I have been seeing that ETH will be moving to a PoS validation framework. These validators will be paid in ETH. It seems to me that this means if I do not stake, my ETH portion will be continuously diluted; whether EIP 1559 results in deflationary supply change, net zero, or otherwise, it seems that those with the largest ownerships will continuously absorb new ETH and increase their percentage ownership, while mine will constantly go down. Does this mean, to secure a steady/increasing ownership percentage, I MUST stake?
The reason I ask this is because of taxes. If I am forced to stake to secure my percentage ownership, this means I will constantly be 'paid' in ETH, which will (in the current tax structure) incur taxable gains. While this isn't necessarily bad, what happens if I am paid at high ETH prices, but when taxes come due ETH has dropped? That would be a horrible feeling for me.
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1 Answer
Your ETH share will actually increase, even if you don't stake.
Justin Drake, Ethereum Researcher, discusses the supply in Modeling Ultra Sound Money. His spreadsheet from his tweet:
Around 13,500 ETH are created per day to pay miners. With Proof of Stake that reduces to around 1,000 ETH per day. And as you can see, with EIP 1559, there will be a few thousand ether burned daily.