no different than solo staking. We provide the same level of decentralization.

The aim is to have thousands of individual node operators kind of operating within the rocket pool protocol. Why is that important? Just refresh everyone on why decentralization of the theorem is important. So there's a few benefits to that. So first of all, there is no centralized control. So in it in proof of stake, it's very important, particularly with MEV. We're going to talk about maybe MEV. But so with MEV, if you have centralized operators, the problem gets, worse, much, much worse. So there's a few things like that. There's also just a resistant, a kind of, it's more robust. The network is more robust because you have different setups, different machines, and so you can't have like a whole part of the network that gets destroyed

and Ethereum goes down. It'll just keep running because you're so decentralized. We'll indeed talk a bit more about MEV. That is Max. maximum extractable value. You've also heard of minor extractable value. We'll talk about that a little bit later. But I want to throw the same question to Vassili. So what's Lido's take on this? How does Lido's project impact the centralization or decentralization of Ethereum? What's your philosophy here, Vassili? So I firmly believe that with Lido, the decentralization of Ethereum is better than without it. So, We are building like not the best solution. We build the best possible solution, the best solution that can actually win. And that's like a big difference. There are a lot of staking models that give bit better de-steralization and ideal work where people use them.

But the staking is a product. Product can be better on loss. And there is a baseline liquid-staking product that is already pretty good. It's liquid-staking of it by exchanges. And we've seen it in the wild, in the other staking economies, to exchanges to take a big share just because it's convenient. And while it's custodial, it's convenient to use and easier. And that's like pretty good baseline.

So decentralized protocols should be competitive and preferably better. They have the means to be better by being vertically integrated, to defy and neutral and decentralizedly governable and well they can be better for for both stakers and for the protocols but there has to be afraid of made to to make them competitive and I think that without without LIDAWR, would be in a worse play than it is for example we've got like about 10% share right now of either that is deceiving between nine not operators. The Krakhan exchange has got like 12% or 40% of all East take right now by themselves.

So that's, yeah, that's what I think about it. So let me run this by you and make sure that you agree with my take on Lido. on Lido. Lido is a, it's a Dow model, right? And so there's community governments, community treasury, community ownership. And so your take is that there's a certain amount of tradeoffs that need to be made as a staking as a service. You said that sticking as a service is a product, a product that needs to be provided.

And so the tradeoff with the currently nine validators that are operating in Lido in the future a few more. That is democratizing more access to more people who are able to stake more ETH. because of LIDO. And that community-owned, community-operated kind of LIDO-DAO is how we manage those trade-offs between fewer validators, but more access to staking services. Would you agree with that characterization? I'd say that the DAO is more like guiding force here.

So it's not like a final arbiter here. It's guiding the LIDO through the initial piece. where the beacon chain is about as useful as a potato where you can steak and you cannot steak and that's like what you can do. And the spec is changing that the construction site. You are a hardhead going through construction site and LIDA is that governance is that hard hat for now.

So but the final form of liquid staking that can actually win win is first ossified, not upgradable, not governable, well slightly governable maybe, but not, not, not very. And it has to be permissionless with not operators. It shouldn't be a white list. It shouldn't be a limited amount of not operators. But that can only happen when we the playing field is not like changed under you, right? So our trade-off is not that we have a wide list forever of small number on our operators, that we have to launch on a minimal amount of future that can actually make a good staking product that is sufficient to decentralize for now and have chances to become better in that in the future.

And Lido Dao is the guiding forward that will guide LIDA from a good product on the start to the best possible product and best for Ethereum, not only for stakers at the end. The beacon chain on its own is about as useful as a potato. That's a quote. I'm going to highlight takeaway from this conversation for sure. Ejaz, how about you? So give the case for why an exchange makes for a good staking services provider. And specifically on this topic of centralization versus decentralization of Ethereum as a

public good. Yeah. Plus, I think it's a great question. And I actually echo a lot of what Darren and Vassili has said so far. Like, listen, Ethereum is at its best the most decentralized, the more decentralized that it is. Right. And I think there's often this notion or perception of exchanges that, you know, we're kind of trying to be the big bad wolves that try and centralize everything. And I'm here to say that that's not most definitely not always the case when we approach our products, particularly with Ethereum. And I just think that like incentives are just different for exchanges in the way. But it's definitely aligned with the kind of principles with Ethereum in general. So in terms of, you know, whether we're towards a centralized and decentralized philosophy, we want to make sure we just decentralized Ethereum as much as we can, right?

But if I go back to one of the original core principles, to one of the earlier questions that you asked in terms of what we consider when we design these staking products, it's ease of use. And so we want to make sure that we balance this decentralization for users with easier accessibility to be able to stake. My kind of thinking and like Coinbase's thinking as well is, yes, one could go out and set up there. infrastructure themselves at home and they're encouraged to do so, but often it's quite tough to do

so for anyone that holds 32 weeks or more. And so we want to be able to balance and create a solution that that enables that. And there's ways that we push forward that decentralized ethos. I mentioned it earlier and we can dig into it now or later if you like, but we look at like our infrastructure stack when we do that. I don't think just because Coinbase is the company that offers ETH2 staking for our users, that means that we are, we should be considered a single infrastructure entity, right? I think there's ways that you can decentralize that, whether it's using multiple clients, whether it's using multiple staking providers.

And I think there's a path forward there. So definitely pro decentralization. Yeah, I definitely want to echo the fact that I think centralized exchanges get a bad wrap when it comes to staking. That's a little bit unfair. And I want to make the case for staking inside of Coinbase or staking. inside of a centralized exchange at all. In the world where we, say in like 20, 30, 40, whatever, the future, and that Coinbase has

never ever, or any centralized exchange, has never ever maliciously gone after Ethereum, well, in this world, which I think is actually the most likely world, then all of the centralized exchanges and Coinbase, what they have done is they have made the ease of ether distribution as maximally accessible as possible. And so, you know, I don't really think there's no reason for in any, any centralized exchange's self-interest to harm the network that is the staking network. Therefore, if that version of the future plays out, then all Coinbase would have done is they've been able to democratize more and more of the ether staking and ether issuance to a broader and broader set of people. Because that's really what Coinbase's core competency is. It's user aggregation and ease of use.

And so, you know, so long as the incentives of Coinbase plays out, then they will actually be one of the most democratizing forces of ether staking rewards of all time. And so I think that's a decent perspective about centralized staking that I don't see or hear echoed all that much. Yeah, I mean, listen, you honestly hit that right on the head, right? Like the ethos or foundational ethos for blockchains are decentralization, right? We've seen that with Bitcoin. We've seen it with Ethereum. And like our mission at Coinbase is to create an open financial ecosystem, right, to enable paths and funnels for users to be able to access all of this, right?

And, you know, there's brand and reputational risks that is tied to all of this, right? And I think like when we build these products, it's definitely with the mindset of enabling this wider decentralization. And it's through the aggregation effort. It's through ease of use. It's through a safe and simple means for the majority of. users that may not want to, you know, set up and run their own infrastructure. And that's really what we want to help pitch and create for. I want to turn the panel to this question. We'll continue

with you, Ejaz, for the moment. This is around like validating in architecture, like specifically who is doing the validating. And that's a question for Coinbase. So it seems like the model for Coinbase versus both Rocket Pool and Lido here is, is that Coinbase is sort of running the the validating infrastructure. I want to ask about that, but then I want to ask, like, more broadly, if I'm staking my eth with Coinbase, what trust assumptions?

In what ways do I have to trust Coinbase? I have to give up my private keys, right? And we've heard, you know, not your keys, not your crypto sort of thing. What are the other trust assumptions here? Yeah, so let me take the first part of your question and then can touch on the last. Yeah, so, you know, as you're all aware,

ETH2 staking was designed in such a way that encourages the decentralization of its inherent staking infrastructure. Like, right, so like the 32 ETH minimum, multiple staking clients. And so we really wanted to build our solution in a way that upheld this whilst also making it easier for our users to stake. And so one of the core focuses was to decentralize, the validating part of our solution. And we can do this through a few ways, one of which is to use multiple staking providers that meet our levels of security and quality. This is safer. It

minimizes centralized risk exposure, so we reduce the chances of triggering slashable offenses. Bison Trails, who we acquired earlier in the year is one key example of a partner, but we also focus on using multiple providers. And then in terms of, I guess, How our validators are incentivized for maybe things like maximum uptime and stuff like that. Like we have a high bar for quality and security requirements in general for each provider that, you know, needs to be met before we integrate them. But we also have things like SLAs in place of service level agreements that ensure that our providers meet at least a minimum level of service. And these can account for things like maximized uptime, using multiple staking clients, minimum overlap between providers, infrastructure, etc. And like another way I like to think about incentives for for these providers, because I think it's actually quite an interesting topic, is, you know, if a provider integrates with Coinbase, that's almost guaranteed e-flow for them to stake, right? And there's also reputational risk for providers itself that we use if they don't maintain a quality of service. So that's kind of like the outlook there. And then in terms of, I can go on about the infrastructure, but I want to answer your second question.

question, which is around, like, what are some of the trust assumptions? Yeah, inherently, you know, Coinbase is a custodial solution and users that, you know, place their eth with Coinbase in our accounts, place it within Coinbase's trust, risk, and safety parameters and usability. So, you know, they don't have their private keys, but we kind of like maintain and manage your private keys. We manage the kind of like staking process. And there's like a specific way that we do that to make sure that, you know, Coinbase does this in a very careful and managed method. So that's largely the main trust assumption that's made down. So I want to turn the same question to you and with Lido, because Lido's got, like you said, has nine validators and it looks looking to add a few more in

the future. How does Lido go through the selection process of who gets to validate for Lido? And how does Lido also incentivize uptime? Because uptime is really, really important when it comes to in staking as a service. So who are the validators? How is that process decided and how is uptime incentivized? So with LIDO, we've got

currently nine not operators and the process we have been used, we've been used two different process to select them. One was when we, before launch, we talked to

every basically good not operators. operator out there. I'm coming from a validator background so I'm CTO of P2P a pretty prominent steaking provider. So we talked with just about everyone good and found five very good ones who wanted to be part of LIDO and start with us. It's steakfish, Sertus, Chorus, and staking facilities all very good some some people had legal concerns some people had like some other concerns didn't want to be part of liquid staking or something

so we we've got five very best apprentices at start the second lack was when we had a process to select additional a few additional ones we launched a Google form where people could make an admission and not the existing operators had like some kind of council vote on who's going to be in LIDO. The next lack is probably the same one, but that's like a stopgak solution. We use a community of not operators to select other not operators for now. That's working out pretty good for us, but that's not a

a permanent solution. Why we do that right now, that way, is that either is basically hostage with not operators on B-conchain right now. There are no withdrawals. They are not coming for half a year at least. And the staking is locked. The rewards are locked. There is no way to do anything is not a preface.

go stroke or out of business or something. So until that hostage period is over, the white list is very important to LIDA. The incentive here to be a good not operator comes from the fact that all of them are very respected and very experienced not operators. operators and they have in total, I think, a few about short of 10 billions since taken in all the networks they're operating. So they are very experienced. They are very good. They are aligned with the ethos of blockchain and Ethereum in particular.

And they want to maintain reputation for a long time. So that's how it works for now. And I want to ask, what's the thing? long-term plan for staking or being a validator or node operator with Lido? Are you guys looking to open that up to just a broader, a broader set of participants over the long-term? Like, how many node operators do you think Lido will have in like one year, five-year, 10 years? So it's a hard problem to design around. We need to balance the quality of note operation with permissionless nature of the protocol.

we are making drafts right now, drafts, many of them, and I think it will take at least half a year to have something actionable here. The building blocks we have for this process is mostly like the history of how people operate in Lido. The other is the Stakers opinion on operators.

So Stakers have to have a say here as well. The people where the operator that Ethereum Stakers considers to be good ones, should be like put more France and center than one they don't. And something like safety model where people can stake their funds with an auto-party funds with an auto operators and say that if they screw up, that's my money on the line, but I won't share for what's here. Very cool. Very cool.

Okay. All right. Let's go on to Rocket Pool as well. So, Darren, I know that Rocket Pool's goal is to open up staking to as many people as possible. So I want to ask you a slightly different question. Who does Rocket Pool really go after? Or who do you guys find in your community that is part of your validator set? And how does the rocket pool system incentivize uptime?

So we're permissionless. So anyone can be a node operator. But we have kind of rational incentives. So our node operators have skin in the game. They have 16 of their own funds, earning rewards. So they want to maximize their return. And so consequently, they are maximizing staker returns as well. It's an equal amount essentially between the amount that they are only, the amount that they have

with their own funds and the amount that they get from the pool. So what we get is a natural alignment of incentives. So they essentially ensures that they perform well. So I want to turn this to kind of the the staked eth token, right? It's like the idea of tokenizing stake teeth tokenizing departments, this tokenizing deposits. this is a superpower of Ethereum, right? You know, we're all familiar with the article, superfluid collateral,

and all collateral has become on Ethereum somewhat superfluid in that it can be used in all sorts of defy applications. So the token, it seems, the staked eith token starts to become much more important. And Darren, you mentioned that Rocket Pool has something called ArtEath. I'm curious how Art Eath might differentiate itself from other staked Eth tokens, if it all. And just in general, your thoughts on how this landscape will play out. Will there just be a ton of different versions of staked ETH tokens in the wild? Or would this consolidate to a few?

Or will we have like wrapped versions that contain multiple? How wild and crazy is this going to get? and how is it going to evolve? Yeah, so eventually you'll be able to use R-Eath across the entire kind of DeFi landscape. So liquidity pools, lending protocols, yield farming strategies, R-EF derivatives, and all that crazy stuff that we haven't invented yet.

That's all out there. But a big difference, I guess, the big differentiator, I guess, with R-Eaf is its design. So it doesn't rely on balance rebasing to deliver rewards. So the amount of RE is actually static, but we have this ever-increasing exchange rate, which accomplishes essentially the same thing, but it has some significant benefits. So first of all, it is much more compatible with exchanges and other protocols who are not really expecting balance rebasing.

That's basically updating the token balance automatically on a daily basis, essentially. Ampleforth or Yam followed this model as well, yeah. Yeah, yeah. And second of all, there's a concern in our community around the tax implications of owning these tokens. And the R-EF design is much easier to track from a tax perspective because rewards are not continuously being pushed creating these taxable events. So obviously, every tax jurisdiction is different. so get some professional advice. But in general, if people want to have questions about Reth and how it works,

we're happy to answer them in our Discord. That's essentially the difference. Vasili, I want to give credit to Lido as actually the only project that actually has a staked ETH token out there in the wild. So I want to get to you. But first, Ryan already brought up Dan Ellitzer's superfluid collateral article. Another article that Dan Ellister wrote was the death of Ethereum. and death was actually D-E-T-H.

And he stood at D for delegated ETH. And this was actually a possible scenario that Dan illustrated in this article that, well, if there is a staked Eth tokens out in the wild, like Lido has staked Eth, Rocket Pool has R-Eath, and then in theory any centralized exchange like Coinbase or Cracken could issue their own, like, delegated ETH, except there's this concept of liquidity-begetting liquidity.

And so while there might be many, many staked-Eth token, you know, staked-Eath derivative tokens out there, it's likely that, you know, only a handful or maybe just one really just becomes the dominant form of Staked-Eath collateral in D-Fi. Largely kind of how we see USDC is the dominant, you know, stable coin in D-Fi. And so EJA, my question to you is that why will the death of Ethereum not happen? If Coinbase does actually absorb a lot of ETH, and I'm assuming, and also baked into this question, is, is Coinbase going to issue a staked ETH token? And then also, if they do, why would it be not the death of Ethereum? Okay. So that's a good question. So let's touch on Rapt ETH two first, right?

So I think firstly, I'll say, I've got to be careful what I say. But I think, firstly, I'll say we definitely intend on offering liquidity for our users, right? I think it's a core component for our staking experience that users are able to withdraw, send, or trade their assets. And EF2, of course, is unique in that the transition to proof of stake is phased, right? So there's a lockup period, as it were, right now. In terms of how we've been and still exploring a number of options for enabling liquidity. And a wrapped ETH2 token is one of them. Another option that you could consider as well is something along the lines of like an internal order book, right, of sorts,

where users that have a staked ETH2 position could potentially trade out of that position with someone who wants to enter that position, right? And to be honest, there's pros and cons between all of these options, right? For example, an internal orderbook might be simpler to implement and use, but it makes it so that stakers can't, move their stake off platform, right? Because there's no token. A wrapped ETH2 asset on the other hand is, as you said, and as Dan Ellitzer says in his article, much better capital efficiency as you can hold it, take it off platform, use it in DFI protocols.

But I would say trickier to implement technically and compliantly with a holistic product experience. So that's the way we think about liquidity, very important and focusing down onto a solution now as we've been kind of looking into it. And then in terms of like, was your question, David, around why it wouldn't be the death of Ethereum? Do you mind helping me understand that last part? Right. So the concept, the idea, the thought process is that all of these liquidity staked eth tokens will compete for liquidity. There will be one dominant winner. If that one dominant winner is a centralized exchange, then we have one centralized exchange growing and why would you come and stake

your eth in any other platform if you know you want to get liquidity on that so you choose the platform that has the best liquidity on that staked eth if that's coinbase then that's a centralization factor onto one centralized exchange yeah um good point i guess the way that i'm viewing it is i honestly and this is my own opinion i honestly don't think there is a world where it's necessarily just going to be one staked eth derivative um that kind of rules all And the reason for that is I think optionality is important, right? Like if you ask yourself, why do people use USDC over dye, which is like, you know, theoretically a more decentralized stable coin, right?

There are different uses and purposes for that, right? Whether that token is used as collateral to back a certain thing, whether you use it as collateral in Arvei to kind of like pull out credit on that or whether you use it for something else, you know, it depends on the user and the use case in particular. And then in terms of liquidity, I think it'll, you know, there's a high chance that it plays out quite similarly to stable coins if I want to stay at it, right? So you could have a dominant centralized exchange that has a wrapped teeth two token, but you could also have a decentralized version, you know, whether that's the likes of what Rocket Cool are doing or what Lido is doing as well. So I think that optionality is important. I don't think liquidity would primarily be an issue there, in my opinion.

Basically, as the representative of the team with the only actual staked ETH token out in the wild, tell us about that. What's that like? Is the Lido Staked Eth token? Is that collateral in any application? What's the strategy behind growing liquidity? Overall, what is the approach towards growing the market cap of Lido's Staked Eth token? One correction.

We are not the only liquid stake ETH token. there are like I think four more we are dominant like 75% of them of the liquid staking market but not not the only one and the the rest has a lot of within total as well so there is stakewise and STKR and the credit it's where's credit you we are not the only one so we are honestly in the bucket of there there will be like a dominant liquid staking token here and the runners-up. And that the dominant token can change, but the equilibrium here is there is a domination on the market because that's how the things work. When the products are not very differentiated and liquid staking tokens are not very differentiated to most users,

they want an adder with some staking reward. on top and every every liquid stake in token provides more or less that when they are not sufficiently differentiated the the one that has a slight edge will get used more and slight edge might be liquidity might be like better rewards or something but there is a place for for domination here i think so and then the liquidity improves we have a positive feedback here. So I'm pretty sure that this will be a market where the winner takes most. And the winner can change at times, but the equilibrium is one dominant coin and other less prominent. Guys, what a fascinating panel so far. Diversity of approaches, also diversity of

perspectives on some of these issues. Guys, we have a few more things to cover that you are not going to want to miss. We're going to talk about MEV. We're going to talk about insurance. We're going to talk about what keeps these panelists up at night when it comes to staking. So a lot more to unpack here. If you are enjoying this conversation, if you want more bankless panels and you want reminders, send notification sent, make sure you like and subscribe to this channel right now. Just hit that like button, subscribe. We are going to get to the sponsors and then be back with these panelists

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We've covered so much so far. One topic we haven't addressed, and we absolutely need to, is this topic of M.EV in an e-staking world. This is no longer a minor. extractable value. This is maximal extractable value. This is basically the idea of being able to front-run transactions because validators have the God mode superpower of transaction ordering. They can order transactions and benefit certain parties over another, maybe receive a fee for providing that transaction ordering benefit. This is almost like a, we've talked about this so much

on bankless. We've talked about this as sort of a MOLOC problem. We've talked about this as kind of a like a coordination problem. It's something that's very pernicious on Ethereum. I want to start maybe with EJAS. Tell me about MEV, the structural issue that you think staking service providers are going to have around this and how Coinbase plans to approach it. And the last thing I'll say about this is this could really impact the yields that Stakers get. If one of you guys, one of you service providers are able to extract more MEV and give that back to stakers, you're going to be able to offer much more competitive yields and rates. So what's Coinbase's approach to MEV, Jazz?

Yeah, really, really interesting question. So I think, first day, I think MEP could be a huge opportunity for us and for Coinbase. But it also comes with many interesting challenges that we need to consider, right? So given Coinbase's position, you know, running, you know, loads of validators for a number of proof of stake networks, Coinbase now has the opportunity to capture MEP, like you said, right? And this revenue stream could potentially be substantial. As an example, I think some experts have predicted that MEV after Ethereum proof of stake, merges happened, could enable ETH2 validators to increase their earnings by as much as like 60 to 300 percent, right?

And those all sound like kind of like defy summer type APIs, right? And I'm pretty sure it would consolidate down pretty succinctly. But, you know, there's definitely a marginal opportunity to increase to API. So that's one core incentive, right? And to your point, Ryan, like, if one provider does this, right, now there becomes a competitive disparity between other providers. And so they might want to do it. And so there's a number of options to consider for how we proceed with MEV, everything

from, you know, creating proprietary strategies to maybe even purposefully opting out of MEV and maintaining a neutral stance. At present, the full scope and implications, in our opinion, are unclear. But we're working pretty hard to come towards a conclusion here. That being said, what I can say is our intention is to pass these MEV rewards through to our customers. Another interesting thought that I had is like there's also just some really interesting concepts and paths that you can consider for like different products that we have, right? So let's say we could use MEV, let's say hypothetically for Coinbase wallet users, right? So Coinbase wallet is like a non-custodial option where users can kind of like hold assets there and interact with different gaps.

We could theoretically have like something like front running protection, right? So let's say, for example, a user wants to send a uniswap transaction. Instead of going to a public mempool, you know, you could go via Coinbase in the block that we propose and a private mempool. So some really interesting thoughts there. We are still trying to nail down what our proposed kind of like solution to strategy might be. but it's just a fascinating topic to learn about, to be honest. I want to throw that same question to Vassili and Lido. Vasili, can you kind of speak to the validators that Lido currently has and works with

and how does the validators there, are they equipped to be able to capture as much MEV as possible? And what are the intentions, can you speak to the intention to the validators and how it relates to the state ETH token? So you can, in that regard, you can think of LIDA, like more or less the not-operators union. So organized not-operators. I think it's pretty likely that LIDA will adopt a unified approach to M-E-V and enforce it across all the validators because that's like in the best entries of both not-operators and users and stakeholders. and stakers. So I think that MV extraction, actually extraction is something that not operators are not to keep

to make themselves. Because it's something that's basically a field, a job where you walk without sleep for three months straight and then you burn out. And not operators are like the long. game players they they play the game for for years and decayed like so it will be probably looking like right now with mining pools and and flashboards so there will be a service providers that handles the the extraction the the gritty parts of it and not operators will be like doing the high level things like

setting it up and maintaining and monitoring and and maybe like doing the selection of the service providers, but the service itself should be provided by the very competent and people who don't need to sleep ever. There is not a lot of them right now. I think that's where it ends up for most of the not operators. and it's more or less with what we see with mining and MEV. Same thing I think we'll have with staking.

With that one important difference, well, maybe two important things that will change from transition from mining to staking and MV. One is that staking is much more aligned, makes the alignment between Ethereum holders and, extractable value extractors much more strong. So it's essentially the stakers who decide how MEP will be extracted right now. And stakers are its holders. And unlike hash power owners currently who are, well, they mostly are Ethereum holders too,

either hold a stool but in much less amounts and quantities so the value line was much stronger here after after after the stake as the staking after the marriage basically and that will change the landscape because that changes the quotient and that means that over extraction of MOU will be no longer in the best interest of the validators. So that's one thing. And the other that's taken will provide multi-block reorganizations and multi-block mvue extraction. Right now, the only feasible way to do it is within a block, with one block as an atomic thing,

but after the merch is in, we will know this key. deal for for block producers and the block producers will will know that oh okay I've got three blocks in a row I can like reorganize the transaction for three blocks in a row straight and that changes the opportunities very significantly does that make them the opportunities more like does that increase the opportunities for providers and in which way does it change significantly. So right now, a lot of protocols are designed with a, with a thought in mind that the only atomic thing there is a block.

And between blocks, there is no way to ensure that you've got three blocks in the row. For example, uniswop-based oracles, twopps, that they take the last price of asset in a block as a data point. If you've got only one block to produce and you don't know who has to produce the next block, you can't manipulate that because the next block can be your adversary. And if you, like, for example, unbalanced price, like put either to like $200 to force liquidation, the next block producer can buy it out and have you take all your money here. But if you have two blocks in a row,

you can in one block unbalanced price, get at a warp point on chain, and then use that toward point to force liquidation. So when you can reliably string two blocks in a row, the Uniswop2 protocols are no longer as secure as they used to be. And yeah, so many protocols are beaten assumption that one block is an atomic thing that can happen. And that will be no longer true,

and that makes that MEP more dangerous. So what's interesting is on the one hand, the MEV becomes more dangerous in a fully merged ETH2, and some DFI protocols are going to have to redesign around these new parameters. But on the other hand, some of what you said made me actually optimistic Vassili, right? You said that basically you think that node operators

won't try to extract MEV themselves, but this will be somewhat commoditized. And they might plug into solutions like FlashBots, which is actually, I think, a good setup for minimizing the damaging impacts of MEV. And you also noted that, hey, validators aren't like miners. They are long-term incented toward the health and decentralization of Ethereum. So both of those things made me optimistic. You know, Darren, what's your take on all of this?

M-E-V, what's rocket pools, design parameters, and what's rocket pools take? So we've taken a look at this. We've done considerable amount of research into this recently, and it spurred a conversation within our community and also some of the Ethereum core devs as well. So we've recently posted a medium article about our position, but actually, first of all, I just want to touch on something that Vassili said. So he was kind of saying about the blocks, how their blocks are produced.

So decentralization is especially important when you have M-E-V, because with centralization, the chances of collusion between validators within an epoch. This is Ethereum-based kind of proof of stake. Actually intensifies kind of the potential for evil. So having a large centralized provider, having lots of validators, means they're more likely to have multiple blocks within a epoch, which means that they can actually do more damage than either kind of on purpose or by accident. So our position is basically that we wish MEV didn't exist,

but if it's going to be part of proof of mistake, then we can't really ignore it. We'd prefer it to be democratized, transparent, and ideally somewhat responsible. We're collaborating with flashbots to see what that looks like. And we've got kind of some ideas around some mechanisms to incentivise the fair sharing of MEV rewards with our stakers, so our REath holders.

essentially, MEP post merge is a very emerging space at the moment. So it's certainly something that's going to kind of develop over time. Hey, David, you're muted. There we go. Sorry about that. Importantly with MEV and Rocket Pool, MEV goes to the actual person that is running the node, right? Not the actual validators, or not the ETH stakers, but the people actually taking in the ETH and actually running the node.

can you go into a little bit more detail with how rocket pool plans to incentivize the rocket pool node operators to put the earned eth back into the overall pool of rocket pool earnings, which ultimately goes into the RETH token. Yeah, so it's kind of broken down into two parts. There's like a detection mechanism and the actual incentive. And we've got both incentives and de-incentives, I guess. So the detection mechanism is essentially. this collaboration with flashpots in the sense that you'll only kind of be able to do MEV through them. With the incentivisation and deacentivisation, essentially if you do MEV outside of that, which means that you haven't shared with the RE holders, then we have a

slashing mechanism that enables us to kind of slash them based on that activity. We also looking at other, we're also looking at the carrot as well as the stick. So we're also looking at ways to incentivize the sharing as well as this, this kind of slashing. Does, does the misalignment between Rocket Pool ETH stakers and rocket pool node operators, that misalignment with MEV, there's a little bit of, you know, the node operators want to capture more of the MEV and kind of want to hide, hide the MEV that they capture under the table while the East stakers are like, hey, we want all the MEV as possible. Does that misalignment concern you at all? Not on the surface.

Like a lot of the people that we've spoken to would actually do the right thing. It's just the fact that because we're a decentralized protocol, we have to design for people defecting essentially, for people not doing what the protocol requires of them. So we have to design that into place. But speaking to a lot of people, If they're operating within the Rocket Pool Protocol, they're willing to do the right thing. They're willing to share it with the Harrow Stakers because they know they're going to get significant benefits from operating within the Rockapel Protocol.

One of the incentives actually that we're looking at doing is essentially like a staking or a smoothing pool. So very similar, so MEV is very similar to proof of work in the sense that you can get these. payouts every now and again, but you can also get kind of small payouts. So it's very inconsistent. And so what we do is we put this smoothing pool together so that we can actually even that out. So instead of getting a lower kind of return, they actually get a higher return because it's a kind of a flat return rather than this kind of go for gold sort of scenario.

So from a long-term perspective, that's much better. Guys, this has been just a fantastic panel, mind-blowing on a number of levels. Shout out to the YouTube chat playing the drinking game while we have this panel. Yeah, as we're saying keywords, I think people are drinking. I don't know what the keywords are, David, what are they? I think the words are private keys, trustlessness, and decentralization, which are really aggressive words to play a drinking game with. Well, you know, we'll try to avoid those words in the last question so that people aren't too intoxicated while they absorb this information.

It's the last question to the panelists. And I want to pack two questions in one because I think this is important. The first is tell us what keeps you up at night with respect to eith staking. So that's kind of the negative worried side of your brain. And then secondly, what's the thing that makes you most optimistic about ETH staking? So that's kind of the bright side. We'll start with you, Darren. What keeps you up at night?

What makes you most optimistic? So living in Australia means like it kept awake at night a lot, talking to the US and Europe. So thank you. Thank you for doing this daytime call. I guess getting rocket pool to main net safely and securely, that's the thing that I am very passionate about and very, that's the thing that's kind of driving me at the moment. In terms of the optimistic side for Ethereum, I think Ethereum proof of stake is a fantastic invention and has a, in the broader kind of finance, sort of spectrum has a lot going for it. So I think that that is something that drives me as well, the potential, I guess.

Vassili, same question for you. What keeps you up at night and what makes you most optimistic about ethestaking? So about what I've got like this existential that of as a tech lead on the protocol that has about like 9% of steak teeth in it. I, I, I, I, I, When we launched LIDO, we did a lot of planning for failure, for bad thing. What we will do if there is a disaster, what the recovery reports, etc., etc. But it turns out we didn't plan for success, right? And when in March it hit me that we're just very, very big already. We've got a lot of stake.

How do you keep it safe? How do I keep it aligned with the room? That's what drives me currently. we've got at a point where we are impactful and we should light that should build this power well so that's that's what I'm working for right now where's the optimism coming from are you optimistic about that on the other side too one thing that is actually I think underappreciated on the plate right now about the merge and it's taken off is that Ethereum holders will have a much higher political weight right now in the

Ethereum governance. They are now not just holders. The stakeholders are making Ethereum secure and they are taking the role that miners used to have and still have. And that makes, well, that's a tectonic shift that is not still processed, I think, by the community, but it will change how it theorem operates, and I think it will change how it even operates for good. Ejazz, take us home with this question. We'll keep you up at night. What makes you most optimistic?

Well, yeah, I mean, aside from this amazing podcast, that's keeping both you and I out, Brian, on the East Coast. Listen, there's a few things. Like, one of them is a topic we've already covered, which is MEV. Like, I just think it's such a fascinating development that's playing out. And, you know, probably has the potential to be one of the most controversial for Ethereum, depending on how we all approach this as a community. And I think, like, that being said, it's such an interesting challenge with so many different

possible outcomes. So, you know, I've been trying my best to wrap my head around the latest developments around that. And I think, like, secondly, is probably echoing the city's point. I sometimes, like, before I'm going to bed, literally, I'm thinking about, you know, how much we have, you know, state. And, you know, I can't be mentioning figures and stuff. But it's just, you know, it's a significant amount. It's a non-travel amount.

And it just can't help but keep you awake and thinking about how we can maintain that infrastructure, about how we make sure that this is done. in the most optimized and best way for our users. Now, if I were to flip that over and look at like the optimistic side, I mean, guys, like similar to you guys, I've been in an Ethereum fanboy for years now. In my prior role, like consensus, they used to be on the ground, like working alongside a lot of these different gaps and protocols.

And actually one of the main reasons why I moved to Coinbase is, okay, I've seen all the awesome innovation that's been built out. how do I enable it in such a way that, like my mom, who thinks I work on magical internet money, and she's kind of not wrong, can access and use all of this, right? And I think, like, you know, eth two staking in general is just one major way to be able to do that, right? We're seeing Ethereum's decentralized ethos and vision come to life right now. And being able to empower that is definitely motivation enough, I think. Ajaz, Vasily, Darren, thanks so much for joining us. This has been a fantastic panel. We appreciate it.

Thanks for having us. Thank you. Happy you. Bankless Nation, ETH the internet bond, ETH the triple point asset, ETH becoming a capital asset. These are regular themes. Staking enables all of that. Such an exciting topic. We hope you got a lot out of this panel. I certainly did. I know David did. Of course, And disclaimers, ETH is volatile. ETH is risky. So is staking. All of crypto is risky. You could lose what you put in. But we are headed west. This is the frontier.

It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot. Also, like and subscribe if you enjoyed this panel. Make sure you do that. Take care, guys.