0xwildhare - Squad staking with DVT

Transcript

gmgm uh I'm zerox wildair I'm here today to talk to you guys about um friends. fun and how it fits into the array of tools available to the ethereum staking Community uh my first time speaking at an ethereum event I like really wanted to go B I had elaborate plans of what to talk about um I was I was going to uh basically come up with an idea a concept for what the ideal LST would look like

um you know it it'd be decentralized and permissionless governance minimized capitally efficient fungible um the perfect LST then I was going to go through and sort of compare some of the the existing projects to that standard and where we uh sit there it' be like a uh basically like Squad staking with an LST but you know we're all the squad man [Music] um but uh this controversy with with Lio sort of put the uh the final nail in the coffin with that whole plan cuz there's

not really a uh perfect LST it's not it's not possible there's too many different needs uh too many different participants in the ethereum ecosystem to do a a on size fits all there's nothing that's going to be perfect for everybody um the capital allocators for um staking Protocols are pretty they're the customers of these services and so um the the tendency naturally is to cater to the capital allocators to give them the best reward um but as as James who spoke before me was saying you know

actually um there there's different there's different ways to address that um the problem's not necessarily um with the number of things you can do with a staking token but that there's different participant needs different technical levels there's different um different things that can be addressed so one solution one one LST isn't the answer for everyone you know what is what is the optimal case um I would propose it's sort of what we're building as a community now

um okay okay sorry sorry thank you um so I propose it it's what we're building in ethereum now it's many different staking Solutions uh to address all the different needs of different different um uh participants different technical capabilities um as my girlfriend put it many different flavors of Kool-Aid for all the Kool-Aid drinkers um lots of different Niche Solutions lsts yes many different lsts but not everyone needs an LST that's not the um you know there's different ways to

represent stake in a staking protocol so I mentioned Squad staking earlier just uh sort of quickly I assume most of the people in this audience are familiar with what that is I'll just sort of speedrun through it pretty quickly um but the first time I heard the term Squad staking was uh was either on bankless or daily guay um not sure but as soon as I heard it I was like that's exactly what we're building you know that that's the perfect use case for um our system so uh like I said quickly it's um well first I got to talk about uh DVT distributed validator technology

you create your validator cryptographically split the signing Keys into four parts uh give it to four different operators as long as three of the four are online uh your blocks are proposed your attestations are made um also it would take three of the four to collude to make a SL able offense uh so you have some slashing protection and there's a reputation game so as uh um your operators are are monit or ranked for uptime and Effectiveness and for example if uh if you signed a bad block for someone else why would I

pick you as an operator to sign my blocks right uh so Squad staking let's say we have four friends they each pitch in 0 e for the 32 um and then they're each an operator so as long again as long as three of the four are online and their machines are behaving properly um their validator runs normally um it also allows them as operators to start building their uh reputation so maybe you know if if they have you know good uptime and Effectiveness maybe someone else a different valid Ator or pool or whatever or use them as an operator and they can start earning a nice little like side

stream of income from that um there's some challenges with Squad staking um the first is uh Hardware uh you have to spec and purchase Hardware uh second is software um you have to run a consensus client an execution client boost DVT software you have to keep all those things updated uh there's a few Solutions on the market for that handle both of those problems one is avato um another is DAP node I know the avato guys well so I'll say avato one more time but the other guys are good too

um and then there's no there's no Mev smoothing that's uh sort of a downside of uh of squad staking or solo staking in general but uh hopefully there'll be some solutions coming to Market on that before too long um and then finally for Squad staking there's some uh some level of trust required um you know do do all the rewards go to one person then he distributes them to the group or do you use a you know a generic splitter contract is there another option I'm glad you ask um friends. fun we

are a uh eth Global hackathon pro project from Bogota uh we're currently going through audits before our main net release and we are Squad staking as a service um basically a well-defined workflow for um to set up a squad staking validator and uh we have some um security guarantees baked in so just to walk you through it quickly one of the squad members one of the friends goes to friends. fun and uh connects her wallet and creates a

pool uh they get a link to send to the rest of the squad once they navigate to that link they go to this page um if they have an ens set up it'll show up there with the ens Avatar uh they connect their wallet select the amount of eth that they want to deposit into the pool um sign the transaction and they get an nft uh this nft represents their portion of the pool it has the deposit amount shown on it uh this allows them to claim their rewards whenever they want from the pool um it allows them to get their deposit back

back once the validator is exited and uh it's transferable so if you need to get out of your position quickly you can sell it on the open market once the pool is full uh it will direct you to generate your validator keys uh and then upload the deposit file that populates the pool contract with the information that you need to stake to the beacon chain um at this point the squad has a few options you know ideally uh the the front end will will direct you to select SSV operators we've been working with SSV to develop this they've uh they've been great

um you uh yeah directs you to select four operators ideally those would be the squad members or some of the squad members uh alternatively you can just select uh any existing SSV or yeah any any operators you want um also if you want to keep it real simple but also single point of failure you can just run your own node uh this is dashboard page everyone gets it has uh any pools they've created it has uh their deposit nfts it has their total eth deposited that is not my balance but I wish it was and the amount claimable so we're working on some

things for for future um future versions one is uh uh Merle tree allow list if you're worried about someone else trying to jump in on your pool between the time you created it and everyone else contributes you can you can prevent that um we also have a a option to make the nft non-transferable so that the the squad the friends group would be sort of locked um but then in the unfortunate event if there's a falling out amongst the um the squad uh person can call Rage Quit once they do that gives the rest of the squad members one week to buy them out of

their position and if they do not then the nft unlocks it becomes transferable they can sell it on the open market uh we've had some talk about having a a pool chat with some maybe government governance options if you want to change the art on the nft for your pool or uh add or remove operators those might be governance options that we make available um so yeah it's sort of what what friends. fun is like I said just perfect as soon as I heard about Squad staking I was like you know that's perfect perfect application for what we're doing I started talking about an

uh LST and friends. fun does not have an LST um we've had some conversations about how that would work how to incorporate one um one idea would be uh using the nft as collateral to borrow the LST against um that has one interesting unlock would be um if I have 16 eth I can get a flash loan for the other 16 eth create the you know 32e nft B if it's a 200% collateralization ratio I borrow the 16 eth worth of LST against that swap free pay off the flash loan

and then I'm running a validator for half price um there's some challenges though um things along the lines of how to make sure the uh the person who created pool as selecting operators that the operators that they selected have good uptime and Effectiveness those probably the answer to those would be governance and allow lists thing things like that that make it much less palatable for us so for right now at least the nft is not on our road map um D.A does have some

interesting Solutions to those problems so once they go live we'll we'll be watching that to see how that works um but yeah for now we're content to be a uh sort of a niche Squad staking as a service protocol uh like I said I think the solution to the problem of of the centralization forces in the the staking Market is just lots of different solutions solons for lots of different participants and skill levels um to bring as many people in as possible uh so yeah I want to encourage

you to go to friends. fun join our Discord let us know what you think um does anyone have any questions is there any way that a squad can create private Keys together or do you have to trust one of them to kind of log on and upload like once the 32 e is in there which of them can show up is it the one that contribut the most or yeah how does that key upload piece work excellent question um it's currently whoever created the pool or

whoever created creates the validator and the person who creates the pool has the power to enter that information into uh the pool contract uh in the future we're working on making that uh more um I guess uh more uh trustless but we don't currently have a solution on that SP it uh so you mentioned that Rage Quit function can you tell me a little bit more about that uh yeah uh it is essentially the the nfts would be non-transferable so uh you could not

sell them but if for example I decide I want I need to exit my position for whatever reason if uh someone else in the squad you know slept with my wife then I could call Rage Quit um and then that starts a one week timer when when I do that and in that one week and I can uh set the amount that I want for my nft I can set a discount basically so if if my nft is worth five eth for example I can say okay I'll I'll be bought out of my position for 4.8 eth um and so there's a one week time or I can set it five I want my full five eth gives one

week for everyone else in the Squad to buy that inft uh and then if they do not do that then I can unlock it um and that you know then I can sell it on openc or well if openc allows us to sell these nfts that's an open question too anyone else I also have a question uh when mainnet excellent question we're currently going through audits um I I don't want to commit to amount of time that audits takes but we're definitely talking about weeks not months um soon TM awesome let's thank Steve

again uh the next talk will be five past one one sorry five