Ethereum Independent Staking Survey: Males Account for 95%, Over 70% of Stakers Do Not Work in Crypto

Original Title: “Staking Survey 2024”

Author: nixo

Compiled by: ShenChao TechFlow

Abstract

We conducted a survey of independent operators (commonly referred to as "Solo Stakers") to better understand their profiles, demographics, pain points, and motivations. We noted that while respondents are beginning to feel that their structural rights are being stripped away and are concerned about the pressures of validator centralization, they still have high confidence in validators and resilience.

The purpose of this data is to provide a set of perspectives from a very privacy-focused group of participants in their own words, to accurately reflect their needs. This survey will be conducted annually, and feedback on the question set is welcome.

Method

Collection and Distribution

The survey results were collected using LimeSurvey software. To ensure that questions remain relevant to respondents, branching display logic was employed. We used cookies to prevent duplicate participation and CAPTCHA to prevent bot activity. The survey was open to the public, and all responses were anonymous.

We solicited responses through EthStaker's social channels (Reddit, Discord, Twitter, Farcaster), Obol's Twitter account, and the public channels of the most popular Staking as a Service providers, hardware providers, and client software. The survey was also published on the Beaconcha.in website, Rhino Review, and the Week in Ethereum newsletter. The survey was conducted from April 8, 2024, to May 6, 2024.

Analysis

Only completed survey data was used; incomplete surveys were discarded. Manual checks were performed to identify bot activity, but complete surveys were not discarded. The pie chart data represents the results of single-choice questions. Multiple-choice answers are represented in the discussion with star ✶ unicode✶ characters✶.

Sampling Bias

While the data indicates a preference for home staking over more passive staking methods, this may be due to differences between participants and the survey population. Those who frequently engage with the staking community often manage their own setups. In contrast, those who do not manage their own setups are less concerned, as their validators typically do not require their immediate attention.

This information is more qualitative than quantitative, as it relies on subjective data from a self-selected subset.

How comprehensive is this data?

Public node crawlers show that the number of Ethereum nodes ranges from 6,000 to 11,000. Not all of these nodes are validator nodes. Many nodes are operated by professional operators. This survey only targets stakers using their own funds, and the questions are unrelated to professional operators. At the time of writing this report, the estimated number of validator nodes using Rocket Pool is 1,832, derived from the number of nodes with ETH at the staking snapshot minus the number of Allnodes nodes. This can serve as a lower bound for the number of independent operators. Out of a total of 1,024 responses, 868 came from stakers who claimed to control their own node setups, so we estimate that about 8% to 47% of node operators participated in this survey, but both ends of this range are unlikely. Note that this percentage includes all node operators, including professional operators. This survey primarily focuses on non-professional operators.

While it is easy to see the number of validators on the network, it is currently impossible to accurately count the specific number of validator nodes, independent operators, or network nodes (this is more of a feature than a flaw). Node operators can self-identify their validators, but most independent operators and many professional operators do not do so.

Results

The raw data can be queried here.

Respondent Profile

• 32% are Genesis stakers.
• 80% are home stakers, with another 4% combining home and remote staking.
• 84% do not hold significant funds in liquid tokens.
• 85% have not changed their primary staking method.
• 77% stake 66% - 100% of their ETH.
• 30% use smoothing pools, 61% do not use smoothing pools, and 9% are unfamiliar with the concept or do not know the options available to them.
• 95% run validators on Linux ✶.
• 51% have not used staking software to set up their validators. 27% use Rocket Pool, 15% use DAppNode, and 10% use Eth Docker (those who "do not use staking software" generally refer to following guides and using systemd) ✶.
• 85% have not changed their staking method since the beginning.

Figure 1: When did you start running your validator?

Figure 2: Where do you stake? Do you hold LST?

Figure 3: Have you changed your staking method, and how much ETH do you stake?

Figure 4: Are you in a smoothing pool?

Figure 5: What operating system do you use for staking?

Figure 6: Have you used software to assist you in staking?

Main Concerns

• Main concerns include the overwhelming majority of customer risks, suboptimal tax structures for staking, hardware issues, and key management ✶.
• 69% do not track their bandwidth, and 78% are unsure if bandwidth has increased since Dencun.
• Respondents spend an average of 3.4 hours per month (median of 2 hours) maintaining their setups. Excluding one outlier (x = 155 hours), which has a Z score of 22, the average monthly maintenance time is 3.2 hours.
• On a scale of 1-10, where 10 represents the maximum risk the network may face, voters rated supermajority risk at 7.4 and the risk of staking centralization at 7.2 (the scoring criteria were adjusted for clarity).
• When asked about the expected staking ratio of ETH in 2-3 years, the average answer (n = 1003) was 49.4% of ETH.
• When asked what proportion of ETH staking they suspect is operated by independent operators like themselves, the average answer (n = 924) was 15.9% of ETH staking.

Figure 7: What are your most pressing concerns?

Figure 8: How much bandwidth does your node use?

Figure 9: How many hours do you spend on maintenance each month?

Figure 10: Risks facing the network

Perceived Value and Representation

• 89% believe that the importance of independent stakers to the network is as important or more important now compared to when they first started staking (11% believe its importance has decreased).
• 66% believe that individual voters today gain more or the same benefits from participating in consensus voting compared to when they first started voting (34% believe they gain less value).
• When asked how well they think their interests are represented in ongoing research and protocol development, the average score was 5.8 (out of 10), where 10 represents "well represented" and 1 represents "not represented at all" (the scale was adjusted for clarity).
• 50% believe that protocol research either ignores independent stakers or is largely ineffective in helping them combat monetary interests (19% indicated they do not care).
• 92% support or are neutral towards the statement "the issuance curve needs to change to better incentivize decentralized staking" (not considering existing proposals).

Figure 11: The value of independent staking

Figure 12: Issuance and representation in research

Figure 13: Advocacy for independent stakers

Continued Participation

• Supporting the Ethereum protocol (84%) is the primary motivation for initial staking, followed by returns (81%) ✶.
• 65% plan to continue increasing their staking share.
• 35% plan to continue increasing their staking share but intend to stop adding new stakes after meeting certain external conditions.
• 31% do not intend to add new stakes.
• 62% indicated they have no plans to exit staking ✶.

Figure 14: Do you plan to add new stakes?

Figure 15: How long do you expect your validator to continue running?

Where do stakers learn?

• 69% use technical guides as their primary source of learning (e.g., some websites, CoinCashew, Rocket Pool docs, client documentation) ✶.
• 63% use EthStaker as their primary source of learning ✶.
• 53% use ethereum.org as their primary source of learning ✶.
• The most common sources reported for understanding necessary updates and protocol research (these two questions seem to overlap, so we discuss them together) are Discord, explorer notification services, Twitter and Reddit, ethresear.ch, and podcasts, with a significant portion specifically mentioning Daily Gwei ✶.

Figure 16: Where do you learn about staking?

Figure 17: How do you stay updated on news and information?

Figure 18: How do you learn about the latest developments in protocol research?

Open-Ended Questions: Unresolved Concerns

At the end of the survey, voters had the opportunity to express opinions on what they felt was not adequately covered in the survey. Complete answers can be obtained from the raw data, and here is a summary of AI-assisted answers:

n = 204

• Centralization and decentralization risks (n = 68): Many respondents are concerned that the current development of the protocol will lead to centralization effects and insufficient representation of solo stakers. LST is seen as a centralizing force that diminishes the attractiveness and viability of running independent nodes, while re-staking is viewed as a potential medium for centralization.
• User experience, technical barriers, hardware (n = 46): Many called for a simplified staking process to make it easier for non-technical users. Additionally, concerns were raised about bandwidth, IPV6 support needs, and the need for legacy planning solutions.
• Issuance curve adjustments (n = 38): There are significant concerns about the impact of changing the issuance curve, particularly regarding its potential effects on independent operators, though some expressed support for research directions. Many believe that declining yields will create conditions that only favor large centralized pricing entities.
• Economic and tax implications (n = 28): Tax policies are a significant burden for solo stakers, making solo staking less economically viable compared to holding liquid staking tokens (LST) with more favorable tax treatment.
• MEV (n = 24): There is a divide among stakers regarding the use of MEVboost, with some choosing not to enable it for ethical reasons. These respondents advocate for alternative solutions and further research to address the issues posed by MEV. MEV is seen as a tool that could enable large centralized entities to capture the protocol. Respondents called for stronger measures to prevent MEV from undermining Ethereum's decentralized nature.
• Privacy concerns (n = 15): Stakers are worried that details of their operations (such as IP addresses and transaction contents) may be exposed, compromising their privacy and security. Respondents hope for the development and integration of privacy-preserving technologies. They noted that due to a lack of privacy, some creators have had to scrutinize transactions, affecting the network's neutrality and inclusivity.

Demographics

• 95% identify as male.
• 90% consider themselves to some extent or largely as technical personnel.
• 74% do not work in the crypto industry.
• 88% of staking comes from North America, Europe, or Australia.

Figure 19: Technical background and employment industry

Figure 20: From which region do you stake?

Discussion

Respondent Profile

Independent operators are mostly technical elites from North America, Europe, and Australia, using Linux operating systems, which is not surprising. Many diversity initiatives exist throughout the staking community. However, little is known about how, why, and what proportion of ETH these operators run validators with, as stakers are often reluctant to share information that could create security vulnerabilities.

The large number of Genesis participants, 80% being home stakers, 84% not holding any significant liquid staking tokens, and 77% staking over 66% of their ETH, are all very encouraging new data that indicate a high level of confidence and resilience among independent operators regarding staking.

Proportion of Independent Operators

A recent report by StakeCat investigated addresses identified as independent operators (methodology detailed in the report) and found that the proportion of independent operators on the network has increased since the merge. These survey data show that a significant portion of respondents (32%) have been staking since the Beacon Chain Genesis event. Since the survey data comes from a self-selected subset of stakers, these findings are likely biased towards those who joined around the Genesis period, when EthStaker was the only comprehensive source for staking education and support.

As more protocols and products that improve user experience and provide self-support are introduced to independent operators, these later stakers may reduce their interaction with the general staking community. This is ideal, as software, education, and support targeted at independent operators are shifting towards diverse self-sustaining projects that may attract less "technically savvy" operators.

Morale

Since the Shapella hard fork enabled withdrawal features, the staking slope of ETH has been steadily increasing over time, with professional entities showing increased interest in using delegated staking.

Figure 21: ETH staking over time: noticeable increase in slope post-Shapella

These professional entities often benefit from economies of scale, as they can run hundreds or thousands of validators on each node, reducing the hardware cost per ETH, while independent operators typically run single or double-digit validators on each node. Large entities can also pool execution layer rewards to smooth their validator sets, while independent operators have only recently launched two separate validator smoothing pools. Professional operators can also gain additional returns by participating in protocol-agnostic services that require more robust hardware or operational expertise. These factors lead to LST holders sometimes receiving higher returns than independent operators, even considering the fees paid to monitoring service providers.

In considering these results, respondents feel a sense of disenfranchisement. They now feel that their role in the network is as valuable as, if not more valuable than, when they first participated, but do not feel that the protocol values their participation in the same way. When asked how their interests are maintained in protocol research, most respondents' views fell between "not represented" and "well represented," slightly leaning towards the latter. More than half of respondents believe that researchers are either hostile, neglectful, or ineffective in representing their interests. The majority of respondents expressed support for changing the reward structure of protocols to correct what they perceive as disenfranchisement (of course, this support does not necessarily imply endorsement of existing proposals).

The "Stickiness" of Independent Operators

For years, independent operators have been referred to as "irrational actors" and "altruists," with some believing that their staking is more "sticky" than that of delegated stakers. This survey cannot compare the two groups, but respondents did express a desire to continue staking, regardless of minor fluctuations in annual percentage rates or broader changes in the staking ecosystem.

While most respondents expect to continue staking under any positive yield conditions, 21% indicated they have a specific yield threshold at which they would exit (n = 184), with an average yield threshold of 2.3%*.

(* As a side note, this figure should be understood as deviating from the rational desire to maintain high yields, as some stakers indicated they are currently running validators but would exit below a threshold we have long since passed, suggesting that some delegators may not be actively tracking their current actual yields.)

This reluctance to exit is often combined with the ideological motivation for initially exiting ("supporting the Ethereum protocol"), which is frequently viewed as the "altruism" of independent operators. It is important to note that their inertia may be bidirectional. Independent operators are less likely to exit their holdings during minor market or issuance fluctuations, but they are also less likely to bring their holdings back to the network after exiting, even if conditions become slightly favorable. Thus, their losses are likely to be more persistent than those of delegated holders. The overreliance of independent operators on altruistic motivations rather than structural fairness may lead to the disappearance of this segment of holders over time.

A series of airdrops targeting independent operators in 2023 and 2024 has recognized the current gap in rewards and power between independent operators and professional operators, as well as the value of retaining independent operators in the network. These one-time incentives are helpful in the short term, but in the long run, we should not rely on these incentives to bridge this gap.

Looking Ahead

Recent reports from StakeCat show that the demand for solo staking remains strong, with the proportion of independent operators to professional operators remaining relatively stable or even increasing over time. Given the centralization pressures emerging in the current protocol design, many recent studies have attempted to preserve meaningful participation from independent operators. These proposals should largely rely on insights directly obtained from the motivations and concerns of independent operators — this survey and report aim to provide this data for brainstorming and research purposes.