Blockchain technology is about innovation and re-imagination of the status quo. In 2009, the world heard the first rumblings about Bitcoin and its novel Proof of Work (PoW) consensus mechanism. Now, Proof of Stake (PoS), the next stage in blockchain evolution, is here. PoS is a newer consensus mechanism that has the potential to achieve the original goals of cryptocurrency and blockchain technology – decentralization, security, and accessibility for all.
Ethereum is transitioning from a PoW to a PoS consensus mechanism, and this requires ETH stakers to run validators that will operate and secure the network. To participate, a staker must run a validator by depositing 32 ETH and putting them “at stake”, commonly referred to as “staking”. Once a validator is active on the network, as long as it stays persistently online and responds to calls to sign data in a timely and correct manner, it will be rewarded every ~6.4 minutes (an “epoch”) with a small amount of ETH. However, missed calls to sign data result in small amounts of ETH being subtracted from the validator’s balance, and bad behavior or excessive time spent offline can result in the validator being forcibly removed, or “slashed”, from the network.
As you can see, a potential staker must decide if the rewards from running nodes on the Ethereum blockchain are worth the risk of their investment being reduced or even eliminated if they can’t achieve close to 100% uptime.
Therefore, in order to optimize staking on Ethereum, both validator liveness and security are paramount.
However, achieving infrastructure resilience for Ethereum staking has proven to be exceedingly difficult. Strict protocol rules and decentralization guidelines limit configuration redundancy, preventing the same validator client from running simultaneously on multiple nodes. And, as we are still in the early stages of the industry, there is still a lot of standardization and regulation that needs to be done before reaching an acceptable and stable status quo.
These challenges have led many stakers both large and small to adopt the same staking infrastructures and services, limiting diversity across components and creating the potential for disastrous consequences if just one component fails. The negatives of centralization can also be seen when a majority of validators use a single validator client, as was the case with the Prysm mainnet incident of 2021. And, many of the largest custodial staking services collect and store a vast number of private user keys, presenting a significant security risk if the service is ever compromised by a bad actor.
To address how all these potential single points of failure could be mitigated, research on Secret Shared Validators (SSV), aka DVT (Distributed Validator Technology), started back in 2019. What started as a research paper conceptualized in collaboration with members of the Ethereum Foundation, is now a fully functional, open-source, decentralized ETH staking protocol running on an incentivized testnet. And, plans are in the works for it to become a fully functional, LIVE staking solution in the very near future.
At its core, SSV is an infrastructure layer designed to promote validator liveness, decentralization, client diversity, fault tolerance and resilience in the ETH staking space by enabling the distributed operation of an Ethereum validator across varying non-trusting operators or nodes.
SSV Technology Overview
SSV (aka DVT or Distributed Validator Technology) enables validators to run portions of a validator key (KeyShares) across a distributed, trustless network, thereby mitigating potential modes of validator failures. ssv.network is the first secure and scalable implementation for distributing validator KeyShares between non-trusting nodes (i.e Operators). This means no node on the network needs to trust another to operate, and a certain number of faulty or offline nodes (up to the threshold) can be tolerated without affecting validator performance. In addition, no node can recreate a validator key signature on its own or make unilateral decisions on behalf of the validator, paving the way for trustless networks to be distributed across multiple people or staking services.
ssv.network running a validator key on 4 different setups. Only 3 of 4 KeyShares are needed to produce a beacon chain signature, and no single KeyShare can take unilateral control of the validator.
SSV uses a secure Multi-Party Computation (MPC) threshold scheme with a consensus layer that governs the network. Its core strength is its robustness and fault tolerance. By trustlessly splitting a validator key across different systems, SSV presents an Ethereum staking infrastructure that reduces the reliance on any one single point of failure that might affect validator performance while simultaneously increasing network security and promoting decentralization across the entire Ethereum protocol.
Distributed Staking Network
SSV promotes decentralization, security, and liveness across the Ethereum consensus layer. It does it via an active-active redundancy configuration that forms the foundation of ssv.network, a fully decentralized and robust ETH staking network. From small DIY stakers to big staking pools, regardless of your staking configuration, you will find the network open and easy to use. As long as duties are properly executed, anyone is eligible to provide services and reap the rewards for doing so.
In addition, because the protocol is open-source, anyone can expand and develop different services on top of ssv.network. With this in mind, it becomes easy to imagine staking pools where operators leverage the full potential of SSV, enabling true decentralization from both the operational and withdrawal perspectives, both of which have been limiting factors for decentralized staking pools to date.
This type of horizontal scaling is complemented by vertical scaling, allowing individual stakers to view a transparent operator ranking scale and choose who they want to manage their validator(s). This provides stakers with the ultimate in choice and validator protection and promotes decentralization across the network.
The ssv.network is comprised of 3 main actors:
- Operators – Infrastructure providers that manage validator KeyShares on behalf of users (stakers) and collect fees for their services. Each operator is ranked on a scale of 0-100 by the DAO based on the overall quality of service they provide
- Stakers – Services or individual ETH holders that wish to leverage SSV/DVT technology for optimal liveness, security and decentralization of their validator(s).
- DAO – The governance and driving force of ssv.network decisions. Tasked with rewards distribution, grants, funding initiatives, partner programs, validator and operator guidelines, future development, etc.
SSV operators, ranging from large centralized exchanges to highly technical at-home validators, will have the chance to join the network, earn network rewards, and facilitate staking for users.
If an operator must go offline or is compromised, the validators they support will continue running without pause. Given the threshold of KeyShares needed to reach consensus amongst operators, not all need be online at once.
Making things even more interesting, an SSV operator can offer a variety of different nodes boasting a range of different components, technologies, and clients. The end result is an enhanced decentralization of components and the reduction of single points of failure across the entire network.
DAOs are the epitome of decentralization and transparency as they exist to promote decentralized governance and shield against consolidation of power in the hands of a selected few. The SSV DAO, therefore, is a natural extension of the decentralized and open-source protocol.
The SSV DAO was created for the sole purpose of decentralizing ownership of ssv.network, and is the Network’s official governing entity. Community members can propose and vote for new initiatives, protocol changes, fee structures , and treasury related decisions, in addition to requesting grants for funds to help develop SSV.network. In order for the protocol to remain agnostic, decision making via voting is limited to SSV token holders who have the ecosystem’s best interests at heart.
The SSV DAO is a for-profit DAO and SSV is the token used for governing the ssv.network protocol and treasury. The SSV token will comprise the majority of the DAO’s treasury and will be used to execute and enforce the decisions being made.
In order for the DAO to maximize income, community members mostly contribute to:
- Protocol development and decisions
- Determining protocol and service fees
- Supervising operator activity
- Assisting with growing the ecosystem
SSV’s incentivized Testnet is a working version of the network for the purposes of testing the SSV/DVT technology at scale, while simulating “real world” transactions and dynamics between validators and operators.
The ‘Primus’ testnet is open for participation to anyone who would like to run an SSV validator and earn rewards in the form of SSV tokens for helping the team stress-test the network. There will be multiple phases, during which the community will have the opportunity to provide feedback, begin developing on the open-source protocol, and look for glitches and bugs that will help developers improve this early version of SSV.
The period for running the Incentivized Testnet is set at 4 months and is separated into 2 phases. The 1st phase will run for 5 two-week rounds (~2.5 months) from 24.01.22 until 04.04.22. This phase will be followed-up with a longer lasting testnet (2nd phase) with higher rewards, in alignment with the release of SSV’s v2 contracts. The end goal is to capitalize on a version that best showcases the full capabilities of the product along with the incorporation of SSV token as the payment layer for the network.
The SSV DAO has allocated 64K SSV tokens for the first 2.5 months of the program.These will be distributed as follows:
Validators (+SSV Holders)
Future DAO votes will determine additional SSV token allocation for continuing the Incentivized Testnet beyond ‘Round 1’.
The core strength of ssv.network is its accessibility to anyone who wishes to participate as a validator or operator. The goal of SSV/DVT is to offer a decentralized staking model that enables simple and scalable access to Ethereum and other PoS staking for everyone. The open-source, community-driven public project was started as a way to address the issues of Ethereum validator liveness and security as well as the lack of non-custodial staking services and validator client diversity on the Beacon Chain. As we wait for the highly anticipated transition to PoS, ssv.network is making big strides solving issues with centralization of the Ethereum consensus layer and limitations/risks to running a validator node on the chain.