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The value of the newly minted LSTs matches the value of the deposited ETH, maintaining the protocol value. Once enough ETH is accumulated in the staking pool to create a new validator, the LSP distributes ETH to randomly selected node operators. Further reductions in the attack threshold are possible with naively implemented DVT, particularly without random key distribution. If only 2/3 of the key shares are required to operate a validator and node operators can select their key shares, the attack threshold decreases further by a factor of 2/3. However, LSPs can mitigate this risk by implementing random distribution of key shares to validator private keys among node operators.
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However, historically, RocketPool struggled to attract sufficient node operators to stake ETH from depositors, causing its LST market price to de-peg upwards. RocketPool requires node operators to deposit collateral of 16 ETH to 8 ETH to run a validator, compared to the standard 32 ETH, while Stader protocol lowers this threshold to 4 ETH. This reduced collateral requirement decreases Ethereum’s economic security threshold to 11% and 4.13%, respectively.
