[pa7x1]

> Sure, friends also won't let friends skip the fact that circulating supply of ETH is now decreasing instead of increasing.

This changes absolutely nothing of the calculation. Furthermore, the change in circulating supply last year was of 0.07%.

> Also, only ~30% tokens are staked.

Correct.

> The 30% who chose to stake essentially tax the other 70% in use.

There is something called opportunity cost. With the existence of liquid staking derivatives the choice to stake or not is one of opportunity cost. Plenty of people may consider the return observed by staking insufficient given the opportunity cost and additional risks. Participating in staking is fully permissionless, stakers are not taxing non-stakers. They are being remunerated for their work.

> Each of the validator do exactly same amount of work (that's the point, right) except what they receive is proportioned to how much they stake.

Incorrect. A staker does proportionate amount of work to its stake. That's why it gets paid more. A staker gets paid for fulfilling its duties as defined in the protocol (attesting, proposing blocks, participating in sync committees). For each of those things there are some rewards and some punishments in case you fail to fulfill them. If a staker has more validators running you simply fulfill more of those duties more often, hence your reward scales linearly with number of validators.

[rfoo]

> Participating in staking is fully permissionless, stakers are not taxing non-stakers. They are being remunerated for their work.

That's just a more polite way to say tax. Being permissionless is cool, but it's still tax in my dict.

> There is something called opportunity cost.

And, who is going to be able to have a larger percentage of their funds staked, a poor or a whale? You need a (mostly) fixed amount of liquidity to use the thing.

> Incorrect. A staker does proportionate amount of work to its stake.

Apologies, I edited my original reply which should answer this.

In short, I don't see anything preventing me to run 10000 validators with 32 ETH each with very similar cost to running just one. It's certainly not linear.

[pa7x1]

> That's just a more polite way to say tax. Being permissionless is cool, but it's still tax in my dict.

It most certainly is not. They are doing a work for the network and getting remunerated for it. That's not a tax. That's what is commonly referred to as a job. A kid that delivers newspapers over the weekend is not taxing the kid that decides not to. Both make a free decision on what to do with their time and effort given how much it's worth to them. Running a validator takes skill, time, opportunity cost, and you assume certain risks of capital loss. You are getting remunerated for it.

> And, who is going to be able to have a larger percentage of their funds staked, a poor or a whale? You need a (mostly) fixed amount of liquidity to use the thing.

Indeed, the protocol cannot solve wealth inequality. That's an out of protocol issue. It cannot cure cancer either.

> In short, I don't see anything preventing me to run 10000 validators with 32 ETH each with very similar cost to running just one. It's certainly not linear.

There are some fixed costs, indeed. But they are rather negligible. You need a consumer-grade PC (1000 USD) and consumer-grade broadband to solo stake. Or you can use a Liquid Staking Derivative which will have no fixed costs but will have a 10% cut. The curve of APY as a function of stake is very flat. Almost anything else around us has greater barriers of entry or economies of scale.

[everfree]

> And, who is going to be able to have a larger percentage of their funds staked, a poor or a whale?

This is a truth that's fundamental to all types of investing. Advantaged people can set aside millions and not touch it for a year or five or twenty. Disadvantaged people can't invest $20 because there's a good chance they'll need it to buy dinner.

Stocks, bonds, CDs, real estate, it all works like this. You've touched on a fundamental property of wealth.