Introduction to SSV Network
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 helps decentralize the network and introduces new levels of security and accessibility for users.
Ethereum is transitioning from PoW to PoS, requiring Eth stakers to run validators that will operate and secure the network. To participate, stakers must deposit 32 Eth and put them “at stake.” This process is known as staking. Once a validator is active on the blockchain, as long as it stays online and responds to calls to sign data, it will be rewarded every ~6.4 minutes (an “epoch“) with a small amount of Eth. On the other hand, if the validator goes offline or has an issue and misses calls to sign data, the network subtracts a small amount of Eth from the validator’s balance. And suppose a validator participates in malicious acts or spends excessive time offline. In that case, it risks being slashed, losing up to the entire 32 Eth deposit, and being forcibly removed from the network.
As you can see, potential stakers must decide if the rewards from running validators on the Ethereum blockchain are worth the risk of their ETH capital being reduced or even eliminated if they can’t achieve close to 100% uptime.
Validator liveness and security are paramount to optimizing staking on Ethereum.
Achieving infrastructure resilience for Ethereum staking has proven to be exceedingly difficult. Its strict protocol rules limit traditional 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 to be done before reaching an acceptable and stable status quo.
These challenges have led stakers of all shapes and sizes to adopt the same staking infrastructures and services. This limits diversity across components and creates the potential for disastrous consequences if just one part fails. The drawbacks of centralization became evident during the Prysm mainnet incident of 2021 when the Prysm validator client failed, causing all of the validators running the client to stop working. In addition, many of the largest custodial staking services collect and store private user keys, presenting a significant security risk if a bad actor compromises the service.
To address how to mitigate these potential single points of failure, research on Secret Shared Validators (SSV), aka DVT (Distributed Validator Technology), started back in 2019. What began 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 very soon.
At its core, SSV technology enables the distributed operation of an Ethereum validator across varying non-trusting nodes to promote validator uptime, decentralization, client diversity, fault tolerance, and security in the Eth staking space.
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, effectively eliminating single points of failure. ssv.network is the first secure and scalable implementation of DV technology using distributed validator KeyShares on non-trusting nodes run by operators. Nodes on the network do not need to trust each other to perform their duties, and some nodes can even be faulty or offline without affecting validator performance. In addition, no single operator 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 uses a secure Multi-Party Computation (MPC) threshold scheme with a consensus layer that governs the network. Robustness and fault tolerance are its core strengths. By splitting a validator key and running the shares across different systems, SSV presents an Ethereum staking infrastructure that reduces the reliance on any one component. This eliminates single points of failure, increases network security, and promotes decentralization across the Ethereum protocol.
Distributed Staking Network
Active-active redundancy forms the foundation of ssv.network, a fully decentralized and robust Eth staking network. Small DIY stakers, big staking pools, and everyone in-between will find the network open and easy to use. In addition, anyone is eligible to provide services as an operator and reap the rewards for doing so.
Because the protocol is open-source, anyone can expand and develop different services on top of ssv.network. Now, it becomes easy to imagine staking pools where operators leverage the full potential of SSV, enabling true decentralization from the operational and withdrawal perspectives, both of which have been limiting factors for decentralized staking pools to date.
Stakers will now have a transparent view of operator ranking scores and use this information to choose the ones they want to manage their validator(s). This provides stakers with the ultimate in choice and validator protection and promotes decentralization across the Network.
Participants
ssv.network is comprised of 3 main actors:
- Operators – Infrastructure providers that manage KeyShares and operate validators on behalf of stakers. Operators charge stakers a fee for their services in $SSV. Each operator is ranked on a scale of 0-100% based on the overall quality of service they provide.
- Stakers – Services or individual Eth holders that deposit 32 Eth to run a validator that receives rewards by securing the Ethereum blockchain.
- DAO – The decentralized community responsible for governing and making decisions for ssv.network. The DAO handles testnet rewards distribution, grant requests and funding, partner programs, validator and operator guidelines, future development, etc.
SSV operators, ranging from large centralized exchanges to highly technical at-home validators, can join the network, receive rewards, and facilitate staking for users.
Making things even more interesting, SSV operators can offer stakers a variety of nodes running a range of different components, technologies, and clients, further promoting decentralization and reducing single points of failure across.
SSV DAO
A DAO is the epitome of decentralization and transparency as it exists to promote decentralized governance and shield against the consolidation of power into the hands of a selected few. Therefore, the SSV DAO is a natural extension of the decentralized and open-source protocol.
The SSV DAO was creataed for the sole purpose of decentralizing ownership of ssv.network, and is the network’s official governing entity. Community members can propose and vote on new initiatives, protocol changes, fee structures, and treasury-related decisions, and request grants for funds to develop on ssv.network. To keep the protocol agnostic and ensure the ecosystem’s health, voting is limited to SSV Network users.
The SSV token governs the protocol and treasury, and will comprise the majority of the DAO’s treasury holdings. These funds will be used as seed-rounds for grants and to execute and enforce the decisions being made by the DAO.
For the DAO to maximize income, community members mainly contribute to:
- Protocol development and decisions
- Determining protocol and service fees
- Supervising operator activity
- Assisting with growing the ecosystem
Testnet
The Incentivized Testnet is the first public implementation of SSV/DVT technology at scale. It is a full working version of the protocol made to stress-test the network using simulated “real world” transactions and dynamics between validators and operators.
The testnet is open to anyone who would like to run an SSV validator and receive $SSV rewards for helping the team 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 first phase of testnet, dubbed “Primus,” ran for five two-week rounds (~2.5 months), starting on 1/24/22 and ending on 4/4/22. This phase tested and proved the efficacy of the basic functionality of splitting a KeyShare and distributing it to multiple operators for distributed validator operation. This phase will be followed-up with a longer-lasting second phase of testnet that will introduce SSV tokenomics into the equation. And a third version of testnet may be required before it is ready for mainnet release. The goal is to find the version that best showcases the product’s capabilities and incorporates the SSV token as the payment layer for the network.
Conclusion
ssv.network is open and accessible to anyone who wishes to participate as an operator or staker running a validator. The goal of SSV/DVT is to provide a decentralized model that enables simple and scalable access to Ethereum and other PoS staking for everyone. The open-source, community-driven project addresses the issues of Ethereum validator liveness, security, and centralization, and it helps promote non-custodial staking services and validator client diversity on the Beacon Chain. As we wait for the highly anticipated transition to PoS, SSV is making significant strides in eliminating the limitations and risks of running a validator for stakers and solving issues with centralization of the Ethereum consensus layer.