Hi,
I noticed that yields on Lido are much lower than other staking platforms because the stETH is paid out immediately thus leaving people who have staked and been matched with validators paying the bill of the newcomer until more validators come online. This has a couple of disadvantages.
It means that yield will always be inversely proportional to growth. Since the more users sign up, the more validators are needed, and the more people the current yield is split between.
It will be a disincentive to stake with Lido. Many potential stakers will see a lower yield than stakers without liquidity and be turned off.
Solution:
Add a delay between when you stake and when you can claim stETH. This way long-time stakers are not being punished by having to pay yields of new stakers. This will take away immediate liquidity but it returns the yield to a reasonable rate and would be to everyone’s benefit, especially since the delay would be relatively small.
I hope this resonates as a see many people asking for airdrops proportional to when they first staked. This feeling is justified, they should be rewarded proportionally to their early commitment and not be left paying other’s people’s yield.
The wait to claim length should simply be == to the amount of time taken for ETH to be deposited into the validator queue, so all stETH is actually representative of a live and staking eth (not a queued eth earning no yield yet).
One of the draws for me was that I was able get to use stETH in the DeFi ecosystem immediately. The opportunity costs of having your deposit sitting idly for 3-4 weeks are non-negligible.
Also, I think that over time stETH yield will come closer to the actual eth2 staking rewards as the weight of active validators increases relative to new deposits.
The proposal makes sense. It boils down to, basically, what’s the core property of stETH - liquidity or the rewards, and makes that choice in favor of the rewards.
I’m leaning liquidity myself. The week+ long wait would make stETH much less usable and attractive for people who want to dip in staking.
Isn’t the need for immediate liquidity met by the market for stETH? Anyone can get stETH immediately by buying it on an exchange(at a discount currently I might add). By adding a delay before claiming people who want immediate stETH will need to buy it on the market. This will be a driving function for stETH to reflect the actual value of ETH plus staking rewards instead of devalued asset.