marketing!, afaik there’s a budget for marketing, but arbitrage too
This is expected, but the market balances itself with time, every major staking protocol should eventually reach a balance in this sense. Also, there is simply more benefit in holding sETH2 than ETH anyway if you’re not trading or actively using your ETH.
The existence of the pool allows people to exit their position if they desire to do so.
incentives from participation in the LP, a lot of people will not want to exit their position because it’s could be more profitable to keep it and pool your sETH2 or rETH2 with ETH.
Im sure many expected the pool to be set up, so they might have held onto some if not half as much ETH. I’m sure a lot of people will also come to stake and pool just because of the incentives as well. But yes, this is a valid concern.
A significant amount of liquidity is provided by stakewise itself though, so keep that in mind.
The exact amount of ETH that will be needed for the pool is information that @kiriyha handles according to the responses to the polls, but there’s also an amount of people that probably want to exit part or all of their position that probably haven’t responded to the poll.
1 ETH = 1.01 sETH2, Buy 1 ETH worth of sETH2, gain 0.01 sETH2 minus ETH fees (equivalent to 0.01 ETH).
The fact that most of the liquidity will be in a tight range doesn’t mean that the price can’t be moved.
You’d be surprised.
Big wallets are the ones that perform the most arb though.
Nope, you’ll need staking pools. Not everyone has 32 ETH to run their own validator, so there will always be a need for staking pools.
There’s also added benefits to staking pools over running your own validator, one example could be slashing insurance at the cost of a bit of yearly returns, or the fact that the risk of running your own validator and being slashed is absorbed by the entire pool instead of just yourself, thereby reducing APR, but still remaining profitable to stake.
Also, when ETH2 launches, every major dApp, token, pool, staking protocol remains live, just as before the merge. The consensus mechanism being different doesn’t change what’s already deployed on the blockchain.
There’s no freebies, there’s a fee for exchanging your staked ETH in the pool, but the idea is to make that pool the hub for position exiting when unstaking isnt possible.
The pool also creates a lot of other benefits/opportunities though:
- Pool rewards for LPs in the shape of SWISE
- Distribution of the governance token to incentivize participation in the DAO
- The LP tokens and the native protocol tokens are building blocks for DeFi, it allows easier integration with other DeFi protocols.
- Users are actually able to exit their position before unstaking
- Revenue through LP fees.
Hope all that makes sense, but if I’m wrong in anything, please feel free to correct me.