Alvaro Revuelta - Smooth your MEV Rewards as a Solo Staker

Transcript

all right so our next uh speaker here is um Alvaro who is um with um uh is a research engineer uh with status um and is also affiliated with the D node Network and um me rewards um and smoothing them as a solo [Applause] Sak thank you so yeah my name is Alvaro and I'm here today to talk about how to smooth your MB rewards as a solo stakers so we have a problem here um a solo Staker which is defined as a person

or entity that runs ethereum validator that runs few ethereum validators let's say one will only propose uh an average of three blocks a year this is calculated with 880,000 validators as some of you may know H the execution rewards are have a huge variance so some reward some blocks may have a huge reward another blocks may have a very small reward so this makes the the APR the the return of investment H in in percent a year not predictable right it's based pure on on pure lack so yeah we can rely on lack um so let's say that we have a paco is a a Manolo both of them are Solo stakers they run a d

note from their home and they are they only have one validator um we have Paco that is lucky and proposes three blocks in a given year that as you can see are the reward is high right but then we have Manolo that proposes three blocks with a very small reward this makes Paco happy and Manolo unhappy the problem here is that beforehand a prior you don't know if you're are going to be Paco or or Manolo right and this is a huge uh a huge issue because we can't have H solo stakers depending on on lack we have couple of examples here on the left side we have a block with 200 e

of reward and on the right side we have a block with 02 uh cents right which is nothing so you don't want to be the guy proposing three blocks like the one in the right a year so luckily we have a solution and it's the M smoothing pool H AKA smooth built by dap node that I have helped developing Lansky from dno will after me say a few words about the the project and there may be or not be an alpha leak by the end of this talk so feel free to stay so how does it work well long story short solo stakers send their rewards to

a common pool AKA smart contract and this reward rewards are divided or splitted equally H between or among all participants H so yeah basically the execution rewards are smooth smooth H but how does it work so I am here to explain you the technical details on how this project work Works H it has mainly three components we have the Oracle we have a contract and we have a front end uh the Oracle is the I would say the most complex part it h does offchain calculations of the rewards and settles everything on on chain updating a mercel route in the in the contract and this

Merkel root is like a summary of all the balances of all the individual validators of course it uses a consensus and an execution client so you can see an example here we have Paco we have Manolo and we have feno three solo stakers and they H propose H blocks sending their reward into the pool or or the contract H then on the other hand we have the Oracle which monitors the the contract and calculates the rewards that belong to each Staker then er every now and then this Oracle settles everything on chain with updating a mercel root in the contract and then H each solo Staker ER

can H submitting submitting the the Merkel proofs they can H claim their share of their rewards you can see packo claims Manolo claims and fullo claims and everyone is happy um we have some penalizations um if you for example H miss one block H you will get a warning it's like a yellow flag in football H we also have a red flag which means that you have missed uh two blocks in a row H this will mean that you are not eligible for rewards H the moment that you propose a block that is valid then you are your state is rested and you are back again being eligible for rewards

and then we have one last penalization that is like some kind of slashing that if you propose a block with a a WR Fe recipient then you will be a banned from the smoothing pool forever so don't be that guy um the Oracle has a feature H that uh it runs with a quotum a very simple consensus of n out of M so um all the oracles are running and calculating the state and all of them update the the Merle route on chain and if N Out of M agree on the same route uh this route will be considered like finalized and we will consider it h

valid um this Oracle is run by WID listed entities h m uh we still don't know how many we will have and yeah by now this mercel route is is updated every four day four days which is quite frequent so every four days um you will be able to see your rewards and you will be able to claim them with their interface that I will see that I will show later uh on the other hand we have the contract uh quite simple uh this contract is the address that receives the rewards so you should select ER this address as the Fe recipient of your validator it also handles the subscriptions so whenever you want to

join the pool you have to subscribe the smart contract handles this H then also the unsubscriptions when you want to live and then the claims if you submit the a valid Merle proof with a valid address then you will be able to claim your share of your rewards and last but but not least we have the front end as you can see it's h quite simple um if you connect to this front end with your metamask wallet you will see under my validators or your validators and you will be able to subscribe or unsubscribe them uh from this interface as simple as two clicks two clicks connect wallet and subscribe and then on the right side you can see

the claim all um with this button you can claim your share of the rewards and then on the top we have some metrics of the validators and and yes more metrics so um you may say okay this looks interesting how can I join so the the requirements are quite low you only need an active validator inet you have to deposit some collateral which is 20 bucks which is nothing and you have to change your free recipient to the address of the smoothing pool uh you also need non BLS withdrawal credentials and it's important to note that there are two ways of H subscribing it could

be a manual subscription or an automatic subscription so this means that manual is when you deposit collateral and you express your intention to subscribe and you will be getting rewards from T equals z then we have the automatic subscription that if any validator sends the the rewards to uh this address we will consider this H validator as subscribed no matter if uh this validator has deposited the the collateral H this is a in my opinion it's a bit worse because with the manual subscription you start getting rewards from T equals z but with the automatic subscription we won't

consider you subscribed until you propose the first block and this can take few months weeks or even seconds depending on how lucky you are and the good part of this is that you can live at any time the pool and okay and you may ask H how do we deal with Bad actors right because I can see people people there for sure thinking about how to cheat the the system right so uh first of all we have to Define what is a bad actor so we Define as bad actor validators with a wrong Fe recipient or lazy validator that maybe they have the correct Fe recipient but they are not uh performing properly meaning that they are missing blocks blocks so we fix this by

different uh ways uh first of all the collateral is lost this collateral that I told you before of 20 bucks H is lost if you if you set a wrong Fe recipient so if you propose a Blog if you are subscribed and you propose a block with the Ry recipient your collateral is taken and then you are banned from the pool the good news is that the first block that you propos that is correct we will give you back the collateral we don't want your money this is just uh a decentralized project oper Source blah blah um also you can't claim until ER the first block is is proposed this is very important because otherwise people would be subscribing into the poll and

without proposing any blocks they would be getting rewards and they don't deserve that of course H we split the rewards into accumulated that are the rewards that belong to you but you can't claim yet and then we have the claimable rewards which means that which are the rewards that you can claim at any time every block you propose you convert your accumulated rewards into claimable and you can claim it claim them in the interface that you have seen before um and yeah also we deal with B actors with different penalties the yellow flag the red flag and the ban that we have explained before and uh yeah now we have lansi ER from dap node that will be explaining a

bit more about the smoothing pool so give him a round of applause all right thank you Albero um this wouldn't have been possible without Alo uh dedicating a lot of his time on setting up the the all of the edge cases what could go wrong setting up all the Oracle code um huge props to Jesus from the ZK polygon zkm from polygon for taking care of most of the smart contracts um and yeah this has been like a it's not only a dab note effort it's been an effort from uh a lot of people that were convinced by the idea that

users or solo stakers should be at par with um centralized pools or even pools of other kinds um because yeah all the side yeah here uh pools like Lio or rocket pool or uh well rocket pool actually has it thanks to the smoothing pool and actually here's my my other thanks that that I have to say all of this idea of the smoothing pool for solo stakers came because of Ken and Ken's uh talk at uh Bogota uh at Devcon where we were like okay that's fantastic the work that they've done on the rocket pool uh

smoothing pools now how can we translate how can we bring this to solo stickers to put them at par with uh smoothie pool so big round of applause for Ken and the rocket scientist um and thank you Ken because that that you were the the spark of this so yeah as we said pools have natural smoothing big centralized Services Kraken centralized uh exchanges they they act as natural smoothing pools and as leis just mentioned in the talk before Lottery blocks sometimes well somehow they always end up uh in the hands of Lio right so we can see that me is a sort of Cent neutralizing Force meaning

that if you are a Staker that Stakes with one of these pools with uh Lio or a centralized exchange like Kraken um because of this effect of the smoothing it could be that you're actually even though you get a fee that they take you would actually end up with a higher reward because of the smoothing effect that you as a solo if you are as a if you are Paco or Manolo if you're Manolo you're screwed like you're better off and there's no way of knowing this so this is a huge disincentive for solo stakers to even jump into doing something like this because you know I am I am better off I am a lot safer to have like a a regular reward if I stake

with a with a with a pool like Lio or like any other pool and I am actually quite screwed if I happen to be in the case of Manolo so how do we fight back how do we bring solo stakers for sure at the same level as the spools and well the answer is this this whole presentation and um and the the alpha leak here is that today at 3 a.m. in the morning uh edues Al deployed in mainnet and why is this alphal thank you so this is ready and available the front end is not ready will be ready at the end of the day and

why is this Alpha leak um this is an alpha leak because this is a soft launch we haven't officially launched um but you can already start subscribing your validators there and this is an alpha leak because you might have something to gain um so there's uh that's a summary so what what here um you can see that there's a button that says donate up there and here what we're trying to do is we're trying to allow other parties to incentivize solo stakers what does this mean it means that people can donate to the me smoothing pool contract

directly they can send eth directly to the me smoothing pool contract and effectively incentivize every single solo Staker that is participating in the smoothing pool that means that you can single-handedly an entity that wants to fund public goods and they want to fund validators directly they can go to the smoothing pool and directly fund every single solo Staker that is participating in the smoothing pool so it's important here because there's that's DB note branding and this sort of stuff but and and there's going to be really easy ways of participating from dab note itself you use if you're using DB note as uh your staking machine you'll be able to

just click a button and subscribe to the pool if you want it will it's obviously opt in and open open source and like of course um but solo stakers they need only to go to smooth. dap. and participate and sign up they just need to change their uh few recipient address into the uh Meb smoothing pool address and they will start participating as well and again why was I saying Alpha leak because I have good news for you if you're solo stakers we passed an audit contest uh with flying colors um there was there was barely uh anything worth

mentioning that was uh that was dangerous or that was uh that was not just Stellar so the budget that we had decided if the authorities uh if the tax authorities uh once the tax authorities clear this budget um so we're going to be dedicating part part of this to do exactly this to incentivize solo stakers at large and we're going to be donating to the pool and if you are one of the first to subscribe in the pool that means that you will basically have part of this Revenue that will come to your validator straight up nothing to do it's not going to be a lottery block you're you're just going to get that lottery for yourself so uh that is probably

going to happen before we do the main launch next week so um as soon if you see me around find me it's kind of like sort of like a shady Alpha um but uh but find me and I'll let you know when the uh smooth. dap node.io is pointed to the right smart contract and you can subscribe yourself and save yourself a lot of variants last summary stop depending on luck the luck Factor sucks you propose only on average 3.4 blocks and you don't know when that's going to be and if it's going to be three you could propose less number two do not miss high Feast

season it is terrible when you propose a block and this block happens to be in a time where ethereum is dead there's no traffic there's no blocks and then it's equally disastrous when you're seeing that high fees everywhere everybody's getting reach blocks with lots of eth and then your DB note is or your solo stick your validator is not proposing anything stop missing High season subscribe to a smoothing pool and this problem is solved and finally have exposure to me uh to M Lottery blocks you yourself with three blogs a year very rarely will gain this stop not having exposure to this Lottery

blogs or having little explo exposure and join a smoothing pool and gain exposure to all of these Lottery blocks with huge Rewards that's uh that's all for me thank you Albero again for doing this POS thank you thank you both we just have a little bit of time for a few questions there uh before we begin I should uh certainly give um a lot of credit to Joe uh clampus in the rocket pool Community he did a lot of the initial design work on it smoothing pool I just happen to give a do a little bit of math on the probability for it and showed the incentive for joining a smoothing pool and um presented that but I'm very excited to see this here one question I did have before we go to the first question in the audience is let me just make sure I understand this right

you do not have to be running AAP node Hardware to join the DAP node smoothing pool is that correct that's absolutely correct uh the only thing that you need is to that as as Alber explained there's two ways of subscribing there's an automatic subscription that will happen when you automatically send your execution layer rewards to the pool you'll be automatically subscribed but you can start earning or accumulating rewards from today if you sign up in and you make this deposit of 20 bucks um then you'll start accumulating rewards from now as a solo Staker and the only thing you need to do is make sure that your fee recipient address is set to the pool cool thanks L I was curious if you could shat a little light on which Rel layers are used behind the scenes and if

there's any control from the folks who are participating right so we're not in control of uh that we don't want to have any opinion on what Rel layers people use on their setup uh you can choose any relayer and there's a check when you're subscribing um that will check that you're in fact subscribed to a relayer but that's your choice if you want to be compliant OFA compliant not OFA compliant that's absolutely your choice and uh we we not we do not enforce any particular relays all right any other questions from the audience here okay uh kfax do we know any of the

details about lunch yes we do thank you guys