Hey there!
First of all: that’s a fascinating idea, perfectly put together. I highly support lowering barriers for staking, providing an opportunity to a magnitude greater number of actors to participate and contribute to the network.
Personally, I think Pectra is an enormous enabler for various ways to make staking as a solo more accessible.
As a contributor to Lido protocol I’m very enthusiastic about possible reduction in risks, associated with permissionless participation. If you’d like you can check my take on risk assessment for CSM module on Lido research forum.
While the general approach for risk transferring is evaluated based on consensus specifications, there is also a wildcard component associated with EL rewards and their highly volatile nature with possibility of rewards rerouting: without managing this, the significant part of total rewards could end up within the hands of malicious actors.
Designs for Sibyl-resistance & decentralization tech is one my field of research, and I find the solution with variable LTV based on protocol share very interesting.
Although introducing that concept may bring another challenge: as LTV is a function of total stake through the protocol - any additional stake lowers LTV for all participants, hence creating a negative externality: effect impacting actors participating within protocol based on the actions of other actors within protocol.
While it is a well established concept (as, for example, base reward is decreasing with total amount of stake overall), the resulting equilibrium with externalities presented could be tricky.
As an example, with 0.3% difference between LTVmax and LTVliq:
- Early adopters of the protocol could stake at LTVmax ~ 96.1% with LTVliq ~96.4%
- With a growth of protocol by 0.3% of total ETH staked, LTVmax would be reduced to ~95.81%, bringing LTVliq ~96.1%
- Without active collateral management “Early adopters” in this case could face a liquidation, as their LTV wouldn’t be sufficient enough with updated protocol share
And sensitivity to total protocol share would be increasing with overall protocol share, as, for lower values of LTVmax the 0.3% leeway for liquidations shrinks (lineary with prototcol share, e.g. to 0.24% at protocol share of 20%)
Again, while incentive to actively manage collateral position, based on external actor actions isn’t something new (for example: borrow protocols) in this particular case liquidations brings net negative effect among all actors in the system in form of direct transaction costs of triggering EIP-7002, while also indirect costs of exiting validator (and its ETH not participating in staking).
Depending on protocol growth speed and level of collateralization management from operators this could lead to impactful negative effect for SOLO holders or validator operators (depending on how this transaction costs would be funded and missed rewards on exiting ETH would be accounted)
Maybe smoothing this effect with some form of incorporating this costs to the actors triggering LTVmax changes could help balance out the overall net effects within protocol