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Comment by lambdadmitry | Hacker News Reader

What boggles my mind is that there is no withdrawal from staking and almost no one talks about it. That is, staking right now is a one way street with a promise to be able to withdraw some time in the future and returning only about 4% gross annually, which is laughably low for something that risky. It's well hidden in Ethereum press releases, the only mention I can quickly find is the FAQ entry titled 'Misconception: "The Merge enabled staking withdrawals."' here [1].

It's not just about transparency either. The whole system's security rests on game theory. Not being able to withdraw must affect incentives, which means the introduction of withdrawals will change the system in ways that were not tested yet.

[1]: https://ethereum.org/en/upgrades/merge/

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> It's well hidden in Ethereum press releases, the only mention I can quickly find is the FAQ entry titled 'Misconception: "The Merge enabled staking withdrawals."' here [1].

You shouldn't make financial decision based on press releases. It was a well known fact that the withdrawal of staked ETH would not be enabled with the POS hard fork. Every staking tutorial does point that out.

The Beacon Chain has been started in December 2020. That means people have been staking for almost 2 years now, knowing that they won't be able to withdraw any of their staked ETH for years.

You can say what you want that is quite the commitment.

> That is, staking right now is a one way street with a promise to be able to withdraw some time in the future and returning only about 4% gross annually, which is laughably low for something that risky.

You are aware that the POS rewards are calculated taking the amount of staked ETH into account? The more ETH is staked the smaller rewards are? That means that people are totally fine with staking for that kind of return.

Withdrawals haven’t been enabled _yet_. Per your own link it will be enabled in an upcoming upgrade.

Of course you can argue this upcoming upgrade will never happen. But you could argue the same about the merge upgrade, and this one did happen in the end.

> Of course you can argue this upcoming upgrade will never happen.

If software development has taught me anything, it's to never depend on the anticipated future kindness of software projects I don't control.

I'm saying that right now staking is an activity with a serious risk of losing all of the staked money, an undefined period of the money being inaccessible, and just 4% gross reward for that, which is so poor I can only imagine very specific people engaging in it. It doesn't make sense financially, so the people doing that are either foolish, enthusiasts, or looking for other ways to profit such as regulatory capture, which should not inspire confidence.

What's more, it's expected to change, changing the rules of a system relying on incentives to stay sound. In that sense it's not even releasing an alpha version, it's releasing a different product and promising to launch the announced one some time later.

It does make sense if you accept two hypotheses:

1/ cryptocurrencies are here to stay, like it or not

2/ The environmental harm done by PoW is a much greater risk to oneself than losing some money on staking.

Then staking becomes a « vote with your wallet » situation to nudge the entire cryptocurrency ecosystem towards non-polluting algorithms.

If you prove switching to PoS can be done at Ethereum’s scale, the case to ban PoW altogether becomes much stronger.

It still doesn't, unless you mean as a cause for activists. Stocks are here to stay too, and SP500 returned about 12% since mid-20th century while being much lower risk and having no withdrawal restrictions. Why settling down for 4% when you can have multitudes of that with lower risk? There is no financial sense to do that, and "voting with your wallet" against your financial interests is by definition activism.

What you're saying is effectively "staking is a donation to Ethereum future", which I don't mind as long as it is explicit. In Ethereum's communications, it's anything but.

I think our disagreement is that I vehemently consider global warming to be against my long-term financial interest, making it perfectly rational to invest in anything that has a serious shot at limiting it, while you consider this to be « activism ».

Investors expect Ether to grow as an asset at more than 12% per year. The 4% staking reward is just a bonus for these people.

> Withdrawals haven’t been enabled _yet_. Per your own link it will be enabled in an upcoming upgrade.

lambdadmitry is aware of that, they wrote "that is, staking right now is a one way street with a promise to be able to withdraw some time in the future".

>Of course you can argue this upcoming upgrade will never happen. But you could argue the same about the merge upgrade, and this one did happen in the end.

They weren't saying that it definitely won't happen, their main point was "[the return] is laughably low for something that risky". Yes, you might be able to withdraw in the future, but it's not guaranteed and right now you can't, so there should be more attention paid to the risk as it stands.

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