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0 pointsjhugo3y ago0 comments

Staking ETH pays interest, so buying ETH is buying an interest-bearing asset (i.e. a security). Some of the biggest players in staking will be exchanges who will likely give some (most) of the interest they earn to their depositors.

Those exchanges are then a ripe target for existing securities regulation, and they'll also be the biggest validators on the network, so risk for them is risk for the whole network.

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rvz3y ago

> Those exchanges are then a ripe target for existing securities regulation, and they'll also be the biggest validators on the network, so risk for them is risk for the whole network.

This. Of all comments this is the centralization risk on top of proof-of-stake which will have a more involved focus on staking with it being highly likely that it now passes the Howey test that ETH looking more like a security, with the Ethereum Foundation at the center of all of this.

capableweb3y ago

> Staking ETH pays interest, so buying ETH is buying an interest-bearing asset

Buying Eth will be the same as before. What you could say, is staking Eth is what makes it an interest-bearing asset, not just buying Eth.

tzekid3y ago

As far as I understand, without any work (energy consumption) that is directly tied to the value of the asset, there's no argument left for it to be a currency, i.e. it can only be categorised as a security asset.

capableweb3y ago

Buying Eth: No investment in a common enterprise, no expectation of profit nor is that non-profit derived from others. Not a security.

Staking Eth: Investment in common enterprise, expectation of profit and profit derived from others. Looks and quacks like a security.

Buying and holding Eth without staking it shouldn't be considered a security, while staking said Eth should be considered a security. At least if we're still following the "Howey Test".

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DennisP3y ago

It's not passive though. You get paid for running a node and validating transactions. You stake ETH as a surety bond that you'll do it correctly.

jhugoOP3y ago

Those things are not as coupled as you make them sound: the vast majority of people getting paid interest on their ETH won't be running a node. They'll be receiving interest passed on by exchanges or other centralised entities that are staking their ETH.

DennisP3y ago

And if those entities give them some kind of token they can trade around, giving them rights to their deposit plus some profits, that token might well be a security.

But if I loan you dollars and you promise to do something profitable and give me more dollars back, that doesn't make the dollar a security.

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rvz3y ago

> Those exchanges are then a ripe target for existing securities regulation, and they'll also be the biggest validators on the network, so risk for them is risk for the whole network.

capableweb3y ago

> Staking ETH pays interest, so buying ETH is buying an interest-bearing asset

Buying Eth will be the same as before. What you could say, is staking Eth is what makes it an interest-bearing asset, not just buying Eth.

tzekid3y ago

capableweb3y ago

Buying Eth: No investment in a common enterprise, no expectation of profit nor is that non-profit derived from others. Not a security.

Staking Eth: Investment in common enterprise, expectation of profit and profit derived from others. Looks and quacks like a security.

Buying and holding Eth without staking it shouldn't be considered a security, while staking said Eth should be considered a security. At least if we're still following the "Howey Test".

2 more replies

DennisP3y ago

It's not passive though. You get paid for running a node and validating transactions. You stake ETH as a surety bond that you'll do it correctly.

jhugoOP3y ago

DennisP3y ago

And if those entities give them some kind of token they can trade around, giving them rights to their deposit plus some profits, that token might well be a security.

But if I loan you dollars and you promise to do something profitable and give me more dollars back, that doesn't make the dollar a security.

j / k navigate · click thread line to collapse