Irina Katunina — Modeling the entry queue post Merge (ETHconomics @ Devconnect)
Channel: ETHconomics Devconnect
Date: 16/05/2022

Beacon chain spec implies a limited number of new validators per epoch. Merge is expected to bring a significant increase in APR due to MEV and priority fees causing an increasing amount of ETH2 deposits and, as a result, an entry queue with no rewards for queueing validators. Using autoregression and linear modeling and scenario analysis, I forecasted the entry queue during the Merge period and Beacon chain parameters for a year perspective.

Lido’s “socialized model” implies that all rewards are being divided among existing and new users that brings, in case of the entry queue, APR loss for existing users. The multiple simulations using such parameters as network growth rate, Lido’s share, amount of ETH and duration of the queue period revealed that even in the “harsh” scenario the actual APR loss in the “socialized model” would not exceed 0.5 percent point.