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Isn’t the 900 validators per day entring/exiting validators a bit low?

Edit: The profit taking mechanism hasn’t been agreed upon yet.

The exits start scaling with an additional validator per epoch for every additional 65536 after 327680 validators ending up at 3150 per day with 30 million eth staked. Explained by u/jelliedonut in the comments, thanks:)

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I am not sure if that is 900 entring + 900 exiting or 450 entring + 450 exiting, either way it is to slow if validators need to exit to take profits. Edit: It’s Separate, so 900 each + scaling.

Say it is the first option, with 10 million eth staked that would mean a turn around time of 347 days, if it is the second one then that doubles to 694 days. With turn around times like this every validator is motivated to signal to exit as soon as they have entered causing this que to always be there, that que time would also be when entering again after having exited to take profits.

Validators take on risk in the form of oved taxes denominated in the local currency so if the eth price tanks they might end up having to sell their eth for a lower price when they exited, but still have to pay tax for the eth at the price it was the day they got it as reward to their validator balance.

I must be getting something wrong since this can’t be the plan, would really like to know what I am getting wrong though. I guess if validators can take profits without exiting this whole point becomes mute.

What do you think?

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3 Comments

  1. While this might not be a long term solution, it will be the case in the beginning that the transaction fees you get from proposing blocks may be sent to any address you want. Also MEV will of course be extracted to any address you want.

    I have also seen chatter about ways that validator balances might be withdrawn down to 32 without exiting but I’m not aware of any proposals yet.

  2. It’s my understanding, and please smarter people correct me if I’m off base here, that in the US any ETH you receive from validating is a taxable event at the value (max, average, etc.) the ETH was worth on the day of the receipt.

    Those are taxes you will need to pay regardless of whether those ETH are sold or not. Since they aren’t transferrable then you’ll have to pay taxes cash out of pocket.

    Depending on how much you make and the price of ETH across the year that could end up being a pile of money owed.

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