Since the Ethereum 2.0 upgrade, the liquid staking and restaking markets have been huge drivers of market activity. With a flood of new protocols entering the scene, how does SSV secure a base layer for LRTs? How does SSV stand out as an LRT network of choice?
SSV Network’s implementation of distributed validator technology (DVT) is positioned as an infrastructure for re/staking applications. By integrating/building on SSV, re/staking applications can seamlessly plug into a globally decentralized network of node operators with different EL/CL clients and hardware, running validators in a distributed manner. Staking applications like Lido, Ether.fi, Puffer, and Renzo, to name a few, utilize SSV Network to ensure that validators securing Ethereum’s base layer are as decentralized and resilient as possible to extend Ethereum’s cryptoeconomic security safely. SSV basically eliminates slashing risks on the Beacon Chain, allowing LRTs to focus on AVS strategies and slashing risk on the staking layer.
You previously worked on a research grant from the Ethereum Foundation to develop distributed validator technology (DVT). How does DVT improve Ethereum’s staking infrastructure, and how is SSV using this to benefit the protocol?
DVT is a revolutionary technology that is becoming the new gold standard for all staking applications. Distributed validator technology (DVT) is the umbrella term for different technology implementations that aim to run an Ethereum validator on multiple nodes. SSV’s implementation of DVT is a non-custodial and permissionless network infrastructure designed for splitting and distributing a validator key into multiple KeyShares, enabling it to run across multiple non-trusting operator nodes on a network. Users that run validators through the network pay node operator in SSV tokens for conducting duties on the Beacon Chain on their behalf, with stakers receiving their validator’s ETH rewards in return. Part of the fee is the network fee that goes directly to the SSV Network DAO treasury to fund ecosystem initiatives and grants.
What are mega clusters? How will SSV use mega clusters to help transition validators from legacy setups to DVT?
Mega Clusters are a coordinated network of independent node operators that enhance fault tolerance, security, and decentralization. Many of the validators on the beacon chain are run by professional node operators. Many of them operate as part of big LST/LRT protocols, creating business and technical ties that can potentially create correlated vulnerabilities. Mega clusters are the reallocation of nodes by an entity to other entities as part of a multi- (mega) cluster setup. Done as part of a group, the end result is the formation of many-by-many clusters to be used by each participating entity.
SSV will use them to transition validators from legacy setups by distributing responsibilities across multiple entities, reducing single points of failure, and promoting a more robust, decentralized network. This approach improves security, regulatory flexibility, and overall network resilience.
How does SSV achieve a slashing-free decentralised staking environment?
Non-DVT setups cannot achieve true active-active redundancy due to the fact that the validator’s private key (that’s required for signing duties) must be online 24/7 and only runs on one machine with one set of components. Active-passive setups are usually utilized and run the risk of double signing when switching from one machine to another (fallback mechanism). DVT ensures this never happens by distributing duties between multiple nodes that collectively sign. Additionally, SSV has an anti-shaling database to ensure SSV’s distributed validators never conduct a slashable or penalisable duty.
SSV has experienced remarkable growth over the last two years; the network has more than 930,000 ETH staked and nearly 30,000 validators. How does SSV plan to continue this momentum?
Just last week (8 July, 2024) SSV hit 1M ETH staked with over 700 node operators on the network. Firstly, SSV has extended and revised its incentivized mainnet program that gives validators a 30% APR boost in SSV by simply registering validators to the network, a major incentive for staking protocols built on SSV as well as solo stakers. The high cadence will be continued by new community initiatives (SSVdivers ambassador program & SSV Community associates) that support and reward community participation and growth. These initiatives go hand in hand with continued work by the SSV DAO grants committee to actively pursue high-quality integrations and critical tooling and infrastructure for the protocol. Lido (the largest staking protocol by TVL) has integrated SSV as a DVT provider in the simple DVT module. Continued work with leading protocols will help increase the proliferation of the SSV Network.
The SSV DAO recently announced an update to its grants strategy. How has the strategy changed, and how will these changes be used to further innovate the SSV network?
The revised grants strategy focuses on fostering innovation through open grants for unique use cases and strategic partnerships for critical ecosystem components. SSV DAO is streamlining the funding process by discontinuing seed funding and TVL milestones but will continue supporting existing grantees and maintaining bug bounties and micro-grants.
Instead of broad grants, SSV DAO may form strategic partnerships for critical ecosystem components, ensuring dedicated development and ownership by the DAO and mitigating dependency risks. Focus areas include performance & metadata data providers, alerting & monitoring solutions, alternative SSV client implementations, operator solutions and cluster selection, developer tools, major player integrations (e.g., RocketPool, Lido), and community programs (e.g., Becoming a Liquidator).
In a recent suit brought forth by the SEC against Consensys, the regulator implied that Lido’s stETH is an unregistered security. While the case’s outcome is uncertain, how important will solo validation be moving forward? What can be done to help address the inherent challenges of being a solo validator?
Solo validation has always been a central point in the Ethereum ethos. As the staking ecosystem evolves, technologies like DVT - that enable squad staking and help reduce the bond requirements for solo stakers - help solo stakers get into the game. Generally, technical barriers are also being addressed. By being a solo validator on SSV, you can be one of the nodes in a cluster running your validator(s) paired with top-class node operators that allow you to get enterprise performance and uptime, therefore maximizing rewards. DVT is also being used in Lido’s new CSM, bringing the capital requirement to 1.5 - 2 ETH.