What issues should independent Ethereum stakers pay attention to in 2024?

What issues should independent Ethereum stakers pay attention to in 2024? This article comprehensively analyzes the important issues that independent Ethereum pledgers should pay attention to in 2024! Friends who need it can learn more about it with the editor of this site!

We surveyed independent operators, often broadly referred to as Solo Stakers, to better understand their profiles, demographics, pain points, and motivations. We note that while respondents are starting to feel structurally disenfranchised and worried about the pressures of validator centralization, they still have high confidence in validators and resiliency.

The purpose of this data is to provide the perspective of a very private group of participants, in their own words, in order to accurately reflect their needs. The survey will be conducted annually and feedback on the question set is welcome.

Methodology

Collection and Distribution

Survey results were collected using LimeSurvey software. To ensure that questions continued to be relevant to respondents, branching display logic was used. We use cookies to prevent repeat engagement and CAPTCHA to prevent bot activity. The survey is open to the public and all responses are anonymous.

We solicited responses on EthStaker’s social channels (Reddit, Discord, Twitter, Farcaster), Obol’s Twitter account, and the public channels of the most popular Staking as a Service providers, hardware providers, and client software. The survey was also published on the Beaconcha.in website, Rhino Review, and Week in Ethereum newsletters. The survey was conducted between April 8, 2024, and May 6, 2024.

Analysis

Only use data from completed surveys, incomplete surveys will be discarded. Results are manually checked for bot activity without discarding complete questionnaires. The data shown in the pie chart is the result of the answers to the multiple choice questions. Multiple-choice answers are represented in the discussion by the star ✶ unicode ✶ character ✶.

Sampling Bias

While the data suggests that people are more likely to home stake as opposed to more passive staking methods, this may be due to differences in participants and respondents. People who regularly participate in the staking community often manage configurations themselves. And those who don't manage their own configuration are less concerned because their validators generally don't require their immediate attention.

This information is more qualitative than quantitative as it relies on subjective data from a self-selected subset.

What is the coverage of these data?

Public node crawlers show that the number of Ethereum nodes is between 6,000 and 11,000. These nodes are not all verification nodes. Many nodes are operated by professional operators. This survey only targets stakers using their own funds, and the question is not relevant to professional operators. At the time of writing, the number of validating nodes using Rocket Pool is estimated at 1832, which is calculated by subtracting the number of Allnodes from the number of nodes with node ETH at the time of the staking snapshot. This serves as a lower bound on the number of independent operators. Of the 1,024 total responses, 868 came from stakers who claimed to control their node configuration, so we estimate that somewhere between 8% and 47% of node operators participated in this survey, but neither end of the range is likely. Note that this percentage includes all node operators, which also includes professional operators. This survey focuses on non-professional operators.

While it is easy to see the number of validators on the network, there is currently no way to accurately count the exact number of validating nodes, independent operators, or network nodes (this is more of a feature than a bug). Node operators can self-identify their validators, but most independent operators and many professional operators do not.

Results

Original data can be queried here.

Respondent Profile

• 32% are Genesis stakers.
• 80% of people are home stakers, and another 4% are a combination of home and remote staking.
• 84% of people don’t hold significant amounts of money in liquid tokens.
• 85% of people haven’t changed their primary staking method.
• 77% of people staked 66% - 100% of ETH.
• 30% use smoothing pooling, 61% do not use smoothing pooling, and 9% are unfamiliar with the concept or unaware of the options relevant to them.
• 95% run validators using Linux ✶.
• 51% of people don’t use staking software to set up validators. 27% use Rocket Pool, 15%DAppNode and 10%Eth Docker (not using staking software generally means they follow the guidelines and use systemd) ✶.
• 85% of people never change their staking method from the beginning.

Figure 1: When did you start running the validator?

Picture 2: Where do you stake? Do you hold LST?

Figure 3: Did you change your staking method, and how much ETH did you stake?

Figure 4: Are you in a smoothing pool?

Figure 5: What operating system are you using for staking?

Figure 6: Have you ever used software to help you with staking?

Main Concerns

• Main concerns include overwhelming customer risk, sub-optimal tax structure of staking, hardware issues and key management ✶.
• 69% don’t track their bandwidth and 78% aren’t sure if bandwidth has increased since Dencun.
• Respondents spend an average of 3.4 hours per month (median 2 hours) maintaining their settings. Excluding the single outlier data point (x = 155 hours) with a z-score of 22, the average monthly maintenance time is 3.2 hours.
• On a scale of 1-10, with 10 representing the greatest possible risk to the network, voters rated the risk of supermajority at 7.4 and the risk of centralization of staking at 7.2 (for clarity, the scoring criteria are adjustments were made).
• When asked what percentage of ETH was expected to be staked in 2-3 years, the answers (n = 1003) averaged 49.4% of ETH.
• When asked what proportion of ETH staking they suspected was operated by independent operators like themselves, the answers (n = 924) averaged 15.9% of ETH staking.

Figure 7: What practical issue are you most concerned about?

Figure 8: How much bandwidth does your node use?

Figure 9: How many hours do you spend on maintenance each month?

Figure 10: Risks to the network

Perceived value and representation

• 89% believe independent stakers are as important to the network now as they were when they first started staking more important (11% think it is less important).
• 66% believe individual voters today gain more or as much benefit from participating in consensus voting as they did when they first started voting (34% believe they receive less value).
• When asked how well they felt their interests were represented in ongoing research and protocol development, the average score was 5.8 out of 10, with 10 being well represented, 1 Scores were not represented at all (scale adjusted for clarity).
• 50% ​​believe that protocol research either ignores solo stakers or is largely incapable of helping solo stakers fight against monetary interests (19% said they are not concerned).
• 92% of people support or are neutral on the statement that the issuance curve needs to be changed to better incentivize decentralized staking (regardless of existing recommendations).

Figure 11: The value of solo staking

Figure 12: Issuance and representation in the study

Figure 13: Advertising for solo stakers

Stay involved

• Supporting the Ethereum protocol (84%) is the main motivation for initial staking, followed by earnings (81%) ✶.
• 65% plans to continue to increase the pledge share.
• 35% plans to continue increasing staking share, but plans to stop adding new staking after certain external conditions are met.
• 31% are not planning to add new pledges.
• 62% said they have no plans to quit staking ✶.

Figure 14: Do you plan to add new staking?

Figure 15: How long do you expect the validator to continue running?

Where do stakers learn from?

• 69% use technical guides as the main source of learning (such as some websites, CoinCashew, Rocket Pool docs, client documentation) ✶.
• 63% use EthStaker as their primary source of learning ✶.
• 53% use ethereum.org as their primary source of learning ✶.
• The most common sources reported to know about necessary updates and protocol research (these two issues seem to be confused with each other, so we will discuss them together) are Discord, Explorer Notification Service, Twitter and Reddit, ethresear.ch and podcasts, Quite a few of them specifically mentioned Daily Gwei✶.

Picture 16: From which channels did you learn about the pledge?

Figure 17: Which channels do you use to learn about the latest information and news?

Figure 18: Through which channels do you learn about the latest progress of protocol research?

Open-Ended Questions: Unresolved Concerns

At the end of the survey, voters were given the opportunity to express their opinions on what they felt was not adequately covered in the survey. Full answers are available from the raw data, and an AI-assisted answer summary is provided here:

n = 204

• Decentralization and Centralization Risks (n = 68): Many respondents were concerned about what would happen with the development of the current protocol Centralization effects, and underrepresentation of single stakers. LST is seen as a centralizing force that would make independent node operations less attractive and feasible, while re-staking is a potential medium for centralization.
• User experience, technical barriers, hardware (n = 46): There were many requests to simplify the staking process and make it easier for non-technical users. Additionally, concerns about bandwidth, IPV6 support needs, and the need for estate planning solutions were mentioned.
• Issue Curve Adjustment (n = 38): There are significant concerns about the impact of changing the issuance curve, particularly the impact it may have on independent operators, but there is also some support for the research direction. Many believe that falling yields will lead to conditions that will only benefit large centralized pricing entities.
• Economic and Tax Impact (n = 28): Tax policy is a big burden for single stakers, making single staking more economically feasible than holding Liquid Staking Tokens (LST) which have more favorable tax treatment Low.
• MEV (n = 24): There is disagreement among stakers on the issue of using MEVboost, with some choosing not to enable MEVboost due to ethical concerns. These interviewees advocated for alternative solutions and further research to address the problems posed by MEVs. MEV is considered a tool that has the potential to enable protocol capture by large central entities. Respondents called for stronger measures to prevent MEV from undermining Ethereum’s decentralized nature.
• Privacy concerns (n ​​= 15): Stakers are worried that their operational details (such as IP addresses and transaction content) will be exposed, thus compromising their privacy and security. Respondents want to develop and integrate privacy-preserving technologies. Respondents noted that the lack of privacy forces some creators to censor transactions, impacting the network's neutrality and inclusivity.

Demographics

• 95% self-identify as male.
• 90% of people consider themselves to be somewhat or largely technical.
• 74% of people don’t work in crypto.
• 88% of pledges originate from North America, Europe or Australia.

Picture 19: Technical background and employment industry

Picture 20: From which region are you staking?

Discussion

Respondent Profile

Independent operators are mostly technology elites from North America, Europe and Australia, using the Linux operating system. These results are not surprising. Many diversity initiatives exist across the staking community. Little is known about how, why, and what percentage of ETH these operators use to run validators, as stakers are often reluctant to share information that could create security breaches.

The large number of Genesis participants, 80% of people are Home Stakers, 84% of people do not hold any large amounts of liquid staking tokens, 77% of people have staked more than 66% of ETH, these are very encouraging ’s new data demonstrates the high level of confidence and resiliency of independent operators in staking.

Proportion of Independent Operators

A recent report from StakeCat surveyed addresses identified as independent operators and determined that the proportion of independent operators on the network has increased since the merger. These survey data show that a significant portion of respondents (32%) have been staking since the Beacon Chain Genesis incident. Because the survey data comes from a self-selected subset of stakers, these findings are likely biased toward stakers who joined around Genesis, when EthStaker was the only comprehensive source of staking education and support.

As more and more protocols and products that improve user experience and provide their own support are introduced to independent operators, these latecomer stakers may have less interaction with the general staking community. This is ideal as software, education and support for independent operators is shifting towards diversifying self-sustaining projects that may appeal to less “tech-savvy” operators.

Morale

Since the Shapella hard fork enabled withdrawals, the staking slope of ETH has continued to increase over time, as has the interest of professional entities in using delegated staking.

Figure 21: ETH staking over time: Slope increases significantly after Shapella

These specialized entities often benefit from economies of scale as they are able to run hundreds or thousands of validators per node, thus Reduce hardware costs per ETH, whereas independent operators typically run single-digit or double-digit validators per node. Large entities can also pool execution layer rewards to smooth their validator sets, while independent operators have only recently launched two separate validator smoothing pools. Specialty operators can also earn additional revenue by engaging in off-contract services that require more powerful hardware or operational expertise. These factors result in LST holders sometimes receiving higher returns than independent operators, even taking into account fees paid to marking service providers.

Respondents felt a sense of disenfranchisement when considering these results. They now feel as valuable, or even more valuable, to their role in the network than when they first participated, but do not have the same sense of how the protocol values ​​their participation. When asked how they would safeguard their interests in protocol research, the majority of respondents fell somewhere between no representation and good representation, with a slight preference for the latter. More than half of respondents felt that researchers were either hostile, neglectful or ineffective in representing their interests. The majority of respondents expressed support for changes to the protocol's reward structure to redress what they saw as disenfranchisement (of course, this support did not necessarily imply endorsement of existing recommendations).

The “stickiness” of independent operators

Over the years, independent operators have been called irrational actors and altruists, with some arguing that the stakes they operate are more sticky than the inputs of delegated stakers. This survey cannot compare the two groups, but respondents did express a desire to continue staking regardless of small fluctuations in APR or changes in the broader staking ecosystem.

While the majority of respondents expected to continue staking in the event of any positive returns, 21% stated that they had a specific return threshold at which they would quit (n = 184). The average yield at threshold is 2.3%*.

(* As a side note, this number should be understood as a deviation from the rational desire to keep yields high, as some stakers have stated that they are currently running validators but will unpledge at a threshold we have long passed, which suggesting that some pledgers may not be actively tracking their current actual yield).

This reluctance to de-stake, combined with the ideological motivation for the initial de-staking (to support the Ethereum protocol), is often cited as altruism on the part of independent operators. It’s important to note that their inertia can go both ways. Independent operators are unlikely to cancel their holdings when there is a small movement in the market or issuance volumes, but are equally unlikely to bring their holdings back into the network after canceling them, even if conditions become slightly more favorable. Therefore, their losses are likely to be more lasting than losses from mandated holdings. Independent operators’ overreliance on altruistic motivations rather than structural fairness is likely to see this segment of shareholders disappear over time.

A series of airdrops targeting independent operators in 2023 and 2024 have recognized the current disparity in rewards and power between independent and professional operators, and the value of retaining independent operators in the network. These one-time incentives are helpful in the short term, but they should not be relied upon to close the gap in the long term.

Looking to the future

StakeCat’s recent report shows that people’s desire for solo staking (Solo Staking) is as strong as ever, and the ratio of independent operators to professional operators has remained relatively stable or even increased over time. Given the centralization pressures emerging from current protocol designs, many recent studies have attempted to retain meaningful participation by independent operators. These recommendations should rely heavily on insights gained directly from the motivations and concerns of independent operators – this survey and report are designed to provide these data for brainstorming and research purposes.

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