Continuing the recap of our Community Call with EthStaker, we bring you Part 2, filled with technical information about SafeStake.
Let’s not beat around the bush and enjoy learning about the first non-custodial DVT protocol in the Ethereum ecosystem:
EthStaker: How exactly is the distributed key generation protocol (DKG) going to work?
SafeStake: Essentially, the DKG function is already built into our current source code iteration, but some steps are needed to activate it. This will happen in Stage 2 where an ‘initiator’ operator deposits 8 ETH into the smart contract, activating the DKG process. Similar to how Obol launched the launchpad, we need to integrate the smart contract into the funnel and remove some frontend obstacles to enable the DKG process across various operations.
In the beginning, we will require the initiator operator to select a minimum of two operators from the ParaState/SafeStake DAO, as an added security measure. Additionally, 24 ETH will come from the liquid staking pool, which is controlled by a smart contract upgradable by the core team. With these restrictions and limitations, we can ensure that no single party has full control over the validator assets.
[Chris explained the use of Hotstuff consensus protocol, pointing out that it is more robust than iBFT/qBFT for validator effectiveness and slashing protection.]
EthStaker: HotStuff Consensus Protocol is a separate Network that all of these operators have to connect to right?
SafeStake: No, not really. The operators run the HotStuff consensus protocol as part of the SafeStake network tech stack, so it is not a separate network. Validators choose four operators to delegate their validation tasks to and the operator committees run HotStuff to achieve consensus and sign data on behalf of validators.
It really comes back to the idea that DVT is based on the concept of delegation. If a validator is running on a single node and it goes down, it will face penalties. However, if you delegate your validation tasks to an operator committee consisting of four different nodes, they can still achieve consensus and sign messages, even if one of the nodes goes down. The committee can also propose blocks to the beacon chain and pass validation tests. This is where the robustness of the system becomes a real benefit to everyone from solo stakers to staking services.
EthStaker: How many people do you currently have on your Galileo testnet?
SafeStake: After the latest update and code merge that happened last week and reset the number of validators and operators on the network to zero, there are now 17 operators and 76 validators on the platform. Before the reset, we had around 278 validators and over 60 active operators. We are currently working to rebuild those numbers.
EthStaker: Can we have multiple DVT Solutions?
SafeStake: While multiple DVT solutions can exist for Ethereum staking, it is important to note that you cannot deploy your validator private key in two different DVT platforms simultaneously as your validator will be slashed. Therefore, it is important to keep your key in one location.
EthStaker: You spoke of SafeStake achieving a 10% share of the ETH staking market in the next 2 years. Are you willing to put a hard limit of 22% in place?
SafeStake: I think this question relates to the question about the DVT space being a winner take all scenario. I would rather say that a good DVT infrastructure can acquire a big market share but it won’t be the winner take all because the whole Ethereum network needs the infrastructure to be diversified and decentralized. What we can do is to encourage more LSD pools (like Lido) to plug in on top of our mini-pool architecture to leverage our DKG scheme, the MPC, and the TSS schemes to decentralize the validator architect and improve security.
So that’s what we will focus on after the mainnet launch because we don’t want to only run our own LSD pool.
EthStaker: So for your own LSD pool, are you happy to limit it to 22 percent?
Safestake: I think that’s a really good number. Over the next two years, my own KPI is set at gaining at least a 10% market share. However, the SafeStake architect underneath ensures it won’t become a monopolistic staking infra even its LSD pools atop attract the majority of circulated Ether to stake. Since the Ether staking in the LSD pools will immediately distribute to the mini-pools created by the DKG scheme with four different Operator nodes. Neither a single party, including SafeStake DAO, can control the mini-pool assets.
During the second part of the call, Dmytro gave a live demonstration on how to import a validator into SafeStake Testnet. Some questions about the setup process were raised during the demonstration, which made it quite interesting. He also demonstrated SafeStake DVT tech in action, showing a dashboard of a validator with four operators active and attesting, and a different validator with only three of four operators active and attesting, but still online doing its job.
Marco concluded the call by reflecting on the expectations for the Post Shanghai Ethereum Staking, which we believe is valuable to include in the final section of this document.
Final Thoughts from Marco
My thoughts are about the presentation yesterday that Justin Drake did in the Staking Rewards Community. Justin proposed two major expectations about post-Shanghai staking on Ethereum.
The first is that the staking ratio will continue to grow over the next two years to be triple what it is now. That’s why we don’t have to compete with anyone else and if we can run a stable infrastructure, our target to get a 10% market share in these next two years will be attainable.
The second is that the Ethereum Foundation has been encouraging the expansion of the Solo Staker base. The main reason cited is that Solo Stakers can operate with zero fee (compared with the 25% fees from Coinbase staking), and offer the greatest amount of decentralization for the network. However, I slightly disagree with this that Solo Staker base will expand only due to their running node in zero fee.
First, solo staking is not as cost-efficient. Our operator nodes can handle roughly 10 times the number of validators that a solo staker does for the same monthly hardware costs. Second, solo staking is not as robust. Solo staker has a single point of failure, it can bring down their performance rate and staking yields. So solo staker has no way to compete with professional staking service providers like Coinbase stake, Blockdeamon, and Allnodes, etc. And the validator base will continue to concentrate on the big staking pools as time goes by.
Now I believe that with the help of distributed validated technology infrastructure and tuning, solo stakers can improve their security and robustness, competing with professional staking service providers at the same level. Ultimately, the goal of Ethereum Foundation could be met, that is to decentralize and diversify the validator base.
If you wish to see the complete video of the event you can access this link:
About ParaState
Parastate is participating in ETH 2.0 PoS with a new tech stack called SafeStake, a trust-minimized middle layer that promotes decentralized ETH 2.0 staking. SafeStake is the first Ethereum distributed validator technology (DVT) written in Rust. It utilizes HotStuff consensus, BLS Threshold Signature architecture, and protocol-level DKG to provide robust security and reliability, so validators can maximize their ETH staking rewards.
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