---
# System prepended metadata

title: cl3-03_issuance

---

# cl3-03: Issunace

## Summary
Patxi's presentation "The Shape of Issuance Curves to Come: The Case for Stake Capping" (2025-10-09) at the Fast Finality Workshop argues Ethereum's issuance curve risks high stake ratios (>50%), negative real yields, LST dominance, and reorg vulnerabilities due to declining risk premiums from maturity, LSTs, ETFs, and delta-hedging. It proposes mathematically constraining curves (decreasing sigmoids mapping all risk premiums to stake ratios 0-1) and a pragmatic EIP introducing a stake burn penalty (e.g., quadratic/log forms) to cap issuance (~0.8-1%) while preserving current yields (~3% at 25-33% stake). Social layer emphasizes outreach (realyield.org), framing as positive real yields for all, and gradual implementation (2027+ timeline). Q&A debated negative yields (exogenous sources, realyield.org addition), social consensus (education, regulatory/ETF impacts), and alternatives (burn priority fees, minimal viable issuance).

## Key Takeaways
- **Problem Statement**: Market sets yields via risk premiums; current curve allows runaway staking (50%+ ratios), negative real yields post-costs, holder dilution, overpaid security, LST governance risks.
- **Mathematical Constraints**: Yield as independent variable; inverse curves as homeomorphisms (continuous, invertible) mapping all premiums to stake (0-1); decreasing sigmoids; pin yields at introduction, cap via burn term (e.g., quadratic: R/√S - B*S, log: R/√S - B*ln(S)).
- **Pragmatic EIP**: Add per-epoch penalty for validator existence (not duties); cap issuance (0.8-1%); preserve ~3% yield at 25-33% stake; healthy ratios ~12.5-50%; piecewise continuous options.
- **Social Layer**: Position as real positive yields for all (stakers/holders/network); outreach via realyield.org, EIP, hard fork; address cynicism (education on real yields); mindful of controversy (merge-like timeline).
- **Economics**: Real yields post-costs/inflation; solo stakers exit first (fixed costs); LSTs dominate; stochastic exogenous yields; cap prevents tail risks.
- **Challenges**: Exogenous yields (assume squashable?); social buy-in (controversy, ETFs); governance (minimal changes, no reward tweaks).
- **Open Questions**: Negative regimes (burn exogenous yields?); exogenous limits; ETF/regulatory impacts; alternatives (minimal issuance, burn priority fees).

## Speakers
- Patxi (presenter, issuance curves/EIP)
- Pintail (incentives)
- Justin Drake (social layer, yields)
- Barnabé Monnot (exogenous yields)
- various

## Resources
- [Slides](https://drive.google.com/file/d/11d5VYDZoqiqqepKpiZ6dkcC2QS4vavKB/view?usp=drive_link)
- [Video](https://youtu.be/Tg-S9UesBJA)

> back to: [Index Page](https://hackmd.io/H4S9OqgnRUWFzavoOhy4aw)

*Note: Summaries were generated in part with the help of AI, so names and terms may not be 100% accurate.*