Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Staking Rewards: Is Crypto Staking Killing Decentralisation? - Mirko Schmiedl & Tobias Jung

Episode Date: June 6, 2025

Apart from incentivising market participants to secure the network through inflationary rewards, many consider staking as an equivalent of stock dividend yield. As a result, although Bitcoin is regarded as digital gold, protocols are looking for ways to increase its utilisation in DeFi and, ultimately, generate yield. Nowadays, while newer networks are struggling to attract investors and sustain a healthy, decentralised validator set, more established blockchains capture the lion’s share of PoS actors. However, in a constant race for profit basis points, centralised consolidation of stakers seems inevitable. Join us for a fascinating discussion on the staking landscape and the challenges it may present to decentralisation.Topics covered in this episode:Increasing BTC utilization through BTC yieldLooping yield productsThe maturation of the staking marketChorus One staking portfolioHow to prevent staking consolidationRetail vs. institutional-grade operatorsSymbiotic, Eigenlayer & restaking yieldEpisode links:Mirko Schmiedl on XTobias Jung on XStaking Rewards on XSponsors:Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.ioChorus One: one of the largest node operators worldwide, trusted by 175,000+ accounts across more than 60 networks, Chorus One combines institutional-grade security with the highest yields at - chorus.oneThis episode is hosted by Brian Fabian Crain & Sebastien Couture.

The economics just don't work in proof of stake. We have no way of really incentivizing decentralization. And then it always naturally consolidates to the biggest players that have the most resources because there's no on-chain mechanism to really incentivize smaller validators because you can't prove that a small value is only run by one person. But it's still a massive opportunity. Like there's just Bitcoin lying there that you can borrow at that, like low cost. The percent of the crypto market cap that's equipped up with work.

and then by proof of stake. And I had done this slide before in presentations. A year ago, 32% was secured by proof of stake. And now it was like 20%. We see just a huge amount of assets are struggling. I mean, all the growth came from new networks to a large extent, right? New networks and, of course, price growth as well to some extent. Both of those have not performed so well, right?

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This episode is proudly brought to by NOSIS, a collective dedicated to advancing a decentralized future. NOSIS leads innovation with circles, NOSIS pay and Metri, reshaping, open banking, and money. With Hashi and NOSIS VPN, they're building a more resilient privacy-focused internet. If you're looking for an L1 to launch, your project, Nosis Chain offers the same development environment as Ethereum with lower transaction fees. It's supported by over 200,000 validators making NOSIS chain a reliable and credibly neutral

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I'm Sebastian Quichior, and I'm here with. Brian Crane. Hey, Brian. What's up? Hey. You look wide awake. Yeah. I'm highly awake.

It's very early here on day two of Staking Summit. And we're joined by another than. Yeah. Yeah, all good, all good. And Toby. And so this is the fourth taking summit, fifth? Fourth taking summit. Yeah.

Or you can say the fifths if you count like the first rooftop meet up in Lisbon, which is 20 people, but yeah, it's the fourth real one. Okay. And Mirker is the one who created it all. Very impressive. Yeah, it's a team effort, obviously. Yeah. I've been the three and I've thought all of them were really good.

but this one is like pretty big compared to say like the one you had in vanguard that's the last time we talked and I think this conversation will be like a good kickoff point from that last conversation in in November where we we talked a lot about meme coins which are not in the like not a thing anymore but also you know bitcoin restaking and bitcoin staking and symbiotic had not gone live yet so I think there's a few things we can pick up on but overall what has been your like what's been the main thing that people have been talking about here at the conference I think it's really about Bitcoin's taking has evolved the narrative

is more about like sustainability now so everything is more back to the fundamental of here it's not about yeah just hyped up it's more about okay how can we actually create sustainable yield at the moment and I think we have to do a lot of work there it's the same with like shared security

it's also evolving more and more and going in the direction of like, okay, how do we create extra use cases for staking and not just repurpose economic security which no one needs, maybe. I was going to pay for. I mean, I think

what's an interesting thing to look at just how this is, to illustrate how this is not working at all today is if you look at Avey is around $4 billion per for Bitcoin. That's the positive in our

Ave at a deposit rate of like 0.03%, literally, it was like 0.03%, some. You might, and you can borrow Bitcoin on Ave for like 0.5% interest, so it's very, very cheap. But only like 10% of all the Bitcoin that's being deposited is being borrowed. So like, there's basically almost no demand, right, for people who to even borrow, you know, at 0.5% interest. that obviously if you could earn yield on Bitcoin in any meaningful way, people would do this,

right? They would be borrowing Bitcoin. But no one's doing it. So I think you can see that kind of like, you know, we're just way, very, very far. There's like a bunch of points and air drops and stuff people can get, but, you know, I think we've all seen those, you know,

I think the times where you can make a ton of money from like point farming doesn't seem to be doesn't seem to be, doesn't see me in the case right now so yeah I think it's going to be a hard road to get like

staking yield to Bitcoin yeah yesterday we also had a panel with the Lombard guy on it and he also mentioned something similar people do not want to like people want to hold on to Bitcoin and they are just not yet

enough yeah sustainable yield opportunities in the space so they are comfortable even putting it into such an ABA contract where they're just earning such, yeah, small. Yeah, basically, that's a topic. Exactly. So there's just a state of... The only reason why you put it into the Awe contract is because then you can borrow against it, right? Yeah, you can take leverage, like... Yeah, you can take leverage, like, borrow sales.

Right, so, but then you're not earning yield on Bitcoin. But I think people don't necessarily need the yield, so I guess it could even scale way higher than the 4 billion that we have right now, because there's infinite demand for leverage as well in crypto, right? Although infinite, it's not infinite. It's $4 billion. Once we get back into the bull market, it will incur, yeah. But it's still a massive opportunity. Like, there's just Bitcoin lying there that you can borrow at that, like, low cost.

So if you are able to, yeah, structure a product around it or arbitrage in some kind of way, Yeah, I feel like, yeah, this market, sure, but you know, as to say, oh, there's, I don't know how many trillions of gold and, like, no one's earning yield on gold. If you can be a yield on gold, it's a massive opportunity. Like, sure. I thought, like, $2 billion of, like, gold reserves, right?

For the X-A-Ut token. Oh, yeah. I wonder what they're cooking, well. What's the, what do you think is the opportunity here with regards to Bitcoin? I mean, like, if you think about it, you know, this Bitcoin is not being utilized, it's not being borrowed. So there's like all this Bitcoin that's just sitting there. Is this sort of a bearish sentiment on Bitcoin, or people are not longing it or like boring against it to like loop or leverage?

There's no bearish Bitcoin at all. People just like Bitcoin and there's not much else to do with it. Yeah. Yeah. I also think like the market is still maturing. It used to be a whole asset for a long. time and now it's yeah

like people are building opportunities around it yeah I think it's about unlocking even more utility for Bitcoin now and finding like interesting use cases so we're working on this Loop BTC product for example where we're looking to like source from

RWA years and then Avi trash with the like 0.5 from Avi and then it can create like a really interesting kind of a really interesting basically like lending out BTC to market makers, and then you can earn like a sixth income on it for like 5% to 6%.

And then you can arbitrage that with the landing markets, where you get it for 0.5. So when you loop that, you can go to like 15% plus in very sustainable API. How can you loop? So I'm giving my Bitcoin to some market maker. It's always a undercollarized loan. It's a collateralized loan.

It's collateralized loans. Scholarized. What would they put up a skeletal? I mean, this is, I think, yeah, they would have to figure it out, like, in the details, but they're working with, like, big OTC desks in New York, and, yeah, putting out the details

how to source these RWA yields. It's a product that's still relatively early in the development, but there's a huge demand for people that are doing the basis trade with Bitcoin, basically. so they can generate a very good yield on BTC and then yeah they can earn or like pay

7 to 8% on it I think in fixed income I think the idea would be to collateralize the NBTC token right and then borrow rep BTC against it NBTC WBTC Yeah so the the RWA yield where we sourced or like maybe tokenized in a NBTC

token and that can then be arbitrage with the rep btcc. So you basically tokenize the RWA yield. Oh, so you token RWA yield, you mean the thing that the OTC does trace you? Right, yeah. Right, so the OTCD desk gives like whatever, it makes up some coin and then you put that in a pool and borrow WPC against. Yeah, so you deposit BTC or rep BTC in a contract. They take that BTC, lend it out to a marketmaker,

form the basis trade, and generate the guild. And they put RWA stuff as collateral. Yeah. Yeah. I mean, the BTC is still there, right? So, yeah. I mean, if the market maker presumably needs to use it, right, for training. Right, yeah, but they have the, like, the position is there there.

It's not going anywhere. But you don't know that. Well, yeah, I mean, this is the, it's like the position's still there when you lend to three arrows too, right? Yeah, but it's all transparent and their work with like big trading dusts and so on. So this is more about, I think the idea is to create a product that sources from like off-chain yields where there's so much opportunity in the market right now. and the more we can bridge this gap between TreadFi and DFI, I think this poses like so many possibilities. If we do that like in a transparent way and obviously have like good security

and transparent materials in place. One kind of actually, I think potentially sustainable way earning yield on Bitcoin, you know, he put Bitcoin into ABA or something like that and you borrow Sabrepoys against it. which, you know, I think costs you 4, 5% or something and then you use those to earn a higher yield. Like maybe you can earn 10% of the stable point,

but like that seems pretty good. And then you could sell off the difference with Bitcoin. Yeah, it just depends for what risk can you earn the 10% right? Yeah, yeah, sure. Yeah, I like that. You should build that as a product. Yeah.

But I think there's just like so many opportunities. on Bitcoin and I think the space has to evolve more towards things that pay like real years and not just, yeah, staking, well, obviously in staking the year continues going down, I think, over time and, yeah, it would be hard to source very sustainable year, just from inflation rewards, obviously. So, so for you, Miracle, you're also focusing a bit more on Bitcoin now. Yeah, that's kind of a big focus for you. Bitcoin, yeah, I mean, I've been excited about Bitcoin for a long time.

And I think having a sustainable yield product on Bitcoin, it's a huge opportunity. And we are creating this product that we are still scoping out and the final details and so on. But we see this as something that can really help to unlock like the next big wave of ADC staking and sustainable yields, basically. And so you guys are also going from, you know, because so far it's kind of like data and events to more like yield products, creating yield products.

Yeah, so the idea is to create products, like looping products. We've tried that with loop type now and it was pretty good. We launched it like one month ago, have like 20 million TBL in it now. And the great thing, it's like fully complementary to all the validators. We work with validators with this community code. So if the validators deposit into the board, we make sure that like all the stake is looped into their validator position. Are you using as ST hype? Yes.

Yeah. Yeah. What's healthy hype? Yeah. Thunderhead guys. Yeah. Like a small team that's been like a lot of different linguistic and private. And they have this feature community codes where validators on board.

And if someone uses the validators community code, then the underlying stake is entirely attributed only to this validator, basically. And when we then, we also introduced this community codes for the looping product. So we have a community code, and then we make sure that the underlying stake is entirely looped with this validator. Yeah. Maybe to loop this back to OI Bitcoin, what we are seeing, for example, with staking, I think you guys are seeing it as well at KOROS. They tend to be quite sticky.

So when is the opportunity the biggest? It's in the beginning of either a network launch, right, when nothing is staked yet. So you really want to penetrate the market really early, become a big ecosystem player. And, yeah, try to get that initial stake because it really tends to stick to your validator liquid staking protocol or defy protocol.

And then going back to Bitcoin, it looks like this opportunity seems very similar to a new network launch because right now we have, like Bitcoin is just lying around on so many wallet. So it's not really staked and it's not really sticky to a specific, yeah, yield opportunity yet.

So being early in this market and providing a great sustainable yield opportunity to get this initial deposit and sticky stake happen is right now big focus at staking awards and that's why we're also shifting our looping product focus into this direction. Yeah, so there's a high stickiness to Bitcoin being deployed into various yield generation product.

It's generally speaking a high stickiness in staking. So once you are staking, you're just not thinking about it anymore. because in your head you're you're thinking yes this is like no productive asset i'm just earning my place of yield i do not need to switch it um it's a cost to to switch it again you need to make more research right so if you're just providing a really good um yeah sustainable product out of the goal where people can put it right if you get this initial transaction um yeah um others will have to make big investments also to to move like stake bTC from from potential

deposit us. So yeah, the opportunity in the beginning is the highest and the market is right normal touring and developing. So you want to be part of it. Yeah, I wanted to talk a little bit about the maturation of the staking market a little bit. And I'm glad that you're here. Yesterday there was this talk on MNA and the staking ecosystem. I know if you thought, I miss it. I mean, I've talked with JP a bit about it. But I unfortunately missed it. Yeah. I mean, you know, JP, you've also done some acquisitions in the staking ecosystem. I was also talking to Laszlo, yes, be from Kiln, and we were discussing consolidation in the staking ecosystem and what the future might look like.

And it seems like, you know, there are a lot of indications that the staking ecosystem, as it matures, will consolidate and that many staking providers, you know, will either get acquired or will acquire smaller, staking providers. And so I'm curious, you know, what you all think that the staking ecosystem might look like in, you know, five to ten years. You know, right now it's quite decentralized, I'd say, and like there is a wide range of types of actors from, you know, homestakers to kind of ecosystem community partners to large institutional providers like, like chorus and lights of kiln and figment, et cetera. So, yeah, what are your thoughts on how the staking ecosystem emerges from here? And like,

what is the role of, say, asset managers, exchanges, neobanks in this in the long term? Yeah, I mean, so I did a talk yesterday and I included this slide which had the percent of the crypto-mortycap that secure by proof of work and then by proof of stake. And I had done this slide before in presentations. But then it was interesting to see the data again, you know, because I saw, I changed. and it was like a year ago 32% was secured by proof of stake off

in the you know the rest is mostly Bitcoin right and now it was like 20% right so we've seen a big I mean you know

we see just a huge amount of assets are struggling and you know you have some some that are thriving you know I mean Solana is doing pretty okay and you know suey and there's like a few but you know even you hear them struggling and but then you know the long tail of assets really struggling right so you you have basically some pockets of crypto doing well

i think mainly bitcoin and stable coins maybe uh but a lot of it is not and of course staking i mean all the growth came from new networks to a large extent right new networks and of course price growth well to some extent. But, you know, both of those have not performed so well, right? So you basically have an industry that kind of hasn't been growing much now or even shrinking. Now, what would it take for that to change, right? I mean, you maybe would have to see, I mean, of course, you could have some temporary change or, you know, some change just in the price side.

which will of course be great for existing players, it would still make it hard for someone new to really come in and benefit much. I think for new people and new companies to come in, you'd have to see maybe a lot of new networks launching again that actually get a lot of traction. And I don't think that's going to happen anytime soon. Like, I don't think it will happen in the next three years. Like, you know, we see fewer new networks.

or big network launches, you know, when we, we look at like, I mean, 2020, 2021, yeah, I mean, if you look at like our thing, you know, of course, there's a variety of networks that we're going to launch, but, you know, of, like, really high expectation ones. I mean, Monad comes to mind, then there's, like, not that much else. So, you know, I think that's just, and then you've had in staking, you've had an industry that was very easy to enter, right? Like, the initial barrier to entry is very low.

So a lot of companies came in, and then you have kind of this, you know, huge supply of companies, and you have an industry that's been kind of shrinking a bit for a while. And of course, that's a very challenging situation. It means a lot of companies are, you know, not in a great position or like there. And so, yeah, I think some kind of degree of, oh, and then there's some other things, right? So new networks have tended to have smaller valetor sets at launch, right? So, you know, maybe 10 or 15 or 30 or something like that. So even then just getting in is like harder.

And then you've also had the thing where now some networks are saying, oh, maybe investors cannot stake or maybe there's lower staking rewards. Or there's no staking rewards. No staking rewards. Right. Or like, or like the same words are locked or like to do all this stuff, which, you know, I think it's a little bit desperate and doesn't make too much sense if you ask me. But it's kind of like this reaction of like, oh, I mean, we're afraid, right? We're afraid of the market. We're afraid there's no buying demand. So we try to kind of like cut off all the sell pressure. And but of course that that is also. reduces the ability for staking companies to generate revenues.

So yeah, I think all of these make it challenging. And then at the same time, I think the integration into, you know, wallets, yeah, fintechs, trapfi, each piece, all of those things becomes more important. And I think that's expensive to compete in. Right.

You know, because you have to invest a lot in product, You have a lot of mess, a lot in BD and compliance and, you know, brand. There's a lot of things you have to invest in a lot. So I do think that you're going to have a situation where, you know, there's only a handful of companies that, you know, can really compete there and they can do okay. None of them are going to do like amazing until things change, right, until maybe the market changes.

But then I think a lot of others are just, you know, know, they don't really have a very valuable business, right? So then we've also seen, right, a bunch of, he mentioned, you know, M&A and stuff, right? So we have seen some of those, you know, we haven't really seen any large staking-out positions, like, for a while, but we've seen a bunch of small or kind of struggling ones sell more recently. Yeah. Yeah, that's a great overview.

I mean, sorry. Yeah, I just want to say, I think. I think obviously it's going, there will have to be much more differentiators for stake price, becoming much more important to have an edge, I think. And I'm not sure how many edges you think there are, but I think there's probably at least three. Either you have very good distribution as an edge, or you have, like, the geography can be an edge if you can be, like, the leader in a certain country and maybe also, like, yeah, claim that market and have, like, good contact with regular.

regulators or whatever. Or it's like a, the third edge would probably be like strategic. That's what you, what you said, like a lot of networks that just launch with a small set and they're just bringing people on

that are like fully aligned and strategically helping the product grow as well. So it's not necessarily about like generating rewards or for them to set it up as a business, but it's more, okay, they already use the product and they have to grow. Maybe they are invested themselves in some form of,

another and then they also run a validator for it basically so it's like either a distribution strategy or geography yeah i would say also say the the validator meta has changed completely like if you were like a top five like competing with other top five validators maybe three to five years ago for like a slot in a like in the yeah network what is just launching compared to now where you're competing maybe with 20, 25 to 30 or even more providers because everybody is just improving and on the infrastructure level itself, I would say the difference in performance is very little.

So you have a lot of providers in the space that are very, very similar when it comes to, yeah, the infrastructure, basically what is important to secure a network and you really, to build on Mercos point, you really need to differentiate. And you also really need to probably do some very calculated bets on networks that you deem to be winners, right?

Because in order to get into the active sets, you need to offer some additional services, maybe some value added services or kind of somehow add value to the ecosystem because just infrastructure, I feel like, is not enough anymore. And I also wrongly believe that it won't be enough in the future. Otherwise, you're just like competing over price and then basically funding the infrastructure for free.

You think the infrastructure then just basically gets commoditized and values are basically only competing on price? I mean, yeah, or they have to. Or they have some strategic. Yeah, exactly. Yeah. I think that's probably the case. the basic infrastructure provision. But there's also the case, I think, where staking itself will become more specialized

into, like, performing certain tasks and actions. So, for example, like in Bittenzo, it's a totally different ecosystem, but to run a validator on Bit Tenzo, you actually need to set up, like, a real data center. You need to, like, really perform some work. Like, you need to do this, what is it called, that they do in Bit Tenzo? but they're basically validate these subnets and they perform like all these AI models running basically as a validator

so it's like it's an actual task that creates value as well it's more like it's going more back in the direction of proof of work maybe where you perform not just state like not just stake but it's a bit more work and I think there will be more use cases as well probably on the infrastructure side I think there can be I mean we have a sort of small like

font research team and and you know we have gone like sometimes we go very deep on some networks to optimize performance and rewards which can make a meaningful difference but it tends to be first of all on a lot of networks yeah you can't there's really not much to do and on other networks it's not worth doing anything right so then it's really like i mean right now our effort on that Front is, you know, just focused on Solana and Bearer Chain a bit. And Bearer Chain also, there's actually very, like, the difference for us and the rewards. We've been earning on the MGT, proof-lake, or you think, it's actually very meaningful, right? So that's a big difference between, like, so we spend a lot of time, you know, some optimizing that.

And, you know, Solana, I think there's also, you know, meaningful differences you can achieve, but then it takes a lot of work, right? Because you have to really dive into it and you have to research it and understand it and then maybe you start modifying the client. So, but I think that can be, you know, there can be meaningful differentiation there, but yeah, you have to go very deep.

And of course, that's expensive, takes a lot of resources. Yeah, you guys recently caught a couple of networks that you were. Yeah, we caught like, this is the biggest network. How many networks?

I think like 15 or something. Oh, wow. That's a lot. Out of what? Chee, 60. We were like, I think running around six, maybe over 60.

So I think now we'll go down more to like 50. I mean, we're still in the, like the whole offboarding thing takes a bit of time too. Yeah. I think we'll probably do another round

like afterwards, look at maybe a few more networks. So is it just, a profitability question there or are there other things that come into? Yeah, it's profitability mainly. Yeah, so there's just a lot of networks where, you know, just the token was doing poorly and maybe also they could all make us. economics were not very good and, and either, we were just not making any money.

And there didn't seem to be any, you know, prospect to get to. Yeah. So, yeah, so, I mean, I think for us, it's, you know, it's definitely a part of, wanting to focus also more on, you know, the big networks that make a big difference. Right. This, I mean, this kind of comes back to my earlier point about consolidation. So it looks like you guys are consolidating on the bigger networks. And there's like consolidation is at different level, right?

There's like consolidation of, say, at the broader level of the ecosystem of stake within a certain number of, of a very professional actors that have distribution. There's also consolidation at the individual provider level where you're consolidated, like those large actors are going to want to consolidate around big networks that have profitability where like token price is going to be maintained.

And so it kind of feels like, and then consolidation also at the network level where, you know, those large networks may launch with smaller validator sets in order to like prevent too much inflation of the token in order to prevent like the cell pressure, etc. So like there's consolidation at every level basically. Does this all of this picture

together, does it just point to a world where there's like networks are less decentralized where there are fewer validators, fewer validators on each network and fewer large validators or sort of meaningful enterprise grade validators

securing most of the ecosystem? Yeah, I think so. Absolutely. Now, I mean, there's different reasons for it, right? One is that the decentralization is, you know, it's kind of expensive, right? It's expensive to pay a lot of validers enough so that, you know, it makes sense, track of them coming. And with token prices not doing well, new network's struggling, right?

People are like, I want to, like, save that cost. And then I think the other thing is that people just don't care that much. by decentralization, right? But people don't care much is like 200 violators or 30 validators. Or like it doesn't really seem something that's like a huge termination of success. So then people are like, well, we can, this is a place where we can save costs. That's sort of an existential crisis sort of question, isn't it? Because the entire point of the industry, the entire point of blockchains broadly is decentralization

and no centralized control. It's sort of... I think the economics just don't work in proof of stake as well. Like there's still, we have no way of really incentivizing decentralization as well. There's no economic level for someone that's running a small value that, and like if there are like a lot of protocols have tried, I guess,

but they haven't succeeded in it. And then it always naturally consolidates, kind of, to the biggest players that have the most resources, because there's no on-chain mechanism to really incentivize smaller validators because you can't prove that a small valetators only run by one person.

And I think as long as we don't solve that problem, it will always tend to keep consolidating. Do you think it's a problem that can be solved? At some point, yeah, I think so. I mean, I do. I think you could only be solved

if you have some kind of identity off chain, you know, like, because otherwise you just, you just, I mean, in a way, other people have the, have exactly, as you pointed out, right? They have tried to design proofsake systems

that are like, you know, decentralized. I mean, look, Ethereum in a way, right? They're like, oh, they were 33, but like, yeah, and just you just run thousands of validates, 10, 7s of validators. It doesn't, or like, you know, others like, you know, Polka Dot or a bunch of others, right? They're like, oh, we have, you know,

every validator in the set earns the same awards. And maybe at some point they assumed this was going to lead to, you know, having, you know, all these being different entities. But no, they just run, you run a bunch of validators, right? I don't think there's any way to prevent this. The old, yeah, you'd have to really have some sort of, like, you know, a bit like what the Salana Foundation does with their delegation program, right? Where they're basically saying, like, okay, you know, we're going to do some kind of verification,

make sure these are individual, you know, organizations, and then we're going to split the state. Now, I think my understanding is actually in their case, they're even thinking of getting rid of this, or reducing this, right? Because they're kind of like, well, does that make a lot of sense? Because now there's a lot of validators whose only business is this Salana Foundation stake

that they make a bunch of money on. Otherwise, no one cares about them. No one's heard of them. No one's staking with them. So I think they're starting to unstake from people who don't have other delegations because they're like, this doesn't make.

You know, also like, what does it really, how does it really benefit the network? Yeah. Not very clear. Like, okay, you can tout some metric and say, oh, you have more validators, more decentralized, but it's kind of meaningless. Yeah. And then you're basically just sort of paying service providers to run your network. Yeah. Yeah.

I think Larry, from, you guys know, Larry in Dango, previously, Delt. So their network, basically they're like doing away with all this and they're just like Validars are invoing dango and they're paying them for it to run the service. Yeah, sure, but the issue is, I know there are like some people doing something like that but then the issue is they were like, you know, I don't know, pay something like what, like, you know, 3K a month for something for a valet or like, you know, some, amount that, you know, maybe higher than the cost of just running the infrastructure,

but it's like nowhere near enough to actually, you know, have a reasonable business, right? So there's no, that's not a future that, I mean, that's not a future that's going to, you know, allow people to organize great conferences like staking rewards. because I'm not deciding some. Yeah, but actually, but from decentralization perspective, is it hard to run the infrastructure there?

Because like $3,000 euros a month or dollars a month that might incentivize somebody to just run it in their home, right? It's still like a reasonably high amount. Of course, like a professional infrastructure provider that has like a huge team won't take this opportunity because there are just so many other opportunities. But there's also like benefit in having like a planable income. each month when you have like right like when you have like your cost and your your invoice versus

like some token that might moon in the future right this is also like a strategy that some validators are running right they are supporting early they don't know what happens to the network in the hopes that it's like yeah they made their analysis and i think it's going to be big at some point basically like a VC right um so yeah it's just a different approach that offers the opportunity to run a planable business. And I used to work at Telecom where we were also running a staking business. And planability is extremely important

also for like adoption of the more web-to-ish players in the whole space, which some might like and others might not like, but just having like a volatile token every month where you don't know what you have in six months is very hard. if you have to do like financial plans for over a whole year, versus when you have like a something you can invoice,

which is nice if you have like a company that is like listed. It actually isn't too bad of an approach. Yeah, but I think here the maybe like the issue is that, you know, you'll, in this, in Dix's example, you may have just like a network of kind of at home semi-professional validators and you'll never have the, you know, institutional, type validators, the likes of chorus that are able to offer distribution

to, you know, at neo-banks and asset asset... Yeah, like, it's in the end, you now make 30K, where even if you have, like, I mean, how many networks would you, of that kind, would you need to be able

to support, like, a reasonable size team that has, you know, I don't know, does all the things that say, you need like a huge amount, like, way more than they exist. And so I think it's not... Yeah, but you're making the argument

just for an institutional grade operator set. Do you need an institutional grade operator set with providers that have like 100 people teams for every network? Maybe you do not have a network that is meant for a neo-bank adoption, right? Maybe it's just like, yeah, maybe there are some other use cases.

Sure. Yeah, totally. It can be. Of course, like that's... Yeah, it's like about the decentralization. right of course there's a cost if you want to have like a super decentralized network you can't have like 100 institutional grade providers supporting it i mean the issue of decentralization here is also like what does it mean exactly right because if this this guy now says like okay i'm working with these 10 parties and you know they write me an invoice and i paid him some

dollars like it's uh it's of course also very very far from uh you know the kind of decentralization that and then they will run it in Headsnall or something yeah you mentioned Kellagam and so you there was a talk I think yesterday or a panel with someone

yeah, Telko's going in big and Steaking as well yeah so what's the play there wait what is that Telko's yeah like Deutsche Telecom telecommunication companies yeah and we actually have like a sponsor here as well right

as Cibarine and like Neo Protocol is doing a So yeah, actually, I can take that one why telethos are moving because actually telecom, I think we were the first in the space and a lot of other telcos are now joining as well following what Deutsche Telecom is doing. And basically the argument that we sold internally, so people were not, because we got actually challenged a lot internally with like cryptos or scam and stuff, but at the end of the day, from tech perspective, it's a, it's an infrastructure.

play right so you're an infrastructure provider for um for the internet right you're digging all the up the ground putting all the cables in there then you're an infrastructure provider for for mobile and then yeah what's the next big thing they these guys also need to to position themselves for the future it's like web three um internet of ownership ownership basically it's a huge argument for blockchain and then you want to be infrastructure provider for blockchain it's in a very um tiny business compared to the overall telco business, but you want to have a foot in the door in case it becomes bigger.

And yeah, that's basically like an infrastructure player. So what networks does Deutsche Telecom validate? I'm not sure what they do, because they also think they had to cut some networks because of profitability. It's actually a problem. But definitely back when I was there, like

Ethereum, I think PolkaDot, I'm Selo actually. They had this, like in the beginning, a big focus on mobile, like connecting your wallet to like the mobile phone number. So that was also like strategic thing. Chain link was big for them. Oh yeah, like that.

Chain link is actually, yeah, like it is. Yeah, I think the biggest. I mean, that makes sense. I mean, for for Deutsche Telecom or any telco, you know, who operate data centers and like have the infrastructure, or basically in-house is what it makes sense. It's like a low lift

to go run a couple of validators on like some servers running in some data center that they have. It's actually also from decentralization perspectives, I think a strong argument because like you have the hyper-decentralizer there, right? You have like your own internet cables, your own cloud.

I think nobody else was on open telecom cloud. And yeah. So there's definitely an argument that these guys are. also decentralizing, even though they are like these big players that are monoplacing everything. Yeah, and on blockchain, that's going to be hard. And especially to have distribution as well. I think that's one of the key points.

I mean, Dutch Telecom and like other telco providers, like everyone using them on their phone. So it's a huge distribution and brand. Yeah. Right. If they didn't know, you know, they could of course like try to have a crypto wallet and stuff like that. Exactly. And some telecos also have, like, so for example, in France, Orange also has a bank, right?

And so there's sort of have different verticals in addition to the sort of telecom aspect. So the distribution can be sort of like internalized as well. Yeah, I think it's very exciting. We probably see more of that, like, networks willing to onboard for brand and distribution. And it's kind of a symbiotic relationship, I guess. Symbiotic. Talking about symbi. Great transition.

So we have about 10 minutes left. So yeah, since the last time we talked, we did it together with Felix and Symbiotic had not yet launched main net. So, yeah, I guess at a high level, how excited are you about symbiotic come to the market? and, you know, more broadly, what do you think restaking looks like in a year from now? My perspective on restaking is that, like, the narrative has kind of deflated a little bit since last year, since Eigenlair launched,

and there's questions about, like, sustainability. Yeah, I mean, I think there's, they're changing their focus now, right? I guess from the positioning, they don't want to call it, restaking anymore. I think. Even Eingleyer and Babylon, like everyone is kind of away from restaking because that narrative is kind of washed out now. And symbiotic, I think I say universal staking now. And it kind of makes sense. I think this is like the use case is that those networks like Symbiotic have to unlock to really create sustainable yield.

And it is coming as well with projects like this cap money where you basically have a yielding stable coin and you stake into a, asset managers and if they produce the target APII for the silver coin then they get rewards and if they don't then they get slashed so it's really going more in the direction of just economic alignment between different actors online and I think that's very exciting like for the staking space like there's so much use cases that we haven't unlocked for staking in general yet

if you look at staking from a first principles it's just like putting capital or like guaranteeing some sort of digital or economic work to be done and getting a guarantee for it. So you get a guarantee that someone gets a certain work done, whatever that is, generating a year or whatever. And you do that in a trustless way, which is pretty fascinating, I think. And I believe there's millions of use cases that are still totally under-expload in that direction. And I would love for these projects like

Anglia, Symbiotic, Babylon, everyone to like unlock these use cases and help us to create a more efficient way of how we collaborate online and how we shape our economy. What kind of use cases are you most decided about? Yeah, I mean, for example, this is like year generation. I think this could be a big thing, just getting guarantees that a certain year just done because then you have a real you get a guarantee

and there's no risk because if the yield is not generated then they get slashed so you you're not just trust the product when they claim they have whatever API or something but you know you're going to get it

and there's no risk of even losing your collateral for example if you have someone on the other hand you could get slashed if if your collateral or your yield doesn't sustain basically Yeah, I mean, I think on a high level, you know, eigenlayer had a lot of expectations, right, a lot of hype.

Then people deposited a lot of e-fentrate in anticipation that like, hey, we're going to make significant extra yield from it. You know, which at first was the points. And then there was the eigenlayer, a drop. And, you know, I think that that seemed to have worked pretty well. But, you know, that's over now, right? So now it's the eigen pays some extra staking yield, right? So if you stake, if you stake, if. But that is like 0.6% right now.

So let's say you make 3% from eif staking. You may 0.6% from eigen extra. LRTs were paying incentives, but I think all of those have run out. you don't make anything from the LRT. And then the ABSs basically don't pay anything. And I think there's a very strong aversion from any AVS to pay anything. Because like if you could, let's say you compare to something like Solana. Solana pays staking wards in Solana to people who hold Solana, right?

There's Solana investors. Most of these people like more Solana, right? They want to have Solana. Right. So staking rewards doesn't necessarily mean people are going to sell anything, right? They may sell some for taxes and, you know, there was the whole like economics debate around the salon inflation proposal. But fundamentally, you know, if you pay your staking rewards to people in your native assets who already hold your native assets, it's kind of like works pretty well. But if you pay your staking rewards to people who are just staking if and there are more EFAPY, like for sure they're going to sell all of it. right, like, or the LRTs may even do it automatically on people's behalf.

So I think there's a big aversion from ABSs to pay any rewards. So basically those are kind of like zero, right? So you have 3.6 now, roughly, if you restaking it. The other thing is there's a huge amount of leverage in the system. So people mostly staking with LRTs. most of the LRTs, I think something like 60 to, you know, 80% is it. It was in Ave because people will, you know, stake Eiff, get like Easy Eiff or something or Etherify Eve, put it into ABE, borrow Eiff, loop this, right?

Of course, that also means that when you unwind this, the TVL, you know, someone may be staking, you know, one million, but then the TVL will go down. by 10 million or I don't know how much how much but you know it's a lot right so I think um and that's also a little bit where you have I mean one of the challenges around eigen layer because for a long time they were like hey look we have so much EF in there we're doing really well we're killing it but of course that also means on the flip side if the EF balance going to come down it's going to look really bad right and then that might depress the eigenlayer price, which further reduces the yield people make

and more incentivizes people to unwind it. So my guess would be that, you know, you're going to see the TVL for eigenlayer come down a lot. And then in the end, for it to really make sense, and in the long run, right, you need the ABS yield. So this is the only thing that's kind of like real and sustainable. And yeah, I think that's going to be hard to get.

Now, I think I guess EigenLayer has gone in that direction too, but I think the symbiotic approach of people having being able to stake their own tokens, I think it's a bit more sustainable, right? So let's say if you like EINA and then you say you have a chain and people can stake ENAE in USDA or something,

and then like you you probably want to incentivize that a lot more than you want to incentivize like eapstake. Of course, that still remains, then raises the question, okay, about, you know, what would a symbiotic token do and why would it have any value? And so it still raises, you know, a lot of questions remain. But yeah, I think I think you are going to see a big deflation of this whole restaking narrative. And I think it's going to, people are going to be like, oh, this is dead. Now, the one thing necessarily is that, right? In the long run, it makes some sense. Like, I mean, it is pretty reasonable to say,

hey, we want to have some economic value that's being secured, that's being used to secure one thing to secure multiple things at the same time. And, like, I think that kind of pattern is something that makes sense. So I think there's going to be, There's going to be something real there in the long run. But I think my guess would be restaking. It's going to have a very hard time in the next, you know, like two years at least. And it's going to be hard to come back as well.

That's what happens to all the project when they launch with an high FTV or with Aunglehr maybe launch with a high TVL, so to say. Once this goes down, it creates a psychological kind of looks bearish. And it's got it's really hard to come back from that instead of. if they didn't have much TVO but grew more organically. And maybe at this point, they shouldn't have had so much TVO probably for... Yeah, exactly.

It becomes more of a liability, right? I mean, it looks fantastic. And, you know, okay, they could, like, raise a very high evaluations and stuff like that. But, like, I think it's something that then, like, hits you when it goes the other direction. Yeah. Guys, I think we should button this up.

Thank you so much. It's fascinating. And, yeah, congrats something. another great event. Thank you for having us. It's been a pleasure. Thanks.