Alon Muroch / DCxPrague

Transcript

hi everyone my name is Ellen I'm one of the founders at uh the SSV core team um anyone familiar with uh DVT distributed valid tech one two not as much so I'll I'll maybe give another brief uh on that as well um so distributed validated technology is um is a new or rather not not new but uh recently new um technology started out life of the ethereum foundation with the goal of being able to distribute the control of an ethereum validator um anyone staking here by the way on ethereum one no not as much um and so the idea was to take an ethereum validator which was represented by a

private key and being able to distribute that uh into multiple uh operators uh with the idea that you can decentralize the entire ethereum ecosystem uh if you kind of create this new component um and so SSV is one of the first implementers we've been um developing it for 2 and a half years years and been um launched on mainnet just a month and a half ago um the core challenges we're trying to kind of solve and and mitigate is the centralization on ethereum uh most of the stake on ethereum because of the um how stake on ethereum works and the difficulties in staking uh is mostly centralized uh and and kind of um com compressed into five or more or so

entities controlling the vast majority of stake um that obviously creates challenges the the the significant challenges are obviously um that ethereum wants to be as decentralized as possible and being um basically controlled by those five or six entities is problematic but it also creates uh a lot of risk so it's both risk on the users using those um services but also there's a major systemic risk on ethereum itself because uh the way slashing on ethereum Works um if one of those entities gets hacked or something happens to it um The Fallout or the the implications on the entire ethereum ecosystems are pretty large and so centralization is a major issue or ma

major challenge that the entire ecosystem needs to address and DVT is one of the major uh forces that can help with that um it also doesn't help that the current tax stack or the way to do staking on ethereum is pretty complex uh you have multiple different softwares you need to run um it's very difficult to run them and make sure they're scalable and robust uh but also it kind of creates single points of failure so it's not just um very expensive to run it's also very difficult and so it kind of increases the challenges around um centralization in general uh and also obviously maintenance and all of those different factors so um the technology itself and the way it's built right now it's pretty uh pretty challenging to run

on on you know thousands and thousands of node operators and so that's why we're seeing that this centralization issues arise um and also so you know if you're developing an actual um service or application for staking there's a bunch of different things you need to develop and build uh which is kind of Reinventing the wheel every time you want to build an application everything from the infrastructure all the way to the operator Set uh Key Management uh settlement all of those types of things are common for each uh staking application out there and each one of them needs to kind of reinvent the wheel every time they want to build it and so all of those three factors are pretty significant in kind of forcing everything to be um decentral centralized and that creates a lot of

issues and that's where kind of DVT uh tries to come into play DVT as as kind of I mentioned before is a distributed validator technology the idea is that you can take an ethereum validator and split it up into independent operators and DVT really has three focuses so one is to be a decentralized infrastructure another one is to be easy to use and scalable uh and if we can get all three of those uh challenges uh solved or at least mitigated by DVT we can make sure that ethereum um kind of goes into the path of decentralization and um make sure it's more robust and so on um DVD in in itself is pretty simple um it's it's comprised of two different

Technologies so a consensus protocol and uh threshold signatures the simple idea is that you have independent node operators they coordinate with one another um and then sign using threshold signatures it's pretty easy um and pretty bulletproof in terms of the technology itself but it offers a lot of benefits uh amongst which fault tolerance so you can imagine if one of those operators gets hacked or is offline the others can continue working as as if nothing happened uh and obviously that's a major major uh advancement um we at SSV what we did what we we took this DVT technology and we made a network out of it the idea there is that you have a a lot of node operators interconnected on a network

and and they all uh controlled and and synchronized by a smart contract that smart contract basically decides which uh validators were run on which operators um a group of operators uh that run a validator is called a cluster so each each validator can be run of on on on a cluster and that cluster can be of different sizes four operators seven operators and so on and so forth um and it's super super easy to run a distributed validator again because it's a smart contract all you need to do is really it's a simple ethereum transaction and so that was the goal of of SSV and and and and we kind of build on top of it the various things that a developer needs to build in order to kind of launch their staking service um

and so we are doing uh Advanced Key Management like distributed key generation you can actually create a validator uh in a distributed way so uh there's no single point where the actual validator key exists and so if it doesn't exist in a single point it's very hard to attack and can uh cause any harm um and um because it's a smart contract driven system it's super easy to interact with so you can even launch a uh distributed validator uh using a simple web app and I'll show you how that looks like um but it's super super easy so if we are uh trying to decentralize ethereum and making it easy and scalable that's a big step forward for for developers uh everywhere basically we launched about a month and

a half ago uh we're still in the launch phase which is not fully permissionless will be permissionless next next month uh but with our launch Partners about a month and a half ago we've launched and we already see 40,000 eth coming and staking and staked via SSV uh performance is amazing is as good as traditional Tech uh tech tech and even better um and um obviously it's a worldwide Network so it's a it's a Global Network of node operators on different continents different data centers um and all of that really um is a step forward for ethereum and what I wanted to show really really quickly is um you know the traditional way of running a distribut a validator on ethereum is pretty uh

pretty challenging so you need to you know spin up your own uh infrastructure you need to run several different softwares uh you need to make sure you have monitoring in place you need to have all of those bits and bites in place in order to run the validator uh make sure you you know it's backed up make sure you can uh reboot it if if needed uh but with SSV or a DVT Network um again it's simple easy um because you already have a network of those operators right and so you can go into a web app a super simple web app um and select a few of the operators you want to use um it's as simple as that just select the operators you can select really high-profile operators you can select cheap operators

you can mix and match you can select four or seven or whatever the group size you want um and once you to select them you can actually just upload some fee into the contract decide how long you want that validator to run uh in this case for a year for example um and from that moment on you can just create your validator in in various ways um you can create the key on your own you can create it on dkg you can have an existing validator uh transferred into SSV you can create a new one but as long as that key is uploaded the encrypted key is uploaded encrypted shares rather uh uploaded into the um into the contract uh each one of those keys is encrypted for a specific operator uh

none of the operators have the full key obviously uh and so once you do that and you actually execute a transaction that's it your validator starts to run completely distributed um you don't need to run any hardware you don't need to do anything else but registered that validator and ultimate you also get a cool web app showing all of the validators you have the status which operators are running them and so on and so forth so think about the application not just as a solo Staker that wants to run a few validators think of a developer that now wants to build a staking pool for example right so instead of taking worried about the infrastructure The Operators like all of those different things it can use something like SSV is its infrastructure

and focus on the actual application they want to develop um and it runs beautifully it's much cheaper it's much faster um and most of all it's decentralized which means that it's more robust and and better for the entire ethereum ecosystem um and so yeah that's uh DVT in a few words um I don't know if anyone's staking here but ethereum staking is becoming huge I mean ethereum staking today has over a million validators that means 32 million e are at stake today and so you can imagine the big the the big Market um and it's only growing at a pretty significant Pace um ethereum staking is bound to be the the largest uh application for ethereum by size and so making sure that

this it's built the right way is crucial for ethereum because otherwise it will put the entire theorem ecosystem at risk um and so DVT is kind of one of the emerging Technologies to uh combat centralization and make sure we're building something uh which is robust enough for the eorum ecosystem uh thank you and if anyone has questions yep so the first one how it will actually help yeah how this will uh help to decentralize what is already centralized like uh I mean coinbase is obviously not going to shut down their own nodes and uh restake with SSV so

there will still be like U major chunk of uh uh of of validation on on ethereum so yeah that that's a that's a really good question so um DVT is something that kind of interests a lot of people in different places and so coinbase is obviously not the early adopter of that but I can tell you that Lio is and Lio is the biggest taking pool by far Lio today holds um close to 400,000 validators so 4 it's millions and millions of eth at stake and so and they are the the most aggressive player to adopt DVT uh anywhere they just announced uh their first uh step of of adoption which is simple DVT uh and so

my kind of you know projecting forward you'll get to those early adapters and I believe the D will take 10 to 20% of the entire ethereum stake in the next let's say 18 months and then ultimately you'll get to coinbase as well coinbase are not early adopters but once coinbase adopts something that means that it's already there for to stay right I mean you can look at the their adoption for uh l2s right it took them a few years to adopt l2s but once they adopted it or started to adopt it they put a lot of focus on it and so it's it's a gradual adoption but I would imagine that you know 10 to 20% in 18 months and probably 50% in like maybe you know four years so it's it's pretty significant um yeah uh

another question uh let's say centralization of Hardware because we know that most of those nodes will be run on Amazon and uh stuff like that so so uh phys physical Hardware will stay centralized and if Amazon shuts down it will shut down like huge chunk of of ethereum validators and uh I don't see like that uh DVT Tech addresses this problem it actually like I think makes it even worse because it dis disincentivizes people uh from making like their nodes on uh on Rock pie or something like this at home because you can now do it like yeah with the with

DVT so I I think there's several um layers that you need to address one is uh the very basic is where the validator sits right so currently you have five entities controlling more than two-thirds of the valers so that's kind of level one level two is client diversity like what software you using Layer Three is your VPS layer four is your Regional uh regulatory area level five is the identities like there there's a bunch of different layers what I would say is that there's DVT doesn't solve everything but DVT enables it to be solved the reason why is that it today it's very hard to do like if you are let let's say you said your coinbase right coinbase will be have very

difficult uh to kind of distribute their uh access and control because they're one entity they can do use multiple data centers but there's still one entity there's not coinbase 1 2 3 and four completely separated it's one entity uh and with DVT you can still have coinbase but you can mix it in the same cluster the same group as solo stakers and other and other operators and so by doing that you're mitigating a lot of the risk I agree there's a like if if we go to the you know to the dream case scenario where uh every validator is run by a single entity in a hardware on their in their own home or own office that's a dream I don't think it will happen but the question is how far can we get to

that dream currently we're as far as we can from that dream I I believe that with and um the things we've been working on towards 2024 you'll see that needle coming into much closer to that dream scenario um you need to mix and match technology like DVT you need need to mix and match economics um operator marketplaces and stuff like that um but I think you can move the needle pretty significantly at least to the point where not one single entity um can take down ethereum even for an hour right um um and so that's what I'm saying like yeah yeah I I I I completely agree the the even

with even with SSV Network Amazon will be able to shut down ethereum definitely but currently like that's level four or five right we currently don't even need Amazon like today literally today the US regulator can go to three or four players and say please censor all transactions from that area that PL like it's it's much simpler than taking down Amazon so what I'm saying is that let's DVT can enable all of that it's not just DVT it's also adoption in terms of the way you use it um how people are using it and so what I'm saying is that with the right economics right discovery of operators and Technology like DVT you can move the needle much closer to where

you're talking about and where I want to be as well instead of the place it's right now it's an enabler it's not like if you don't use it correctly nothing will help but currently in the way you use technology it's none of it is is possible because of the way you know the the current Legacy technology works yeah and okay last one uh Hardware requirements for SSV super simple I think uh a node on SSV can run on two cores it's super super easy okay so I I I still can run it on my on uh oh yeah yeah we have a bunch of a bunch of nodes running on dep nodes on avado I don't know if you're familiar with it's like those boxes where you buy it to your like it's I think it's yeah and like okay thank

you yeah I was just curious about um like when there's a new network there's often new token and that often Mak sense for this though given the V the network sort of based on staking of ethereum is it a security concern that that token is like not ethereum or or is you know that is a separate so um one of the things we're planning for 2024 he have a separation between um the Dow which develops this whole thing and the underlying technology um if you get to dat place the role of the Dow will be to develop the Dow will be you know financially stable to do that like the ethereum foundation uh but the technology is not dependent on that and so the the the idea is that you can take that uh technology and reduce the token

value to zero but it's still going to work okay or or eliminate the token if if you will uh and so yeah that that's that's part of the planning um I think the token where it comes to play is the the community itself so ultimately if you want to have a you know a public good type of uh software um you need money to run it and so um that's I think that's where uh adoption token and Technology come into play the idea is for that to be public good it's completely open software um completely Dow controlled I mean the Dow the SSV Dow currently is financing the actual development so it can you know choose whoever it wants to to develop it um we have planning for multiple clients of

SSV so the idea is that you're not even dependent on one client uh one team or so and so yeah that's definitely in the cards hey yes so I was watching the map a couple of M slides ago and I was wondering uh because probably one of the one of the things you mentioned was that like currently the US can just go censor a couple of factors and then you have a like a big part of your operators go down what challenges do you see in trying to get more operators like node operators in different countries like in South America or in Africa or in parts of Asia that you're not currently getting at what what do you see are the challenges to getting operators on those areas I think the what's being uh the emerging Trend I see right now um with

the biggest open-source protocols on staking uh is bonded operators the idea that you have an operator which is bonded by some collateral right and I think that's the economical basis for opening up to everyone the problem problem is uh there two problems one is how do you get the money to be bonded and the second part is uh economical inefficiencies you see it very well in on Rocket pool for example where rocket pool is you know the de facto kind of reference implementation for bonded uh operators the problem they have is they they don't have enough operators like if you go to their uh deposit queue right now they have 100% full deposit CU which I think it's like um I don't know if I

can access that but like it's I think like 20,000 e or something which they cannot deposit to be validators because they simply don't have enough operators bonded operators and so one of the things we're thinking about is how can you um solve that uh economical inefficiencies uh from the one hand there's a lot of people who want to be operators solo Stak solo operators but they don't have enough capital and so the way we're thinking about it in 2024 is maybe use uh reaking for that purpose so the idea is that you have somebody with capital and you have somebody with hardware and there's some software in the middle which makes the two Mer Merry um obviously there's a bunch of trust assumptions there but the idea is that if you can marry that you can you might create an Open Marketplace for solo

operators um which basically is economical both for the reaking side but also the um uh operator side and that can significantly increase the amount of solo operators um and so I think that's I think bonded operators will represent probably 30 to 40% of the entire ethereum stake the rest of the 60% is probably institutional taking like coinbase and others yeah all right do we have further questions no no no all right thank you everyone Alan thank you so much for for coming and you're here for for for few days in prag yeah I'll be here until tomorrow yeah all right so if we have other questions thank you