The objective of minimum viable issuance and the associated concept of not overpaying for security make sense.
However, solo-stakers are organizing in the Stakers Union because the real and opportunity costs for node operation are high - and potentially disproportionately so for independent operators.
Current solo-stakers may be willing to absorb some of these costs for now. However, these measures will certainly deter future stakers. If ETH price increases as we believe it will, committing the required ETH for a solo-validator will grow more challenging (single validator capital cost is currently >$100,000 USD).
The only viable method for solo-staking will then be some type of distributed validator (DV) where the lowest capital commitment could be 2-4ETH (or $6,600 to $13,200 USD today).
Assuming extremely conservative cost estimates with an initial hardware cost of $1,000 and ongoing costs of $20/month (portion of home networking bill or upgrades required for unlimited transfers), even with augmented rewards rate of up to 7% on their bond of 2 ETH, the validator would not be profitable for approximately 4.5 years.
Annual Rewards: 2 x 0.07 = 0.14ETH ($462 USD)
Annual Ongoing Costs: 20 x 12 = $240 USD
Net Annual Profit: Annual Rewards - Annual Ongoing Costs = $222 USD
Time to Profitability: Initial Hardware Cost / Net Annual Profit $1,000 / $222 = 4.5 years
If issuance were further reduced these figures would look even worse.
We struggle to believe that this timeframe to profitability and the associated effort required would make sense for a new solo-staker. It would be very understandable for that user to simply use an LST/LRT (even with proposed reduced issuance) and start earning returns immediately.
The Stakers Union and our members get this. We also recognize that there is no in-protocol solution for solving this problem and that’s why we’re organizing as a community. Solo-staking is incredibly important for the long-term health of Ethereum and securing out-of-protocol, sustainable rewards for the activities of solo-stakers is our primary mission.
The Ethereum community has recognized the importance of giving back to essential contributors. The Protocol Guild has secured long-term funding for core developers and we believe the community should do the same for its solo-stakers!