by <a target="_blank" rel="noopener noreferrer" href="https://twitter.com/ethstak3r">@ethstak3r.eth</a> In the last few months, interest and participation in ETH staking has grown significantly. Up until Shapella, the staking ratio on the most popular PoS blockchain had hovered around 15% for quite some time. However, once withdrawals were enabled, this number has been growing steadily, recently reaching <a href="/asset/ethereum-2-0" target="_blank" rel="noopener noreferrer">just over 23%</a>.It seems that everyone from home and retail stakers to institutional investors are getting on board with the positive narrative surrounding the approval of a Bitcoin ETF and the possible formation of Ethereum ETFs. To add to the excitement, EIPs like 4844 are on the horizon, promising to help scale Ethereum and make transactions (mostly on L2s) faster and cheaper than ever before.&nbsp;However, one thing hasn’t changed and likely won’t in the near future: running an Ethereum validator requires 32 ETH. With the price of 1 ETH now hovering around $2,300, doing so remains elusive for many average users and retail stakers. And, even for those that are technically inclined, running a solo staking node isn’t easy and it comes with its fair share of risks.&nbsp;<h2>Issues and risks with solo staking</h2>To start, Ethereum validators need to be online 24/7/365 to attest to transactions happening on the Beacon Chain and propose new blocks. By attesting, validators secure the network and earn rewards for doing so. When validators are unable to attest, they are penalized and lose small amounts of ETH from their balance for each epoch they are offline.Next, since private keys run Ethereum validators, the validator private keys must be online and accessible. This presents a significant security risk. If a bad actor gains control of a private key, they can potentially steal funds or cause the validator to act maliciously on the network, resulting in slashing. When a validator is slashed, it will lose some or all of its deposit and could be forcibly removed from the network.Slashing can also result from an event called a “double attestation” where the same validator attests twice in the same epoch. This is against protocol rules and will result in the validator being removed from the network. Users who run redundant setups so their node is never offline face the biggest risk of double attestation.Taking all of these factors into account, it’s no surprise that many ETH holders simply aren’t comfortable taking on the technical challenges and risks that are associated with running a node at home.&nbsp;<h2>Enter Centralized Staking Services</h2>The 32 ETH requirement coupled with the risks and challenges of running a solo node created a perfect storm, opening the doors for large centralized staking services to flourish and become dominant. However, this has had the negative effect of centralizing the blockchain, rather than helping it stay true to its ethos of decentralization.Staking services and liquid staking protocols offer users with varying budgets, even very small ones, an easy way to participate in earning staking rewards. Users run ‘pooled’ validators, where the funding to bring them online is crowdsourced.When you add the fact that little to no technical ability is required, large staking services become a very attractive option for many users. When it comes to liquid staking providers, Lido is currently the dominant player by a significant margin, controlling almost 33% of the total amount of ETH staked. This staked ETH powers large pooled validators that run on a rather limited set of operator nodes that are curated and vetted by the Lido DAO.Staking providers that control significant portions of the total staked ETH pose inherent risks to the blockchain by centralizing its operations. A malicious entity could compromise some or all of the staking provider’s network and cause large numbers of validators to be slashed or prevent the blockchain from finalizing.Now, take this thought process one step further. If a staking provider continues to grow to the point where they control more than half of the total staked ETH, the potential exists for a bad actor, or more likely a group of bad actors working together, to re-write the blockchain’s history or take control of the network.Additionally, as we have seen firsthand, censorship tends to surface when the blockchain is more centralized, while a wide, decentralized validator base helps to minimize block censorship.&nbsp;<h2>Turning challenges into opportunities</h2>For the forward-thinkers at SafeStake, these challenges have opened up a world of opportunities to improve the situation for both ETH stakers and the entire Ethereum ecosystem.Since SafeStake operates as a highly decentralized DVT infra and protocol on a permissionless network, stakers with zero technical knowledge about how to run a node can utilize it to maximize their staking rewards and minimize their risks. At the same time, DVT provides Ethereum with a major upgrade.In fact, in a recent post on ethresear.ch entitled <a target="_blank" rel="noopener noreferrer" href="https://ethresear.ch/t/sticking-to-8192-signatures-per-slot-post-ssf-how-and-why/17989">Sticking to 8192 signatures per slot post-SSF: how and why</a>, Vitalik Buterin, Ethereum’s creator, puts forth the notion that DVT is the future of Ethereum staking and stresses the important role that DVT-based staking pools will play in making staking more egalitarian.&nbsp;<h2>Maximizing validator security and staking rewards</h2>With SafeStake, Ethereum validators become distributed and run on multiple nodes instead of single ones, providing active-active redundancy without the risk of double attestation. How? Instead of running a solo node, a staker chooses four (4) operators on the SafeStake network to manage their validator for them. This is known as the operator committee. Then, the protocol securely splits the validator private key into four (4) shares and distributes one share to each operator in the committee.Now, instead of the private key doing the work, the key shares come together via consensus to attest as the validator. The validator private key no longer needs to be online and exposed and can be stored safely offline in cold storage instead.A big part of SafeStake’s magic is its ability to generate a signature equivalent to that of the original validator key using only three (3) out of four (4) key shares. This means that one of the nodes in the operator committee can be offline without affecting the validator’s performance. The other three (3) nodes will keep the validator online and attesting, maximizing staking rewards over time. Conversely, no operator can ever recreate the validator private key or an equivalent signature, providing the ultimate validator security.&nbsp;<h2>An added layer of decentralization for blockchain health</h2>As Ethereum centralization concerns continue to mount, SafeStake offers an added layer of decentralization that will protect the blockchain and its users, while still allowing centralized staking services to control large amounts of staked ETH.Since SafeStake runs on a permissionless network, independent operators are free to join and leave the network at will. It is this network of independent, decentralized operators coupled with distributed validators that would make a coordinated attack on the Ethereum blockchain next to impossible. Large staking providers can breathe a collective sigh of relief as their share of total staked ETH would no longer pose a risk to the health of the blockchain.&nbsp;<h2>What’s under the hood?</h2>SafeStake’s open source package is the first Ethereum validation client natively integrated with DVT (Distributed Validator Technology), and the only DVT solution that is written in Rust. This key difference not only enhances the security and resilience of SafeStake but also contributes to its superior performance compared to other DVT platforms.Essentially, SafeStake runs on a set of Solidity smart contracts that handle validator and operator registration and cancellation, key share restoration, and fee management. It operates on top of the Lighthouse consensus client, leverages BLS threshold signatures via a non-interactive threshold signature scheme, and has built-in Distributed Key Generation (DKG).Instead of iBFT (Istanbul Byzantine Fault Tolerance) or its cousin qBFT, SafeStake utilizes Hotstuff (a high-performance BFT consensus library) to manage the signature operations of the operator committee, allowing them to maintain and operate an Ethereum validator by consensus. HotStuff provides higher levels of security, performance, and reliability, and better slashing protection for validators.SafeStake also implements Multi-Party Computation (MPC) and BLS (signing) protocols on top of HotStuff, allowing the operator committee to aggregate a signature that is equivalent to the original.<img src="https://tidy-ball-c49dc59f59.media.strapiapp.com/safestake_dvt_8df639ba70.jpg" alt="safestake-dvt.jpg"><h3>Distributed Key Generation (DKG)</h3>DKG allows the operators in a committee to come together and securely generate a validator private key. SafeStake’s DKG has been built into the protocol and is not a third-party or add-on solution. It requires no actions on the part of the operators in the committee, and is automatically initiated by the protocol in SafeStake Stages 2 and 3.In these stages, when an initiator operator makes a 4 ETH deposit, a mini-pool is created, and the other 28 ETH required to register the validator on the Beacon Chain are gathered from the SafeStake liquid staking pool, where retail stakers are making smaller deposits.With SafeStake, DKG is only necessary when multiple depositors are involved and the validator private key must be securely generated by the four (4) operators in the committee without anyone ever having custody of the private key or knowledge of the secret used to distribute the key shares. Therefore, DKG is not necessary in Stage 1, where validator keys are being imported rather than created.<h3>SafeStake Stage 1</h3>Stage 1 supports importing an existing validator by dragging-and-dropping the keystore file into the browser-based Dapp and choosing four operators to manage it. In return for validator management services, a staker pays the operators in the committee a monthly fee in $DVT, the SafeStake network’s native token.<h3>SafeStake Stages 2 &amp; 3 - Liquid Staking &amp; Mini Pools</h3>Stage 2 introduces a DVT-based liquid staking pool and a new operator role called the initiator. As previously mentioned, an initiator makes a 4 ETH deposit, creating a mini-pool. Then the initiator selects three (3) other operators to manage the validator along with them and waits for the rest of the ETH required to be gathered from the liquid staking pool. Stage 3 will work in exactly the same way as Stage 2, however, the deposit threshold for retail stakers will be lowered from 4 ETH down to 0.1 ETH.&nbsp;<h2>What stage is SafeStake in now?</h2>The smart contracts that power the network have undergone two (2) intensive audits from two (2) independent firms, Nethermind and <a target="_blank" rel="noopener noreferrer" href="https://github.com/peckshield/publications/blob/master/audit_reports/PeckShield-Audit-Report-SafeStake-v1.0.pdf">PeckShield</a>, and we are currently in the final stages of testing the Stage 1 code. While the tech stack has been running stably on the Goerli testnet for more than half a year, it is now time to test the code in an environment more similar to mainnet. So, we are launching a new testnet on Holesky later this month.Providing SafeStake on Holesky supports 20 professional operators and testing goes smoothly for 30 days, the initial SafeStake mainnet launch will happen in the third week of February, followed by two months (60 days) of private mainnet. After the 60-day private mainnet period, we will open the SafeStake Stage 1 permissionless mainnet to the public, sometime in the beginning of May.Here’s a quick breakdown of the estimated timeline over the next few months:<ul><li>3rd week of Jan - 3rd week of Feb: SafeStake on Holesky*When the SafeStake testnet on Holesky maintains 20 professional operators running stably, it will kick start the private mainnet stage</li><li>4th week of Feb: Launch SafeStake Stage 1 permissionless mainnet (private)</li><li>4th week of Feb - 4th week of Apr: 60-day private mainnet period</li><li>Early May: Open SafeStake Stage 1 permissionless mainnet to the public</li></ul>&nbsp;<h2>Conclusion</h2>The challenges and risks of solo staking and the threats Ethereum faces from centralization are real. And, until the ability to run a solo node becomes less technically involved, less costly, and less risky, many stakers are likely to continue flocking to large centralized staking providers.Now, in response to these issues and to make staking more egalitarian, Vitalik himself is advocating for Ethereum to be secured by validators in DVT-based staking pools. For ETH stakers, Ethereum users, and the blockchain itself, this means putting a focus on DVT solutions, like SafeStake.SafeStake’s unique DVT implementation offers maximized staking rewards and enhanced protection from the threats of centralization, significantly reducing the potential for bad actors to wreak havoc on the blockchain.Additionally, SafeStake is an advocate for solo stakers and putting control in the hands of many people instead of a few. Stages 2 and 3 are specifically aimed at lowering the barrier to ETH staking to make decentralized staking accessible to all, and promote a wider, more diverse validator base for Ethereum.The future looks bright for SafeStake, and together, we can build an amazing, decentralized future for Ethereum.<hr>About SafeStake:SafeStake is a pioneering technology company focused on revolutionizing Ethereum staking. With its cutting-edge, decentralized Distributed Validator Technology (DVT), SafeStake provides an ultra-secure, fault-tolerant environment for Ethereum validators, maximizing staking rewards and minimizing penalties. SafeStake is committed to driving the growth, innovation, and decentralization of the Ethereum network while ensuring the security and prosperity of its participants.<a target="_blank" rel="noopener noreferrer" href="https://www.safestake.xyz/">Website</a> | <a target="_blank" rel="noopener noreferrer" href="https://medium.com/ethereum-on-steroids">Blog</a> | <a target="_blank" rel="noopener noreferrer" href="https://twitter.com/SafeStakeDVT">Twitter</a> | <a target="_blank" rel="noopener noreferrer" href="https://t.me/ParaState">Telegram</a> | <a target="_blank" rel="noopener noreferrer" href="https://discord.com/invite/zFS3Mnfpwj">Discord</a> | <a target="_blank" rel="noopener noreferrer" href="https://github.com/ParaState">Github</a>

SafeStake: Maximizing Staking Rewards and Decentralizing Ethereum with DVT

TL;DR: