SSV Builders: Blockscape — Decentralized Institutional ETH Staking
SSV Ecosystem Partners Building Next-Gen Staking Applications
Any model of a healthy ecosystem will have examples of symbiotic relationships. In crypto ecosystems, builders leverage each other’s tech to incentivize mutually sustained growth, and when looking at the ssv.network DAO, there are a good few of these being cultivated. Here projects work together like building blocks, ensuring the whole can be greater than the sum of its parts.
In this post, we’ll give you more details about the collaboration project spearheaded by Blockscape. Including two ssv.network partners (Swell Network, Rated.Network), and Quadrata, who are in the process of building a decentralized liquid staking service for institutional investors.
Who is Blockscape?
Located in crypto-friendly Switzerland, Blockscape was one of the first SSV ecosystem partners to receive a development grant. Currently specialists in the operation of resilient and highly-secure validators in over 20 PoS networks, the team started their journey working on PoS validation for the Cosmos network before staking was a twinkle in Ethereum’s eye. Now that The Merge has finalized, the grant call completed, and Phase 1 initiated, the team has started building their institutional liquid staking service on Ethereum.
Liquid staking is becoming more popular amongst Eth-based DeFi protocols because, at the end of the day, it makes more economic sense than just locking up ETH and letting it sit there for APR. This concept also makes more sense for institutional investors who want to leverage their assets. To power the next wave of Web3 institutional capital will play an essential role in the continued growth of the Ethereum network. However, institutional conditions to participate in staking are much more uncompromising because of their risk, asset custody, and compliance needs.
What is Blockscape Building?
In a nutshell, Blockscape is building a way for institutional investors to invest safely and directly into a secure set of distributed operators while making staking rewards liquid or compoundable/tradable via a financial NFT.
By bringing together all of their expertise, the Blockscape team has started working on an institutional liquid staking service by integrating:
- Quadrata — for a tailor-made KYC/AML solution that suits the needs of institutional investors;
- ssv.network — for its distributed validator infrastructure;
- Swell Network — to create a white label solution for liquid staking with financial NFTs;
- And Rated.Network to use an effectiveness rating on explorer.ssv.network to rate operator and validator performance.
How it works
The development of Blockscape’s service will enable operators in the ssv.network to capture institutional funds after completing an application process and reviewing their metrics. The application requires that operators provide stakers with geolocation, client information, company name, etc. This unique value proposition will give the needed transparency to institutions by enabling institutional investors to know precisely who they stake with.
After being accepted, institutions can access operators through the provided white label front end, and according to Blockscape, “The result will be a seamless investing/staking experience for institutions under a full self-regulated environment.”
The Process
- Firstly, to service institutions, participants must comply with various international regulations. This means that all participants must comply with KYC/AML regulations for institutions to know exactly who they are staking with. To do this, both institutions and operators must undergo a KYC process tailored by Quatranta. In this case, using ssv.network infrastructure allows institutions to choose operators according to jurisdiction, i.e., EU-based institutions selecting EU-based operators.
- After KYC, institutions can start staking with approved operators via Swell’s white-label front end and enable the operation of validators through the ssv.network. While SSV operators conduct validator duties on the Beacon Chain, the accrued rewards are paid out to stakers as a liquid staking derivative (swETH) pegged 1:1 with ETH to reduce token economic risk.
- The other distinctive part of this liquid staking service is that as a validator is created, stakers will receive an swNFT minted by Swell Network. Swell’s extensive work into these financial Non-Fungible Tokens (NFTs) will allow it to serve as a digital container of a user’s staking rewards on the Beacon Chain and enable participants to compound yield across the DeFi ecosystem. This configuration allows stakers to either compound benefits by vesting their staking rewards into the swNFT (increasing its value) or withdraw rewards to be used elsewhere in the DeFi ecosystem.
- As the process continues, the Rated Oracle network collects data on validator performance which stakers can use to inform their operator choices. From here, stakers can sit back and enjoy the rewards, utilize LP tokens, or seamlessly customize their validator set-up. Easy as that!
For more information on how Swell’s financial NFT works under the hood, check out their grant call or the grant application.
To turn this blueprint into reality, the ssv.network Grant Committee has played a catalyzing role in this process. Check out the other DAO grants to see what the ssv.network DAO is building, and for more background info on Rated and other ecosystem partners, look at the Collaboration calls or SSV Network Hub.
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