Introducing the Dynamic Liquid Staking Tax (Blockworks Research) - Cosmos Hub Fiscal Policy Part 1

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I think you are confusing a few things here.

  1. The 25% liquid staking cap of the LSM refers to a % of the amount of ATOM staked, which is around 67% of the total supply, not 25% of the total supply

  2. The current supply of ETH is around 120M ETH, and the total amount staked around 25M ETH, so the staking ratio is around 20%, far from the 67% in the case of ATOM

  3. From these 25M ETH staked, around 9M ETH are liquid staked via Lido and other providers, so 9M ETH is around 36% of the total 25M ETH staked and most controlled just by one provider, Lido. So currently, looking at the amount of ETH staked, ~36% of this is liquid, and 36% is larger than 25%. You claim ‘liquid ETH is about 7% of ETH’, this is incorrect because rather than 7% is around 36%. You are getting 7% because you are dividing 9M/120M, but 120M is incorrect because this is total supply of ETH, you need to use 25M of staked ETH

  4. The 25% limit is related to the risk of liquid staking providers collectively controlling one third of staked ATOM, so this limit is to prevent this risk

The total amount of liquid ATOM currently is not 3.3M, but 4.7M which is 1.91% of total staked ATOM. This refers to the 248M staked ATOM, not the 367M total supply including not staked ATOM.

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