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Department of Informatics Blockchain and Distributed Ledger Technologies

Ethereum Issuance and Liquid Staking (Monetary Policy)

Level: BA/MA
Responsible person: Benjamin Kraner
Keywords:  Ethereum, Restaking, Risks

This thesis investigates the interplay between Ethereum’s issuance policy and the growing adoption of liquid staking, focusing on how these factors together shape Ethereum’s effective monetary policy. Key objectives include (1) analyzing the impact of Ethereum’s issuance rate on staking incentives, (2) assessing how liquid staking platforms affect token velocity and user behavior, and (3) exploring possible long-term equilibrium outcomes for Ethereum’s monetary supply. The study will rely on empirical data from public blockchain explorers to track changes in staking participation, as well as econometric models to link observed behaviors to issuance parameters. By quantifying how liquid staking modifies opportunity costs and yields, the research aims to clarify whether such platforms amplify or dampen inflationary pressures in the Ethereum ecosystem. The findings will have implications for stakeholders, including protocol developers and policymakers, by highlighting potential design choices that promote economic stability. 

References: 

  • https://ethresear.ch/t/maximum-viable-security-a-new-framing-for-ethereum-issuance/19992 
  • Xiong, Xihan, et al. "Leverage staking with liquid staking derivatives (lsds): Opportunities and risks." arXiv preprint arXiv:2401.08610 (2023). 
  • Gogol, Krzysztof, et al. "Empirical and Theoretical Analysis of Liquid Staking Protocols." arXiv preprint arXiv:2401.16353 (2024).