Abstract

Independent operators (often broadly referred to as “solo stakers”) were surveyed for information that gives better visibility into their profiles, demographics, pain points, and motivations. We note a high degree of confidence in staking and resilience among respondents despite an emerging feeling of structural disenfranchisement and concern for centralization pressures on the validator set.

The intent of the data is to provide the perspective of a very privacy-oriented set of actors, in their own words, so that their needs can be represented accurately. This survey is intended to be annual and feedback on the question set is welcome.

Methods

Collection & distribution

Survey results were collected using LimeSurvey software. Questions included branching display logic to ensure continued relevance to the respondent. Cookies were used to deter repeated participation and a CAPTCHA to deter bot activity. The survey was open to the public and responses were anonymous.

Responses were solicited on EthStaker’s social channels (Reddit, Discord, Twitter, Farcaster), on Obol’s Twitter account, in public channels of the most popular Staking as a Service providers, hardware providers, and client software. The survey was also posted on the Beaconcha.in website and in the Rhino Review and Week in Ethereum newsletters. Submissions were collected between 8 April 2024 and 6 May 2024.

Analysis

Only data from completed surveys were used. Incomplete surveys were discarded. Results were manually inspected for bot activity and no complete surveys were discarded. Data displayed as pie charts were the result of single-choice answers. Multiple choice answers are denoted in discussion with a star✶ unicode✶ character✶.

Sampling bias

While the data show a preference toward home staking over more disengaged methods of staking, this is potentially a consequence of who is engaged and who this survey was able to reach. Stakers who engage frequently in staking communities tend to be the ones managing their configurations. Those who don’t manage their own configuration can afford to tune out because their immediate attention is not often needed to maintain their validators.

This information should considered more qualitative than quantitative as it relies on subjective data from a self-selected subset of stakers.

How much coverage does this data give?

Publicly available node crawlers put Ethereum node counts at anywhere between 6000 and 11,000. Not all of these are validating nodes. Many are run by professional operators. This survey was only aimed at stakers using their own capital - questions were not relevant to professional operators. At the time of writing, validating nodes using Rocket Pool can be estimated at 1832, using the number of nodes with node ETH at a staking snapshot and subtracting Allnodes nodes. This can loosely be used as a floor for the number of independent operators. With 868 responses from stakers who claim to control their node’s configuration (out of 1024 total responses), we can estimate that somewhere between 8% and 47% of node operators responded to this survey, with the either edge of this range unlikely. Bear in mind that this is as a percentage of all node operators, which includes professional operators. This survey is primarily interested in non-professional operators.

Though it’s easy to see the number of validators on the network, it is not currently possible to collect an accurate count of the number of validating nodes or individual operators or even just nodes that are on the network (this can be interpreted as a feature rather than a bug). Node operators can choose to self-identify their validators but most independent operators and many professional operators do not.

Results

Raw data can be found here.

Respondent profiles

• 32% are genesis stakers

• 80% are home stakers, with an additional 4% running a home / remote combo

• 84% do not also hold any significant capital in liquid staking tokens

• 85% have not changed their primary method of staking

• 77% are staking between 66 and 100% of their ETH

• 30% use smoothing pools, 61% do not, and 9% aren’t familiar with the concept or don’t know of options relevant to them

• 95% use Linux to run their validator(s) ✶

• 51% did not use staking software to set up their validator. 27% used Rocket Pool, 15% DAppNode, and 10% Eth Docker ("did not use staking software" generally means they followed guides and used systemd) ✶

• 85% have not changed their method of staking since they first began

  

  

  

  

  

  

Primary concerns

• Primary concerns included supermajority client risks, suboptimal tax structures for staking, hardware issues, and key management ✶

• 69% do not track their bandwidth and 78% were unsure if it has increased since Dencun

• Respondents spend an average of 3.4 hours (median 2 hours) per month maintaining their setup. Removing a single outlier data point (x = 155 hours) that had a z-score of 22 brings the average to 3.2 hours per month

• On a scale of 1-10, 10 being the largest possible risk to the network, stakers rated a supermajority risk as a 7.4 and the risk of centralization of stake as 7.2 (adjusted scales for clarity)

• When asked what percentage of ETH they expect to be staked in 2-3 years, answers (n = 1003) averaged to 49.4% of ETH

• When asked what percentage of ETH staked they suspected was operated by independent operators like themselves, answers (n = 924) averaged to 15.9% of ETH staked

  

  

  

  

Perceived value and representation

• 89% feel today either more or equally adamant that solo stakers are important for the network, as compared to when they first began staking (11% feel that it’s less valuable)

• 66% feel today either more or equally adamant that solo stakers derive as much benefit from participating in consensus, as compared to when they first began staking (34% feel that they derive less value)

• When asked how well they feel their interests in ongoing research and protocol development are represented, the average was a 5.8 out of 10, with 10 being ‘very well represented’ and 1 being ‘not at all represented’ (adjusted scale for clarity)

• 50% felt that protocol research either ignores solo stakers or is largely powerless to help solo stakers against monied interests (19% reported that they don’t pay attention)

• 92% either supported or felt neutral about the statement that the issuance curve needs to be changed to better incentivize decentralized forms of staking (without regard to existing proposals)

  

  

  

Continued participation

• The leading motivation for initially staking was to support the Ethereum protocol (84%), followed by yield (81%) ✶

• 65% plan on continuing to add new stake

• 35% plan on continuing to add new stake but plan to stop when some external condition is met

• 31% do not plan on adding new stake

• 62% indicated that they have no plans to exit ✶

  

  

Where do stakers learn?

• 69% used technical guides as a primary source for learning (e.g. Someresat, CoinCashew, Rocket Pool docs, client docs) ✶

• 63% used EthStaker as a primary source for learning ✶

• 53% used ethereum.org as a primary source for learning ✶

• The most commonly reported sources for keeping up with necessary updates and protocol research (these two questions seemed to be confused with each other, so we’ll discuss them together) were Discord, explorer notification services, Twitter, Reddit, ethresear.ch and podcasts, with a substantial portion naming The Daily Gwei specifically ✶

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Open-ended question: unaddressed concerns

At the end of the survey, stakers were given the opportunity to comment on anything that they felt hadn’t been adequately covered in the survey. Full answers are available in the raw data and an AI-assisted summary of answers is provided here:

n = 204

• Decentralization and Centralization Risks (n = 68): Many respondents are worried about the centralizing effects of current protocol developments and the insufficient representation of solo stakers. LSTs are seen as a centralizing force that makes independent node operation less attractive and feasible, and restaking as a potential vector of centralization.

• UX, technical barriers, hardware (n = 46): There are numerous requests for simplifying the staking process and making it more accessible for non-technical users. Concerns around bandwidth, the need for IPV6 support, and needs for estate planning solutions were also mentioned.

• Issuance Curve Adjustments (n = 38): There is significant concern about the impact of changing the issuance curve, especially how it might affect independent operators, with some expressing support for the research direction. Many believe that decreasing yields would result in conditions favorable only to large, centralized staking entities.

• Economic and Tax Implications (n = 28): Tax policies are a significant burden for solo stakers, making it less economically viable compared to holding liquid staking tokens (LSTs) which have 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 due to ethical concerns. These respondents advocate for alternative solutions and further research to address the issues posed by MEV. MEV is perceived as a tool that could potentially enable protocol capture by large, centralized entities. Respondents call for more robust measures to prevent MEV from undermining the decentralized nature of Ethereum.

• Privacy Concerns (n = 15): Stakers are concerned about the exposure of their operational details, such as IP addresses and transaction inclusions, which compromises their privacy and security. Respondents desire the development and integration of privacy-preserving technologies. Privacy concerns extend to issues of censorship, with respondents noting that the lack of privacy forces some stakers to censor transactions, impacting the neutrality and inclusiveness of the network.

Demographics

• 95% self-reported as male

• 90% identified as somewhat or strongly technical

• 74% do not work in crypto

• 88% are staking from North America, Europe, or Australia

  

  

Discussion

Respondent profiles

That independent operators are largely tech savvy men from North America, Europe & Australia running on Linux are all unsurprising results - these imbalances have multifaceted causes and are the target of many diversity initiatives across the staking community. How, why, and with what percentage of their ETH these operators run their validators is less well-known since stakers tend to be reticent in sharing information that may create vulnerabilities in their security.

An abundance of engaged Genesis stakers, 80% running from home, 84% not holding any significant amount of liquid staking tokens, and 77% staking more than 66% of their ETH are all new and highly encouraging data that indicate a high degree of confidence and resilience in staking among independent operators.

Ratio of independent operators

A recent report by StakeCat looked at addresses identified as independent operators (methodology here) and determined that the ratio of independent operators on the network has increased since the merge. These survey data show a significant portion (32%) of respondents have been staking since the Beacon Chain Genesis event. As survey data is from a self-selected subset of stakers, it is likely that these survey results do bias toward stakers who were onboarded around Genesis, when EthStaker was the only comprehensive source for staking education and support.

Now that independent operators are increasingly being onboarded through protocols and products with improved UX and their own support, these latter cohorts of stakers may be checking in with the general staking community less frequently. This is desirable as software, education, and support for independent operators shifts to a diverse set of self-sustaining projects that may onboard less ‘tech savvy’ operators.

Morale

Since withdrawals were enabled at the Shapella hard fork, the slope of ETH staked over time has increased and, with it, interest from professional entities utilizing delegated stake.

These professional entities often benefit from the economies of scale as they’re able to run hundreds or thousands of validators per node, bringing down the cost of hardware per ETH staked, whereas an independent operator generally runs single or double digit validators per node. Large entities are also able to pool execution layer rewards to smooth over their validator set, an option only recently available for independent operators with the introduction of two solo staker smoothing pools. Professional operators may yet also be able to take advantage of additional yield by participating in extra-protocol services that require more robust hardware or operational expertise. These factors have resulted in LST holders sometimes receiving higher rewards than independent operators, even accounting for the fee paid to the staking service provider.

There is a feeling of disenfranchisement among respondents when considering these outcomes. They feel now that their role is equally or even more valuable to the network than they did when they first began staking but do not feel likewise about the way that the protocol values their participation. When asked about advocacy for their interests in protocol research, most fell solidly in the middle between “not represented” and “well represented”, with a slight inclination toward the latter. Over half of respondents felt research is either hostile, neglectful, or ineffective in representing their interests. A majority expressed support for changing the reward structure of the protocol to remedy this perceived disenfranchisement (with the understanding that this support did not necessarily signal endorsement of existing proposals).

‘Stickiness’ of independent operators

Over the years, independent operators have been referred to as “irrational actors” and “altruistic”, and it has been suggested that stake operated by them has a ‘stickier’ quality than stake injected by delegated stakers. It’s not possible from this survey to compare the two groups but respondents do convey a desire to continue staking regardless of small fluctuations in APR or broader staking ecosystem changes.

While most respondents anticipate remaining staked in any positive yield scenario, 21% of respondents indicated that they have a specific yield threshold under which they would exit (n = 184) and averaged 2.3%* for that threshold.

(*As an aside, this number should be understood to be biased by a rational desire to keep income high, as some stakers indicated that they’re currently running validators but would unstake under a threshold that we’ve long since passed, which suggests that some may not keep active tabs on what their actual current yield is.)

This reluctance to unstake combined with ideological motivations for initially staking (”to support the Ethereum protocol”) is often cited as a feeling that independent operators are ‘altruistic’. It should be noted that their inertia is likely bidirectional. An independent operator is unlikely to unstake with small market or issuance fluctuations but is equally unlikely to bring their stake back to the network once they have removed it, even if conditions become slightly more favorable. Consequently, their losses are likely to be more permanent than those of delegated stake. Overreliance on altruistic motives rather than structural equity for independent operators is likely to erase this subset of stakers over time.

A string of airdrops in 2023 and 2024 targeting independent operators as recipients has recognized the current disparity in rewards and power between independent and professional operators and the value of maintaining independent operators on the network. These one-time incentives are helpful for the interim but also should not be relied upon to close this gap in the long-term.

Going forward

StakeCat’s recent report show that the hunger for solo staking is as strong as it’s ever been and the ratio of independent operators to professional operators has remained relatively stable, even increasing, over time. Much of recent research seeks to preserve an independent operator’s meaningful participation in light of centralization pressures emerging from the current protocol design. These proposals should rely heavily on insights directly from the motivations and concerns of independent operators - this survey and report aim to provide that data for brainstorming and research to rely upon.

Point of contact: team (at) ethstaker (dot) cc
Graphs illustrated by electropillow