Why Ethereum MUST Change Its Monetary Policy | Sam Jernigan and Jerome de Tychey

TRANSCRIPT
David:
[0:02] Bankless Nation, the debate around the EIP that changes ETH's issuance policy is not over. On this episode, I have Jerome Day-Tuchay, founder of the ETH CC conference and also one of the core authors and proponents behind EIP 8361, the stake targeting EIP. Jerome, welcome to Bankless.

Jerome:
[0:21] Thank you so much for having me. Also a solo staker, and the official number is 8363 now. So if you're looking for the EIP, Yeah.

David:
[0:31] Also joining Jerome is Sam. Sam Jernigan, he is the ETH Maxi of Wall Street, the CIO of Lafayette Macro and CEO of Lafayette Digital Acquisition Corp. Probably one of the louder proponents on Twitter about stake targeting. Sam, welcome back to Bankless.

Sam:
[0:46] Nice to be back.

David:
[0:48] Jerome, let me just start with you. Since you're the core author and you really introduced this EIP into the zeitgeist and has caused much of a gnashing of teeth and debates in the Ethereum community, What is the problem that we are trying to solve here? Why is this EIP important and urgent?

Jerome:
[1:05] Yeah, so there's many, many sub-questions in what you just asked. So let me try to be as... As short as possible. First, it's not an old problem. We knew about this issue for a few years now. Actually, since before even the launch of the proof of stake, we knew that the curve that we were using would probably have to be recalibrated at some point. The initial debate really started in late 2023 and had a first intense debate in early 2024. And then it was rekindled in late 2025. And now is the time to have this discussion again, mainly because at the current rate of entry of new ETH at stake, we are climbing our way towards

Jerome:
[1:50] More than 50% of ETH at stake, very likely in 2028. I hope the time will tell and prove me wrong, but apparently on the current trend is clearly where we are going.

Jerome:
[2:02] And the problem with having so much ETH at stake is that it's detrimental to our security and it's also detrimental to ETH, the asset itself. So let's take a small step back. The current curve that is rewarding the body details for securing the network is very simply put, the more ETH at stake, the more ETH is printed. There is an incentive to stake that never really switches off. Even at 100% of ETH at stake, which would be like the limit, max limit, of course, like 100% of ETH at stake, We are about 1.5% yield. There's potentially no equilibrium possible for the staking market. Like all ETH will want to go at stake at some point. And for the silent majority, the ETH that are not yet at stake, well, they are paying for staking through dilution. So that's what we want to address. and this EIP as the conclusion of many years of research and also of the urgency of making this change now. Otherwise, the more we wait, the more painful it will be.

Jerome:
[3:07] So we are introducing an off-street guarantee that the market will find an equilibrium, a burn that grows with the staking ratio. The more ETH at stake, the more a portion of the reward are burned. So the rewards will taper to zero at around half of the ETH at stake. And in practice, the market will, of course, stop well before that. Actually, where the staking market will find its equilibrium. And whenever the participation ends up being low, which is very unlikely, the curve still pays very well. So it guarantees that we have a good security for the network. So it's also sitting on a research like minimum viable issuance, making sure that we are not overpaying for our security. And something I'd like to stress from the get-go is that we have a history of not overpaying for our security and making changes in our monetary policy, oftentimes at Ethereum, but always in the same direction, downwards, like issuing less, diluting less shareholders. And that's precisely why we're having this discussion right now.

David:
[4:05] I think a lot of what you said, Jerome, checks out to me and also at the same time, in order to change the monetary policy around Ether, you need to have overwhelming evidence that this is not just something in pursuit of a better outcome, but something like meaningfully catastrophic if we do not do this. And so maybe, Sam, I'll throw this to you about like, you know, some of the things that Jerome said is like, you know, like we're approaching 100% of ETH staked, you know, in vanilla ETH holders are paying with dilution. 50, yeah. But like, but the incentive, as you said, the incentive always goes and approaches 100% of total stake. Like, I think I need to hear the answer of just like, so what? Like, okay, we hit 100% ETH staked in the worst case scenario. You know, the worst case scenario, ETH holders are losing 2.5% nominally on their ETH in the year. So what? Like, is that really that bad? Like, how would you argue that this EIP is addressing a very large issue?

Sam:
[5:08] Right. Thank you again for having me and including me.

Sam:
[5:12] I do think this is a very important topic. And before we even really get to the monetary case for it, or the, you know, go as far as to say 100%, you know, the curve stops or goes to zero at 50% for a reason. And that's because we have to maintain above any other priority, Ethereum's credible neutrality. And when you cross above that threshold, and arguably before, unfortunately, but I think that's something we should get into. I mean, arguably, the risk to Ethereum's credible neutrality is well short of 50%. But we feel like that is the absolute firewall. Once you go past that point, you have more basically ETH that is staked into the system, into the consensus mechanism than outside of it. And in the event of, say, a catastrophic slashing or a smart contract bug or a hack, you know, I think a lot of people and a lot of debate seems to be coming from or focused on the LSTs, but you could argue that something like a Coinbase might be even a bigger kind of potential risk.

Sam:
[6:23] And even today, you know, I would, I would ask you, you know, if let's say I think Coinbase's market share for staking is probably 20 or 30 percent if you include kind of all the buckets there. And if, you know, if you have, let's say, you know, 75, 80, 90 percent of the validator set that is staked and they have 30 percent of all ETH, right, or 30 percent market share, right, of that, of that, of the validator set. And if they were slashed or if they were hacked or there was a smart contract bug of some sort,

Sam:
[6:57] My guess is that there would be significant calls to roll back that event, similar to what we saw with the DAO hack back in Ethereum's earliest days. And I think that it should be a very cautionary tale, what just happened with KelpDAO, this diminuously small pool of ETH. Again, it was an LST, but it could have just as well been some sort of a pool centralized operator as compared to an LST. And I will just tell you, I was very surprised to hear large players in our space that viewed that that as a systemic event for the lending protocol that was involved in that incident. And I was telling people that were asking me at the time, no, this is not a systemic event. That's, you know, the total amount of ETH in that lending protocol is less than 5% of all ETH. That's not a material amount. And yet people thought it was a systemic amount. And so that is not, I mean, it's a, it's a insignificant microcosm of the type of risks that you're opening up the core consensus mechanism to if you're talking about

Sam:
[8:06] Going up to 50%. We're at roughly 30, 33%, I believe now. You know, if you're talking about going above 50%, well, it's kind of done, right? You have moral hazard has consumed the chain at any point above, in my opinion. Again, probably before, unfortunately, but as a firewall, 50%. Once you go above that point, you have more ETH that is in the system than in outside. And when it comes to, you know, the ultimate decision is the social layer, right? And at the end of the day, if you have more capital that's in the system and subject to moral hazard than outside, and a decision comes down to whether or not to roll back that event, right, to undo it, well... I think, unfortunately, it would likely be a decision that meaningfully hurts Ethereum's credible neutrality. I think that that's just the one kind of very obvious point.

Jerome:
[9:05] Yeah, there's a ton of moral hazard coming from a big Pandora's box where lots of things get intertwined between the consensus layer and the execution layer, sticking to everybody else that mingle into DeFi. They make the case for, oh, are we going to roll this back or are we going to change this? A much harder decision to make. Beyond the more purely credible neutrality problems, like at what stage do we consider that the network has been captured and we start to censor transactions and so on. But if we look at 34%, what concretely breaks at 50%, 55%, 60% that is not already broken at 34%? Very simply put, it's our last line of defense. The ultimate backstop for Ethereum is on code. It's the capacity to have social coordination backed by unstaked ETH. And past the half of the supply being staked, that reserve is just a minority.

Jerome:
[10:00] And the drift just compounds, of course, because the more ETH is at stake, the more everyone else gets deluded, the more people feel forced to stake just to keep up. And raw ETH gets displaced by staking tokens and trappers and staking derivatives. And it's just replacing the working money in the whole system. But here is something I'd like to underline here. What really breaks is also our ability to fix it. Decoration itself gets more painful with every point of ratio that is climbing up. So fixing the issuance when we have 20% of EF at stake is much easier than fixing it when we are at 34. So I wish we had those discussions like, yeah, four years ago, and it's going to be meaningfully harder if we have this discussion in two years from now. So today we can run a transition that starts at today's yield, give or take, and gives everyone roughly two years to adapt. And that's a gentle path that exists now and will likely not exist later. Also, without even talking about Lean and the roadmap for Ethereum to change, its duty for the validators and so on, that will imply also a change in the issuance. So we have the opportunity right now to do this change, but also to make sure that we pick a new issuance and a new monetary policy that we can stick to for the next five to 10 years, at least.

Sam:
[11:19] So I think Jerome hit on a couple of points I'd like to just elaborate. One on this issue of capture. I will not support and Wall Street will not build on a chain that has been captured by a cartel of small interests. And so maintaining Ethereum's credible neutrality by preventing the valid or set from being captured by a small group of actors is absolutely critical. We're wasting our time here if we genuinely if we allow that to happen i think that

Sam:
[11:50] So that is, that's absolutely paramount, whether it's censoring transactions or, again, simply, you know, JPMorgan or Wells Fargo or Bank of America are not going to build on a chain that has been captured by a small group of people. So this is what uniquely separates Ethereum from every other proof of stake chain. I really only took on this direction in my career and my life with the explicit understanding that Ethereum was committed to capping the validator set at somewhere between, I mean, Vitalik has said it's low as 15%. You know, I think now we're basically allowing it to go all the way to 50. You know, I think Justin for a very long time and most of it, Dankrad and many of the other the original designers of proof of stake always had somewhere in the range of 20 to 30%. We can and should talk about why we're in this situation with the current issuance curve, which all of the designers of the proof of stake mechanism for Ethereum believe was a mistake, that it was always meant to prevent the validator set from growing much larger again than this kind of 30% or even I think they used to say 30 million, but that was when the total amount of ETH was closer to 100 million rather than where it is today.

Sam:
[13:06] But it was always supposed to cap the validator set. And as Jerome alluded to, and I think that this is actually something we should talk about because, you know, I think while the researchers and a lot of the protocol teams maybe understand, you know, the kind teams understand that the lean roadmap implies much less issuance is required. I do not think many people outside of that very small group of people understand that. And certainly that has not been something that you've heard the opponents of the issuance change acknowledge. So I think that that's worth maybe even drilling on a little bit further because this is going to happen either. This is going to have to happen either way. I don't think it will happen if we don't stop it now, if we can't. And this, by the way, this transition period is already far too long for me. I think we run the risk of between now and when lean happens and when the next issuance change needs to occur, that much of it won't happen. And even with the current, this two-year time period is too long, in my opinion. So I think it's important to understand for those that are against this,

Sam:
[14:14] that this is already a compromise.

David:
[14:17] I see Ethereum stuck between trying to maximize two desires, both of which I think are noble. One side is, I think, the side that you guys agree with, which the philosophy of the Ethereum protocol is one of radical self-sovereignty, radical self-reliance. The protocol has no dependencies. That's the whole point. It will never be owned or operated by a single cartel, to use your words, Sam, or a small group of people who can kind of control the influence. And the Ethereum protocol has always bent towards removing intermediaries, removing improving dependencies, being a multi-client system, everything about Ethereum is, radical self-sovereignty, 100% uptime in every single respect. And I see your guys' arguments as to how this is congruous with that.

David:
[15:07] That's one side of polarity. The other side of the polarity is Ethereum has a DeFi ecosystem. It has a private market on the other side. And the private market can solve a lot of problems. And on one side, you might call them like a cartel of people co-opting the protocol. But on the other side, you see the private market being efficient and solving problems. And so one of the arguments is that this EIP preserves the value of vanilla Ether. Well, in Aave, you can deposit vanilla Ether and you can get effectively the ETH staking yield while holding on to vanilla Ether because you've deposited into Aave. And so we have the private market solving some of these problems. And the ETH staking yield is kind of viewed as like a way to inject ETH into the private market. you know, the central bank issuing currency into the commercial banking layer, and then the commercial banking layer distributing that to the rest of the ecosystem. And, you know, instead of maybe calling it a cartel, you could call it just.

David:
[16:11] This is the free market. This is capitalism. This is the market economy building structures on top of the Ethereum economy. And these two things are harmonious. And the desire to go full radical self-reliance is actually destructive of the market economy that's based on DeFi that has monetized Ether inside of Aave. It's monetized Ether inside of Uniswap. And reducing the flows of Ether into this market economy is going to be destructive of the thing that has produced so much value for Ether in the first place. So why are we fighting the market economy? Why are we fighting the DeFi layer when in harmony, these two things together actually produce, you know, one plus one equals three. That's the other side of the perspective. And so like, I think that the DeFi people will want to hear from you guys some amount of like, I don't know, like admission that some of these problems are actually partially being solved, maybe not to the fullest extent of what you guys want, but the DeFi ecosystem is going to be harmed by this. And that's the perspective that I see. Okay, so Sam, take what I've said and kind of respond to it.

Sam:
[17:22] I want Jerome to go first. Sure, okay.

David:
[17:24] Sounds like you guys are ready for this.

Sam:
[17:26] Okay, there's so many places I want to hit there. I want the diplomat to go first, and then I'll go and then he can clean me up.

Jerome:
[17:34] Okay, I will never go to the extent of calling Aave and Lido a cartel. I think they have brought tremendous goods to the ecosystem. And naturally, this EIP is impacting a portion of their business directly. So it's very expected that them, E4Fi, and so on are the first to react. And over the years, they've been very good stewards of the protocol itself. It's funny when you said, look, it's like the monetary policy, the Fed decide this and decide that. Well, when the Fed put its rate at 12%, suddenly the Fed's rate just beat everything. So everything goes to the Fed. That's the kind of situation we are in right now. There is literally no strategy that involves ETH maximizing that cannot involve staking. Because staking is notoriously low risk for many different reasons in terms of infrastructure maturity, in terms of slashing protection at the client level, in terms of amount of different derivatives you can touch on, and also a too-big-to-fail effect.

Jerome:
[18:43] Nothing can beat staking. So we currently have a de facto best thing to do with our ETH, that is putting them at stake. But before that, before we had staking, I mean, pre-merge and even pre-launch of the proof of stake, we also had a DeFi ecosystem that was very healthy with a similar TVL, if I'm not mistaken. So the situation that we are in right now is also something that we have fabricated with our

Jerome:
[19:13] Lack of understanding of what the behavior of the staking will be at the right side of the curve. A lot of research went into making sure that we are paying enough so the curve is good enough that people want to stake early on without knowing if and when they will ever be able to withdraw. But we didn't look at our capacity to actually make the market reach in equilibrium in terms of staking.

Jerome:
[19:40] So that's coming back to the first point. Like, yeah, we need to make Ethereum a radically independent, incredibly neutral thing and so on. And I'd love to hear at some point the original designer of this curve express themselves and say, yeah, maybe we made a mistake. We should have looked at this differently. Now, from a pure DeFi standpoint, I think DeFi will be fine and even will be in a better shape after this change. The staking rate isn't free income at all. It's funded by deluding every holder that doesn't stake. That needs to be understood.

Jerome:
[20:14] What we are removing is a subsidy for DeFi's own users that they are paying through a backdoor. Like, yeah, you get subsidized to go at stake. We don't need this much ETH at stake, but you are paying that through dilution. But you have to know also that DeFi has already repriced for a much bigger version than this. Like the rate fell from 20% to under 3% at the staking level over the years. And the lending market adapted. Different staking derivatives adapted as well. Here we have a change that proposed a published formula that has two years of runway. You can adapt, you can build around it. And I think that some spread will survive. Some other will shrink a little bit. What's missing and it's been asked notably by Stanley is like yeah but where is the cascade model of the LST and the landing impact and so on and I'm trying to come at them and say like yeah you have the numbers you have the research team and the risk teams let's team up. My DMs are open both the E3F5 CEO and the Aave CEO knows where to reach out to me and I would love for us to collaborate and build up this kind of model

Jerome:
[21:23] Maybe the 18 monsters is too much. Maybe the engine monsters is too few. Maybe there's a adjustment that we need to make on this curve to make a smooth landing for everyone. But that doesn't change the problem. We are paying too much for our security and we are over-deluding our asset and slowly pushing all ETH to go at stake and replacing trustless money with governance money. And that's not what we have signed for.

David:
[21:46] With the argument around Ether dilution, I want to push back a little bit on that, just because of my understanding with how proof of stake works, right? So So the idea is that there's just like unnecessary dilution, there's inflation, there's a cost to vanilla ether holder, and we need to preserve the value of vanilla ether because it's the most trustless asset in mankind. And so let's imbue that with as much moneyness as possible.

Sam:
[22:08] Well, you want to preserve it as a portion of the overall set of holders.

David:
[22:13] Yeah, yeah. My counterargument, or at least something I want you guys to contend with, is that proof of stake is already incredibly efficient in the first place, especially Ethereum's version of proof of stake. In terms of economic security, it's already crazy efficient. So the remaining issuance, which is already very low, naturally automatically flows to the people who are already the most inclined to hold ETH in the first place, which is the stakers. And these people, we talk about Tom Lee is generating $250 million in ETH stake every single year. What is he doing? I mean, maybe this changes, but he's probably holding it and so are all of the solo stakers. The natural thing to do for all ETH stakers is to hold the ETH that they are issued. So in terms of the dollar price on the secondary market, I actually don't see too much impact that this protocol will have, in terms of the secondary market dollar price for vanilla Ether, the asset, because it's not like the staking yield is equivalent to sell pressure. In fact, I would say that there's almost a negligible amount of percentage sell pressure from Ether issuance. And I know this is a little bit tangential to what you guys were talking about, but I do kind of want to throw that one at you guys.

Jerome:
[23:33] Before Sam, I'd like to respond with two bones that I will throw back at you in this case. The first one is that the issuance is going to be 0.9, like in a few weeks, something like this, 0.9%. Okay, that's fine, 0.9%. The max issuance that Ethereum can live on is 0.5. Actually, at the same level of staking that we have today, it will be closer to 0.3 or something like that. But never mind. Let's take this delta for this case. So that's 0.4 delta. This 0.4 delta at today's price is give or take $1 billion.

Jerome:
[24:06] Okay, can we save $1 billion? Can we not overtrade $1 billion? Well, on a couple of hundred billion dollars market cap, I think that's a meaningful cut. That's a meaningful way of doing things. So this is not a small amount. But indeed, when we compare dilution, we're like, hey, look, Bitcoin is diluting its holders by 0.8. And in a couple of years, they will have a halving, they will be 0.4 and so on and so forth. So if we are comparing ourselves to the leader, In terms of market cap, like, yeah, we are in the weeds, like, we are in the same shape. And we are much more conservative and less dilutive than all of the rest of the proof of stake out there. But still, it's a billion. So can we save this? Like, we should save this in this case. And you're right. Like, some of the holders of ETH that are the most ETH or Maxis, they are also staking and they are making money out of this. But are they making this money

Jerome:
[25:07] Are they choosing staking because it's what they want to do or because it's what pays the most? And I would argue that this is because this is what pays the most. If you have a vault that's sole purpose is to provide liquidity and write the volatility of ETH, and that this vault is super long ETH and very conservative, not exposing itself too much, like trying to keep up the principle as much as possible, it's paying 1.1 or 1.2%, you're never going to have to only provide liquidity to this when you can have at least 1.5 at stake and more likely between 1.5 and 2.2 for the next two to three years. So we are preventing other DeFi application or DeFi usage of ETH that will be much more beneficial to the price action and the market setup of ETH to arise by just funneling all the ETH towards staking. And that's not even considering the security problem and credible neutrality problem comes at it. So that's my two points on this. Like, it's not a small change in terms of budget impact. We are going to save a lot of money. And also, we are going to let ETH be allocated to more productive things than just adding a little bit of marginal additional security at the cost of potentially losing our own social backstop.

Sam:
[26:28] I hear a lot of people against this keep talking about Ethereum's issuance as a productive yield. And that is not true, right? I think Ganskar actually mentioned this in his recent little note. You are taking a dollar from one pocket and moving it to the other pocket. So you're taking your subs, you're basically, you're taking money out of your left pocket and you're moving it to your right pocket with issuance. And in this case, you are doing it to encourage an activity, in this case, to secure Ethereum and any penny more than what is absolutely required risks, well, first of all, it's excessive and it's imposing an excess tax on the system itself, right?

Sam:
[27:10] Obviously, much more so on those who remain unstaked. And that's why everyone will go to becoming staked, right? To avoid this excess tax. But anytime, you know, there are all types of additional side effects of this. One is that you are effectively subsidizing an activity. And this is actually very similar to the subsidy that the U.S. Government kind of implicitly gave to housing leading up to the global financial crisis. You encouraged excess risk taking in this behavior. You know, the zeitgeist was, you know, every American should own a home, right? And, you know, there were Fannie and Freddie provided very basically government-guaranteed lowered lending rates for those mortgages and you got a tax deduction to be a homeowner. And so in a lot of ways, you know, the same leverage that built up leading up to the global financial crisis is very similar to the subsidy that we're giving to looping ETH, basically. And I don't mean to suggest that I think that the amount of leverage is high or worrisome, it's not at this point but it's the same type of thing because of this subsidy that the protocols

Sam:
[28:25] I've been shocked that they think that they're entitled to this they're they're entitled to take money from me the non-technical ethereum who doesn't i share a validator with with a friend he is more technical than i am but if i want to stake because i'm not non-technical the easiest way and certainly the way that provides me the most liquidity is to use one of the dominant LSTs. And so, you know, in a lot of ways, you're forcing me, right, to avoid having money taken out of my pocket and paid to a stake. I'm foregoing this, you know, this money. And by the way, once it goes above 50% and arguably now, I realize that I'm guaranteed to get bailed out.

Sam:
[29:11] Even if that LST gets hacked or it's the operators become malicious or they're slashed, I'm going to get bailed out. So what risk is it? What risk is there, right? Why would I not just move my money into that LST or into that dominant protocol? So, you know, you often hear about the network effects of liquidity, which is true. So the most dominant or LSTs will have the deepest liquidity. And that will be what will the network effect of that will cause them to become even more successful. But it is also the case that the bigger they are, the more too big to fail that they are, the bigger they're going to get because that is a network effect. I'm going to, I actually know researchers who have used Aave, I'm sorry, not Aave, but Lido because A, it's the most liquid and B, as it gets bigger, they know if something happens to Lido, it's going to get bailed out. And that is sad. That is, it's depressing. When I first found out about that, I was speechless when this person told me

Sam:
[30:07] at a dinner. It was almost two years ago. It was in Brussels. Look, this is not a problem we can wait any longer to handle. I think, let me also address this issue of somehow being bad for DeFi. I totally disagree. I was shocked by this. I was very surprised. You know, I think that, first of all, again.

David:
[30:29] Let me set up the question for you, Sam. Like after my podcast with Stani and Mike from Aave and EtherFi, the, takeaway that they think will happen if the CIP goes through is there will be a mass exodus of the ETH out of DeFi because the staking yield will be lower, the incentive will be lower. Do you think that is accurate?

Sam:
[30:50] The subsidy to loop your ETH will be lower.

David:
[30:53] Yes. Do you think that's accurate? Do you think that as a result of this EIP, there will be less ETH in DeFi?

Sam:
[30:58] I actually think it'll be the opposite. I actually think that what will happen is the price is going to go up. You're going to have an epic bull market and the demand for leverage and looping is going to go stratospheric. So I actually...

David:
[31:10] Wait, with a reduced subsidy of ETH, because the issuance is lower, you think the looping will increase?

Sam:
[31:18] Yes, yes.

David:
[31:19] But I thought you want the looping to...

Sam:
[31:22] Your price is going to go up. The price of ETH is going to go up when you stop diluting ETH holders, right? And I guess it's not just raw ETH holders, it's at a system level, right? At a system level, right? You are, the ETH is, has too high inflation. It's too much for the market and it's suboptimal, right? And by the way, when you make the monetary, and by the way, Ethereum is set up such that we We have what is basically a combined fiscal and monetary policy. We don't have Congress that funds programs, spends, and an independent Federal Reserve. We have a joint- That issues,

David:
[32:04] Yeah. Correct. Right. Spending and issuing is the same thing because it's just- It is pure money printing.

Sam:
[32:10] It is the definition of print money printing when you have a joint authority. And so right now, that money printing is just going to subsidize this single activity, which apparently, you know, they acknowledge it as a subsidy that they think that they need. I actually, I said this on Twitter a couple days ago. First of all, I think that the price of ETH is going to go up when you reduce the issuance. I think that is just mechanically mathematical. I think the second, partially because this is unexpected, an unexpected monetary policy change that is a tightening of policy should almost, you know, by default result in a positive price reaction. But two, it makes Ethereum more credible, right? Signaling and actually having this conversation and people learning this in a lot of ways, maybe the pushback against this is actually beneficial. So all of Wall Street and all of the companies out there are going to learn what makes Ethereum different and special. I'll be right back. They're going to realize that Ethereum is not able to be captured, that it is the most credibly neutral, and that is going to mean more adoption and more growth.

Sam:
[33:20] And so that is going to be positive for the price of ETH. But I think second of all, we see this in almost every economic situation in history where the more credible a fiscal monetary policy that a country has, the more robust and vigorous the financial system. And so that is what, you know, if you talk about why the U.S. Has the largest and deepest capital markets in the world, people point to the historical strength of our fiscal monetary policies and a robust national defense.

David:
[33:58] And our court system as well, like our court of laws.

Sam:
[34:01] The rule of law,

David:
[34:02] Right? The rule of law, yeah.

Sam:
[34:04] So absolutely. So, and that goes to the credible neutrality analogy. So I actually think that this is, so I was very surprised. Now, let me just see one possibility. I think that maybe on the margin, and I think that this would be good for everyone, certainly in the in-state, but maybe on the margin you could see, you know, you'll see DeFi protocols that previously just felt like they were being pushed out of the market because they couldn't compete with this lending, you know, paradigm. You'll see other applications that will maybe on the margin grow. And that would be positive, but maybe slightly on the margin in the very, very short term. But I really don't think so. I think it will be, and I was surprised to hear it. I'm still a little baffled by it. I think that the only way I can really rationalize the position that some of the guests that have appeared on your show and others that are on Twitter is that they're being basically very short term oriented and frankly, very negative. Like my vision for Ethereum is so much grander than theirs. I just don't even understand why they would want to optimize for this short term outcome when, you know, when

Sam:
[35:18] Sitting atop an ETH, you know, an Ethereum that's worth 10 or 20 trillion versus one that is relegated to a future like Cosmos. That's the The only way to kind of explain their behavior is extreme short-termism and a lack of fully appreciating the upside that Ethereum has.

David:
[35:37] I want to hear a little bit more about why you think this would be good for DeFi. My initial reaction is that if you take away the issuance, you take away the subsidy, you reduce the total amount of new Ether that looping and other activities like looping provides to the market. And so that market must contract, especially if, you know, looping accelerates the, say this EIP goes through, looping just accelerates our road to 50%. And if looping at all gets the total ETH approach to approach 50%, why loop at all? Like the incentive dries up so much more quickly.

Sam:
[36:16] Other things to do than just loop is what I'm saying, right? You know, you could pay all types of other things that, but builders aren't going to be, there's not going to be the interest, the capital, and the motivation to explore those others when they're being crowded out by this excess issuance that is solely go, that is being only routed through the consensus mechanism into looping.

Jerome:
[36:40] I would like to jump in on the, on lending itself, like, um, If you take lending, what's the future of lending in the next 6 to 18 months? You have a massive amount of RWA and tokenization that's coming on blockchain. Hopefully, they will stay on Ethereum and that will be their main pick in terms of where to land. That's just the repo markets, the global repo market that is going to change and use those kind of venues to function differently than they were before, 24-7 with lots of advantages. I want to see Ether as a pristine collateral in this case and not just something that you loop on, just like the natural thing to do so.

Jerome:
[37:27] The relationship with less dilutive, more price is something that's clearly established in the macroeconomic literature. The less you dilute, all things being equal, you should just have a better price appreciation. And from a security perspective, it's a very complex spectrum to navigate, but it's not just the amount of ETH at stake. It's the value of the amount of ETH at stake. So we have an opportunity here to even get more security by pushing the price up. And one of the reactions we had is very oftentimes people were saying, like, it's just small, you know, it's just a small change. Like, we already dilute so few. Yeah, but the trend is more important than the dilution itself. Like, we are trending up. We are definitely trending up in terms of amount of fees that are going at stake, and thus we are trending up in terms of dilution. So the market recognized that this solution is ongoing and it's compounding and it's not going to stop. So when people are saying that we should focus more on things that propel better adoption, there's literally no crypto entrepreneur out there that will tell you like, I have a better catalyst than the token going up.

Sam:
[38:42] I have to say, it's so bizarre that Ethereum has become the opposite of Ponzi-nomics. Now we want to do the opposite. We want to like dilute-a-nomics, you know? I mean, the fact that we don't want to optimize our policy for both what is best at securing Ethereum and as a byproduct of getting it right to secure Ethereum makes the price go up. This is a rather strange dystopia of a very long bear market that Ethereum people have somehow lost this kind of basic perspective.

Jerome:
[39:18] Let's just look at what happens when we have more EF at stake, just from a market perspective. So when half of the EF are at stake, by definition, half of the EF are not at stake. When 60% are at stake, 40% are not at stake. One of the drivers of large purchase on the market is, of course, how big is your slippage? How deep is the market? So as you send more ETH towards staking, you are limiting the amount of ETH that is available for purchase. So some people may say like, yeah, this is great. Like there's no more ETH on the market because all the ETH are going at stake. But it's not good for the price. We want to hold an asset that whenever you want to sell it, you'll have the price region is not that good. And whenever you want to sell it, the slippage is 1% or 2%. This is also something that boils down to how DeFi functions. It's not just a repo market and lending. We have DEXs. We now have very complex strategies that are available, very sophisticated strategies that are appearing with the new venues that are popping up. You had Morpho on the podcast recently. We know also that Aave is doing things with V4 and so on. This is getting very sophisticated. Now we have things we can do with our ETH that are not just looping. And we should give those alternatives a decent chance and also not do yourself. Make Ethereum the pristine collateral it should be and also the money it should be, the trustless money it should be for the global financial ecosystem.

David:
[40:40] I think what I'm hearing from you guys is that if we reduce the subsidy, we reduce the amount of new issuance to pay for ETH staking, this might actually be a boon to the DeFi economy because Ether is unlocked and made more available to the free market, on top of the consensus protocol and might make Ether more available for new DeFi startups or even current DeFi startups to do more things with that Ether because they don't have to compete with somebody they can't compete with, which is like the central bank of Ethereum, which is the issuance protocol.

Sam:
[41:17] I'd be curious if Jerome disagrees. But I mean, in traditional economics, you know, crowding out is the term that's used, right?

David:
[41:24] Mm-hmm.

Jerome:
[41:26] When you hear from ETF issuers and DATs about Bitcoin, it's like, oh, it's so simple. We just say it's 21 million. Even though the security budget is just hand-waving, like, yeah, well, we don't know. Like, maybe the price will just double every time we lower the issuance. That's actually the play of Bitcoin. Every four years, we just have halving, and we say, like, look, it's getting rarer. And some people are saying, like, this won't apply to Ethereum. Like, okay, well, I will definitely take this bet. Anyway, the duty of Bitcoin is its simplicity of just saying like it's 21 million and everything else is hidden behind the curtains. We don't really know if it's going to work or not. We have the opportunity with ECIP to make a very clear statement that is the max dilution that you're going to have on Ethereum is 0.5 and we have our economic security fully figured out. So it's 0.5 max. That's your dilution. And that's actually something that is starting to arise in the discussion that we've been having for the past 10 days, the heated discussion about issuance, is that some people,

Jerome:
[42:34] However sophisticated you think they could be because they've been in this space for like 10 years, sometimes more, like they've seen all the things on DeFi and so on. And suddenly they are starting to realize that their yield is actually dilution adjusted. Oh, well, I need to adjust for dilution. Yeah, you need to count that into your calculation. And the new holders of ETH, the sophisticated holders that come from institutions, that's the kind of question they ask. Like, okay, well, I'm getting how much, this much, but where is it coming from? It's coming from issuance. Okay, so there's a dilution. So what's my adjusted thing? And what kind of tax am I paying on top of this? Huh, okay, let me compute that. The arithmetic just doesn't fit. that's that's major improvement for ethereum to have a limited amount of issuance as as low as possible but as much as necessary keep it 0.5 keep it easy to easy to frame i'm not super hell-bent on the 0.5 maybe 0.75 is better maybe something else is better but at least making sure that the market can find an equilibrium is what we need and we have enough research backing to say that 0.5 is achievable and it's it's good for our security overall. We should not let this opportunity flatten.

David:
[43:52] I want to talk about Tom Lee because Tom Lee has been the single largest buyer or Bitmine has been the single largest buyer of ETH in the last year by far because he's plowed like $12 billion into ETH. And one of the reasons that he did that was the staking yield. So Bitmine is getting something like a quarter billion dollars a year in staking yield. And he's like using that to tout Ether as an asset, Ether as investment to Wall Street and to like the marginal buyer of ETH. And so there's two concerns that I have here. First, like.

David:
[44:25] We just kind of, if we, if this proposal goes through the recent single largest buyer of Ether ever, who just plowed 10 billion dollars into ETH, 12 billion dollars into ETH, with the promise of getting staking yield is not going to have the staking yield that the monetary policy of Ethereum previously told him he was going to get. And so I know we're trying to create credible neutrality, but there's also something about like, you know, don't tamper with the monetary issuance in so that it financially harms people. It's kind of like an also an ethos in the crypto industry. And so like, we're kind of harming our single largest buyer of Ether that we've ever seen. And also we don't really have this like yield to advertise to Wall Street and everyone else that he is using to sell Ether to everyone else. And so despite all of your guys' arguments, which I think are good, the optics of it, of changing monetary policy right after our largest buyer ever buys a bunch of ETH is not great. Sam, how would you respond to that?

Sam:
[45:31] Well, I've known Tom for a long time. At least 15 years. And Tom is very smart. And I think that Tom would much rather get 50 bips or 100 basis point yield on a, I think his target is $30,000 ETH, than he would 2% on a $1,000 ETH. And for that reason, I would be surprised if Tom did not, you know,

Sam:
[46:02] I would be surprised. I have not spoken to him directly and I don't want to speak for him, but I would be surprised if he did not look at his, what was in the best interest of himself and importantly for his shareholders, because that's what he has an obligation to. And, you know, this really goes down to the value of your principal versus the value of your coupon. And I think that I made, I tried to make this case to, for solar shakers as well. You know you are not going to get the type of price appreciation or short medium or long term that you would get with an optimal issuance setting for ethereum and so again just going back to tom if i look at you know his forecast you know he's as bullish on i think the future of ethereum as i am and so i would be very surprised if he didn't see it the way that i did and want to earn 50 bips or 1% on, you know, you know, a 30,000 or a 50 or $100,000 ETH that where Ethereum is the credibly neutral settlement layer for the global financial system. And the alternative is you keep your...

Sam:
[47:16] 2% and we are on the road to Cosmos, which literally the atom token goes down every single day. And the analogy between here is very similar. And I think that this is you know, I think so that's how I feel about it. Maybe Jerome can weigh in differently.

Jerome:
[47:33] Yeah, I remember back in late May or early June, Tom Lee tweeted that he is not opposed of any Schwanz change, but it has to come with a large consensus and be whatever like prepared and so on and he hasn't expressed himself on the matter and I hope he will at some point but let's take the opposite argument like if issuance is really if staking yield is really bringing ETH up without any consideration regarding security why don't we like 2x or 3x or 4x the yield and see what happens if you can send us to Namek let's go and make the trip Why not? But as Sam just said, when you are a D18 and ETF, you have your principal and your coupon. You sell the yield as the coupon. So sometimes you must have a hard time explaining, like, okay, it's paying 3%, but that seems a lot for something that's supposed to hold value. Like, is it holding its value? And then they open the chart and like, yeah, it's sort of in this range and not really moving around. Like, yeah.

Jerome:
[48:41] Nobody cares really about the coupon if the narrative on the print support is not something that's convincing. So I think opposing the issuance reduction from a pure DAT ETF perspective is twice detrimental. Like, first it says, well, minimizing dilution is not so important. It says we're not backing up fundamental changes that's going to improve the store value characteristic of the asset. So it's a weird thing to say, like, oh, you don't want the issuance reduced? What is your reason? Oh, you have DeFi problems and so on. is so intertwined, like we don't want to touch that. Yeah, but about the asset, it's good to have less dilution, right? Yeah, but you're in a difficult spot, I think. And secondly, when you say, I oppose the issuance reduction as an ETF for a DAT, you're saying like, well, we accept that the de facto use case and only use case of ETH is just to sit as a staking derivative or in a staking venue, mostly doing nothing, not really promoting adoption or innovation,

Jerome:
[49:51] Not helping out except for extracting some fees out of the rent. But soon enough, you'll have the question like, well, the dilution is 1%, the yield is 2%, what's left is just 1% adjusted. So is that really paying this much? Okay, I'm going to do a little repricing of the principle itself. So, yeah, how is the principle supposed to raise in value if we are not doing everything we can to maximize its security, its credibility,

Jerome:
[50:21] and at the same time minimize the dilution that every holder has to bear?

David:
[50:26] Let's talk about solo stakers. The common response to this EIP was that this reduces the ability for solo stakers to participate in solo staking. And solo stakers as part of the Ethereum structure are the defenders of last resort. Like we must have solo stakers in Ethereum or else this whole project doesn't work. And by reducing the amount of Ether issued for security, you directly harm solo stakers disproportionately versus any other part of Ethereum staking complex simply because solo stakers have the highest fixed costs. You know, Lido or any other like staking pool has like low fixed costs and they can scale very well simply by their size. But any decrease in rewards harms solo stakers the most because they're the ones who are paying for the machine, the internet, the electricity, the uptime, all that kind of stuff. So how would you guys respond to the critique that this pushes out solo stakers, in favor of the cartel, the quote unquote cartels that you guys are trying to minimize in the first place? Sam, how would you respond?

Sam:
[51:32] The history of proof of stake is that, you know, they have been overtaken by cartels, right?

David:
[51:39] Other proof of stakes, not Ethereum.

Sam:
[51:41] Correct.

David:
[51:42] And so when we use a cartel word, we're not talking about any Ethereum entity, but we're talking about the boogeyman, the cartel boogeyman out there. Yeah, correct. Right.

Jerome:
[51:52] Solostakers. Everybody can come and say, I'm a solostaker, but sometimes they just have a, they just have a solostaking node and they are posting gravities or they've been active in the community for quite some time. I can name probably 10, 12 solo stakers that I know, including me, that are pro this kind of issuance. This kind of issuance will change. The other ones are, you know, some are against, some are more composed. They want to dig more into it. They got to make a better, more informed decision to support it or not as time goes. But you're right. Like Ethereum has been designed to be solo stakable. And that's a pretty strong word because we have to impose a minimum stake of 32E for various reasons. Like we don't want the network to be 50,000 staking nodes because the network throughput will have a bad time sending the blocks across the whole network or those kind of reasons. So we have this 32EF. And 32EF can be a meaningful amount of money. But nevertheless, you should be able to spin a node when you have enough financial resources and you are decently technical. Like we have a lot of great organizations that are doing the work out there to make sure that it's accessible to actually go at stake. Now, regarding the EIP itself and solo stickers, we've been correcting our own language and trying to make sure that we don't lead people into a misunderstanding that this EIP is saving the solo stickers. No, it's not.

Jerome:
[53:20] I'm not going to try to make it up. We cannot claim that this proposal will preserve solo sticker share. We don't. The research on the matter is genuinely split and we can't pretend otherwise, but what we claim is quite narrower. Today's curve pushes the solo stakers out. That's it. That's what it does. Dilution rises, tax will hit and is already hitting the nominal number and there's no equilibrium to stop that either. So the status quo is worse than the change because the status quo will push the solo staker out arguably faster, but it's split on the matter, but I think arguably faster, and we'll end up in a much worse situation, a situation where we have more dilution, more concentration of stake in a few venues, and way less solo stakers. So

Jerome:
[54:14] The tapering of the issuance removes the pressure regarding dilution, the pressure regarding taxonominal numbers, and allow us to have an equilibrium. And it's doing that without adding any burden that lands harder on the small stakers compared to the big stakers. So it's generally applied the same way everywhere. We are taking a fraction of the yield from everyone and no fixed fee overall. So the status quo is not a good place to be in regarding the solo stakers. And some sort of stakers don't really realize that. Some stakers are like, OK, well, I care more about my principal. So you're getting my coupon. That's OK. I want

Jerome:
[54:54] My principal to go up. So they are supporting this because they believe in the after effect regarding the price. Some are way less sensible to costs, like a fixed cost of $500 of hardware and time and so on. It's not that much. So they're like, yeah, I'm not sensible. I have 32 ETH already at stake. But nevertheless, the tax effect and the dilution effect applies at first at the solo staker level. They are the butterfly in the forest, as I like to frame it. And the status quo is hitting them harder. They will get pushed out, whatever happened. But the equilibrium that will be post solo stickers out may not exist. And they will be out with much more dilution for everyone. So we don't want to claim that we are protecting them. We want to claim that we are making them up in a much better fashion.

Sam:
[55:52] I think, unfortunately, there'll be nothing to protect. I mean, like I said, I share a validator with a friend, but if I'm not bullish on the long-term outlook for Eat the Asset, that activity is not worth it to me. And so I'll probably, you know, ask that we shut down that validator.

Jerome:
[56:07] Yeah, as a solo staker, you have the operational risk and you have the operational risk to bear. But when you are putting your money into an NST, you have the operational risk and also the risk that's inherent into the LSD. Arguably, the operational cost of the solo stakers are higher than whatever is out there, but they have just one cost to bear. They have one risk to bear. And lowering the staking yield and allowing the market to find an equilibrium is also giving us a chance to find a yield amount that is both enough to save some solo stakers and also to have the market-landed equilibrium at the same time. But who will come out first? It's an open question, but what's for sure is that the current status quo is very much detrimental to the solo stakers already.

Sam:
[57:01] But remember also that solo stakers are not too big to fail. The largest staking pools are. And so why would you remain a solo staker if the largest pools get so big that they are undoubtedly too big to fail? That is an irrational behavior, especially for one that you now have less confidence in its long-term credible neutrality and the values that you signed up for. So, you know, I, again, for reasons that are not as purely economic that Jerome just went through. I think that there are other reasons that, like what I just mentioned, I think that there's other angles here as well. I think the two high issuances is actually, and you will not find there's not research on this. This is an unexplored topic area, but for a very long time, a lot of Bitcoin has been mined in Iran and China, countries either where people want to get money out because for capital flight out of China, for example, where you're effectively spending your RMB to receive Bitcoin and then swap that into Tether, for example. Or, you know, you mine in Argentina or Iran or places where the inflation is very high.

Sam:
[58:14] And you want to, again, spend your local currency to get an asset that retains its value that you can and has a better inflationary profile. I think that we should actually probably, we could see a, if we limit the growth of the centralized staking pools, you could actually see a better diversification of geographically of staking operations. Again, I don't think you're going to see any research on this, but I think that that is, because again, the economic soundness of the asset is one that they want to own.

Jerome:
[58:49] Yeah, and maybe to conclude on solo stickers regarding how we can help them, actually what actually works for solo stickers to be more competitive with the rest. You have anti-correlation attestation penalties that is now being proposed for inclusion in Hegota. It's very, I think it's a bit far from the original design of this EAP 7716. It's been redesigned and reshaped by Hoshin from Obo. So that's the kind of thing that will help solo stickers, for sure. And personally, I kind of support this kind of...

Sam:
[59:22] The economic requirements also go down significantly with lean, correct?

Jerome:
[59:25] Yeah, yeah, indeed. And we need also MEV burn. If you want to help the solo stickers, we need MEV burn. That's also something that's going to tilt the scale in favor of other solo stickers. But again, the status quo is unacceptable for solo stickers. And once they will be all out, we'll be like, yeah, but we have a dilution of 1.3 and we are

Jerome:
[59:48] in an inevitable trend of coming up and up and up in staking as time goes.

David:
[59:53] I want to ask about the contention behind this EIP. This has been one of the most contentious EIPs in recent memory in years that I can really remember. What's your guys' plan to get this EIP through, given that there's just seemingly a lot of hostility and contention around it?

Jerome:
[1:00:11] Well, very simply put, we're going to keep our heads up, continue to respond to the different arguments that we are facing, adapt, see if we get good reasons to modify the parameters that we have laid out, and let the PFI process continue. We have the 26th of October for the consideration for inclusion deadline. We want to let this debate continue. It's great to see that people are more and more informed on the matter. We are getting interesting feedback to adjust. Some people are complaining that this should have been withdrawn already after just 10 days. But to the contrary, we are getting a lot of positive things out there. We are trying to find the solution. A rough consensus on where it should go and how we should adapt. And I think you'll be surprised by the type of endorsement that will come in the following weeks as people get more accustomed to the problem and more accustomed to the risk of doing nothing. And if it's not for this fork, it will be for the next one. But the general path is now. So we should not let this window for productivity close.

Sam:
[1:01:21] Yeah, I mean, this is not a new issue. And those who, a lot of those people who are claiming it was whatever. Many of them, I think, unfortunately, are misleading you. This issue has been going on for at least five years, so much so that the researchers who worked on it have now almost all given up. My friends are at ETH Labs, unfortunately. I mean, they genuinely have burned out on this, right? This goes back to at least 2022. At that time, we put in place an asymmetric change to the validator queue to slow down the rate of new entrance, but left it unchanged for exits because this was a problem known then and we wanted to provide more time. Maybe it was 23, 2023. I wanted to provide more time for robust research. You know, Ansgar and Casper came back in 2024 with a proposal. It was brought before all core devs and Lido raised concerns and it was shut down. That proposal was more aggressive than this one. And we've had another...

Sam:
[1:02:31] Two or three years now, where I think actually, unfortunately, there's nothing really more to explore from an academic standpoint. It's almost the exact opposite of what the naysayers say. And so I will say, while sometimes I regret my spiciness on X,

Sam:
[1:02:53] In many cases, look, I am in this space at the risk to my own reputation and career. And I make strong statements at personal risk to my reputation career. And so you should appreciate that it's not done lightly. I'm not seeking Twitter followers or anything else. I'm doing it because I care very deeply about Ethereum. And because I have gone all in on Ethereum, and I don't see a path without defending Ethereum's credible neutrality. And this is the minimum we can do to protect that. And I, for me, and again, I do not think this is Jerome's position, but I think for me, this is a bit of an existential kind of moment. I think that Ethereum community really needs to, you know, both look at the economic interests of the people they follow on Twitter, but they also need to do a little bit of, you know, do your own homework on this issue. There's a wonderful website originally maintained by Casper called issuance.wtf. There's so much research there. You'll never be able to get through it. Maybe point your chat to BT or Claude at it and ask some questions.

Sam:
[1:04:07] So there's nothing like, you know, whatever the naysayers say, whether it's like it's been rushed or it's like we need to do more research or there's concerns, all of those things have been brought before. And, you know, this is getting a bit, there are no real defensible remaining objections in my opinion. Again, I'm not even very happy with this. Jerome will tell you the morning the EIP dropped, I called him very upset because I was not happy with the 18 month, two year implementation. I thought it was unacceptable. And yet I'm here because I am compromising. I'm here defending it because I realized that we need to do what is best for Ethereum even if it is suboptimal. I mean, I think maybe the exact thing I said to him that morning was they've already had five years to adjust. They don't need another two years. And I don't mean they being DeFi protocols. That was not what I had in mind. This has been a bit of a surprise to us. What I really meant is the staking service providers, because all of them have

Sam:
[1:05:10] Been involved in this debate. You know, Lido actually has an individual, Artem, who shows up at every single Ethereum Foundation-sponsored issuance conversation. And he argues for, is it maximal viable issuance? What is it? He basically argues for the exact opposite of his of ethereum's historical position so literally they have one person who's i think he's he doesn't actually work for lido i believe he works for cyberfund and he shows up and literally is always given an opportunity to speak he's published some some work on this so this is not new this is not new to anybody it's not a surprise This has come before all core doves before. This is something that is very, you know, well traveled. And so I'm increasingly frustrated. I think that you could question. And I have... You know, I think you could question whether or not, look, if we can't make this change because staking service providers believe it is not in their economic interests and they're able to maintain a more active social media presence, maybe Ethereum already is captured.

Jerome:
[1:06:25] I have a different view on that because I've been in the space for like 11 years now, mining in the early days, and I remember the time where we had the difficulty bomb. So whenever we had something contentious to pass on the rewards, We're like, yeah, well, let's have the difficulty going to kick in. And suddenly, like, yeah, it's making things much easier to adjust because the whole network is suffering. We don't have a difficulty bomb for staking. Nevertheless, we have lean coming up. It's the next three to four years. We are proposing a change that can last for a very long time, and that's as a transition path to it. Neither I nor my co-authors have any interest of forcing something through. Yeah, I want to stress that. We're not forcing things through. Absolutely not. But anyway, nothing can be forced through in the EAP process itself.

Sam:
[1:07:20] I was about to say, I don't know how that would happen. And if anything, I've been the one behind the scenes for the last two years demanding that we get something proposed. It was a little bit funny when they tried to call it an ivory tower initiative, when the ivory tower, you know, is not really involved here.

Jerome:
[1:07:35] In any case, sometimes you have to say the uncomfortable thing out loud. We are on a dangerous path. And the current regime is bad for our security, it's bad for our credibility, it's bad for the market signal that we give in terms of baudeness and capacity to adapt. It's mostly bad for solo stakers, but it's very bad for Ethereum itself. So I'm at least glad that we are having this discussion and I can definitely

Jerome:
[1:08:00] see the light at the end of the tunnel coming up.

David:
[1:08:02] Jerome, Sam, the first time we covered this episode was with Ansgar and Casper back in 2024 and stake targeting was compelling to me then. I think there are a lot of arguments that I think people need to truly contend with, with stake targeting. One of the biggest arguments that I really like is that this is just a natural continuation of all Ethereum's monetary policy changes that it's ever had. It seems to be that this is like the path that ETH's monetary policy has been on. And I think the arguments that you guys have that like we aren't done yet on that arc are compelling. I think that needs to be contended with. I do also take the arguments that.

David:
[1:08:43] That the DeFi ecosystem has to compete with the issuance rate of Ether. And if we are overpaying for security, we might be able to hit two birds with one stone in reducing issuance and making ETH more productive outside of ETH staking. And that's good for the DeFi economy. I really like these arguments. I am somewhat worried about the optics of the monetary policy. I am also worried about the lack of consensus around this EIP on an EIP that needs to have a lot of consensus to go through. I think some of the arguments that people give is like this EIP doesn't have consensus, therefore let's not do it. I actually think that's a bad argument because not having consensus is not a reason to not have consensus. That feels like it's a little oroboric. I hope this conversation can continue. I think if we can get consensus on this EIP, that it could be very good for Ethereum. As you've alluded to, Sam, I think that's a long road. I think there's a lot of conversations that need to happen. I think, unfortunately, that's just the way that it works in Ethereum. These are kind of all my thoughts as we sign off here. I want to thank you guys for coming on the show. And maybe if you guys have any last asks of the bankless listeners of the broader Ethereum community, or just any like next steps for everyone in particular, I'll kind of give you guys the final floor here.

Jerome:
[1:10:02] Absolutely. If you are, if older, this will benefit you. So make your first voice heard. Indeed, it's a contentious and we are far from consensus at the moment. But it's only been 10 days. So we are at the beginning of the process, even if it's a short process. We have a way to get this through and to form a large consensus on the matter. But do also note that not acting and delaying the change is just making the change much harder and at the expense of every eFolders. So the time is now.

Sam:
[1:10:31] I want to thank David and the Bankless community for hosting this podcast. Two-part discussion and it is very important to Ethereum. And I want to thank Jerome. He has really stepped up to, I think, provide a public service to Ethereum. That's something I don't think I could do. He's really doing. And so I want to thank Jerome as well. And I would also say that both of us are eager to have any and all conversations. We want what is best for everyone and we're eager to engage in constructive dialogue with everyone. So we're both pretty available. You can include our Telegram and Twitter handles and show notes.

David:
[1:11:10] Jerome, is ECC going to be a banger this year?

Jerome:
[1:11:13] Of course. 10 years anniversary and we have a lot of issue and stuff to discuss. No, just kidding. It's happening in April again, early April. We hope to see you there. The weather forecast will be as amazing as it should. And yeah, hope to see everyone in Canada again on the 12th of April.

David:
[1:11:31] Jerome, Sam, thanks for coming on the podcast. I appreciate you guys.

Jerome:
[1:11:34] Thanks for having us.

David:
[1:11:35] Bankless Nation, you guys know the deal. Crypto is risky. That's why we're here, though. The institutions have landed. So we are going even further west. This is the frontier. It's not for everyone, but we are glad you are with us on the bankless journey. Thanks a lot.