Ethereum is transitioning from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism; bringing with it the need for ETH stakers to operate and secure the network. Staking on Ethereum is unique compared to other staking blockchains; in order to participate, a staker must run a validator by depositing 32 ETH and being online at all times to execute network duties. Time spent offline is penalized, and actions not in the best interest of the network are penalized by a large reduction of ETH and removal from the network (slashing). In order to optimize staking on Ethereum, both validator liveness and security are paramount.
Achieving infrastructure resilience for Ethereum staking however can be exceedingly difficult, due to strict protocol rules that limit configuration redundancy. The result of which has led to adopted infrastructure similar in design between all stakers, large and small. This in itself limits diversity across components, which can cause disastrous consequences for stakers if one of these components fails, in addition to promoting centralization across various vectors throughout the network.
Centralization may take the form of heavy reliance on a single validator client (as seen during the Prysm mainnet incident), all the way to aggregation of user keys as is the practice of many of the largest staking services. To address these potential single points of failure, research on Secret Shared Validators (SSV) has been in the works since 2019; the first secure and robust way to split a validator key, enabling the distributed operation of an Ethereum validator across varying machines or operators, promoting diversity and resilience as described below.
SSV Technology Overview
SSV enables validators to run portions (KeyShares) of a validator key across a distributed, trustless network. No node on the network needs to trust the other to operate, and a certain number of faulty 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; paving the way for trustless networks distributed across multiple people or staking services.
SSV uses a secure multi-party computation (MPC) threshold scheme with a consensus layer on top, that governs the network. Its core strength is in its robustness and fault tolerance; by trustlessly splitting a validator key across different systems, SSV presents an Ethereum staking infrastructure solution that reduces the reliance on any single point of failure that might affect validator performance and safety, while simultaneously increasing network security by focusing on decentralization across the entire Ethereum protocol.
SSV.network – Distributed Staking Network
SSV promotes decentralization, security, and liveness across the Ethereum consensus layer and forms the foundation of SSV.network – a fully decentralized and robust ETH staking network. Using the network will be open and simple for anyone who wants to run an Ethereum validator; from DIY users all the way to staking pools and big institutional staking services. This applies to using the network both as a user or a service provider; regardless of staking configuration, as long as duties are properly executed, anyone is eligible to provide service and reap rewards for doing so.
Additionally, different services can be built on top of SSV.network by using it as staking infrastructure. Imagine a staking pool whose operators leverage SSV – enabling the true decentralization of pools from both the operational perspective as well as the withdrawal perspective, which has been the limiting factor for decentralized staking pools to date.
This type of horizontal scaling is also complemented by vertical scaling, individual stakers choosing multiple SSV operators to run validators. Thereby protecting their validator from staking risks and promoting decentralization across the network.
The network is comprised of 3 main actors:
- SSV Operators – Infrastructure providers that will manage KeyShares of validators on behalf of users (stakers) and collect fees for their service.
- Stakers – Services or individual ETH holders that wish to leverage SSV for the liveness and security of their validator.
- DAO – The backbone of network decision-making.
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. All with the crucial added benefit of enhanced resilience for both staker and operator.
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 more interesting, an SSV operator can offer a variety of different nodes boasting a range of different components. The end result is enhanced decentralization of components and the reduction of single points of failure across the entire network.Select Share Configuration
Default Configuration and Cost
SSV.network is composed of operators and validators both of whom benefit financially and from a safety standpoint for joining the network.
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Running a validator on the SSV network will require a fixed fee of SVT deposited in a dedicated fee account by the user. 80% of the fee will go to the network operators and 20% to the network DAO (more on that below). Fee distribution to the operators will occur each block. Operators will be able to set their own service costs. In this way, SSV stakers will benefit from lowered service costs due to open market competition between service providers.
As default, a staker’s validator will be run by 4 SSV operators. The setup can tolerate 1 operator being offline while 3 out of 4 continue operating as normal.
In order to operate, SSV.network has 2 distinct layers:
- SSV Peer to Peer (P2P) network layer
- Ethereum contract layer for network governance
SSV Peer to Peer (P2P) network layer
The SSV P2P layer is the execution layer, it reads the current operator list and validator KeyShare assignments from the Ethereum contracts and operates the validators on the network.
Ethereum contract layer for network governance
The Ethereum contract layer is crucial for network governance. SSV operators will be assessed and ranked by a DAO resulting in a decentralized and transparent network scoring of their quality, experience, and service. Actions like adding an operator, creating a validator, and distributing fees will occur on the contract layer.
The decision-making component of the SSV.network will be handled by a DAO of SVTtoken holders. The DAO’s areas of responsibilities will include:
- Operator Scoring – On a scale of 0-100. The score is crucial for users to decide which operators to use. In addition, DAO governance decisions can remove an operator from the network.
- Fee – The fee amount is controlled by the DAO and can be changed by a governance decision.
- Treasury – Grant distribution to different initiatives for and by the community. Other decisions for accumulated fees and investment inflows.
- Other decisions – Key protocol decisions such as roadmap and protocol improvements.
SSV.network will be open to anyone who wishes to run a distributed validator, safeguard and optimize the performance of that validator while promoting decentralization across the network. The underrepresentation of non-custodial staking services on the Beacon Chain mixed with a historical lack of validator client diversity makes clear the need for such a system. The Ethereum consensus layer is not immune to central forces, and the SSV.network intends to change that by making decentralization of staking accessible to all.