Building a Sustainable Home Staking Model for Ethereum

Transcript

Oh yeah. Okay. Uh one, two, three. Hello. So, uh guys, first of all, I like that we have such a small audience here and you are already communicating with each other because homestaking and mostly sub sustainable homestaking is also about communities. It's about building relationships. But we'll learn about it later. First, let's start with a question that most of you probably know the answer, but still, let's recap. Why home and solo stakers matter for Ethereum? So, Ethereum staking in a nutshell is that simple. You have user and the user should lock 32 ETH or more to get the ability to run validator. And

by running validator and doing it appropriately, users get rewards. That's the simplest version. And one may think that with such a simple scheme, the conclusion is also simple. More users stake, more decentralization, better for Ethereum, right? It is slightly more complicated because when we look at this scheme, there are many questions to be answered. Namely, are these users independent? who actually runs validators here because there's no limitation that a person should deposit E and the same person

should run validator and much much more questions to make it this picture a bit clearer instead of looking at a simple scheme of Ethereum staking we can look at this wonderful picture prepared by Eve staker it's basically a list of a highlevel tiers or categories of stakers ers and we particularly want to focus on the top two ones. But why? Because solo and homestakers, as you see from the table, they first of all own all or some capital, which means they have something at stake. They control configurations and specifically homestakers they also

validate mostly from home from their residential locations or maybe using their local server provider or something like that. While the others still being good for Ethereum do it in different ways. For example, professional node operators they do control configurations but they also tend to concentrate stake because they are operating not their own money they are operating delegated stake. and liquid stakers they they do not control any configurations they are not running validators at all but at the same time without liquid stakers how would we have homestakers so with all this mess we see that the top layers are actually the backbone of Ethereum and now the question is why it is so and why

solo stakers actually matter well I see four reasons for that the first one is solo and home stakers are indeed censorship resistant Imagine you have a big entity like a huge one I don't know name whatever you want and then the governments decides that oh you are not allowed to post this transactions or that transactions it can easily be applied because for the big entity it will be a matter of existing or non-existing and now imagine just all of the people sitting here we live across the whole world and no matter which government on its own will decide to tell oh you are not allowed to include this transactions in the block while it might affect some of you but not all of you. And the same applies for no matter

which country and so on and so forth. That's because of the second thing that solo and homestakers are decentralized by its nature. H mostly homestakers because they are validating from home and we all live in separate homes. I swear not a lot of you live at the same apartment but maybe who knows but most of you don't. The next thing is that solo and homestakers are resilient. The same as this particular example with censorship, there might be other regulations or any other pressure stuff from governments. And again, since we have multiple individuals, it's way harder to enforce something on multiples than on several big players. And at the end of the day, solo and home stakers,

and I personally believe in that, they do not only make Ethereum robust, but they also have a relatively robust configurations on their own. And they're relatively robust setups on their own because they have something at stake and instead of just recklessly I don't know not maintaining your dab node or whatever they tend to pay way more attention to their hardware compared to a low tier professional operators. So in this combination we can definitely see that solo and homestakers do matter. The question now is are there enough solo and homestakers? Well, I believe a lot of you guys in this room are solo and homestakers, but we don't know actually what the situation on Ethereum is

because there's no such a thing as I'm a homestaker badge. Well, some people might claim such a badge and but that will be a problem to verify if it's true or not and a lot of solo and homestakers prefer to be anonymous. Rough estimations tell that something between 20K to 5K solo and homestakers are currently in Ethereum. But even if we take the upper border, that's still a relatively low number compared to the size of Ethereum network. What can we ask here? How can we figure it out? Because it's hard to be solo staker. That's probably the main reason why we have not that much solo stakers.

First of all, you need this capital. So if you are a pure home solo staker, not a home staker, you need 32 E, then you need to you need hardware, you need skills, you need to deal with Ethereum rewards. The most painful part for me personally is that being a solo staker and even having 32 EV and dealing with all this shenanigans to run validator, your rewards on average would be just slightly above the rewards that you can get by using liquid staking in Lido, for example. So why would you do that? Um and yeah, I believe that most of the solo stakers they look like that question, can Ethereum help here?

Because Ethereum is our everything and uh why not just to ask Ethereum Foundation, hey guys, do you want to make something special for homestakers? Well, the problem is that Ethereum cannot help here because of the neutrality path that has been chosen by Ethereum. for Ethereum, for the network, and even for the community, there's no big difference between validator number one and validator number two because there's no way to actually verify who is the operator behind the this validator like no way to verify it with a 100% guarantee. That's why we are in a bit of a struggle here. But there is a solution and the solution is definitely

homestaking, the second type that we've talked about today. And there are many protocols on the market who offer homestaking solution. They all offer different conditions, different pathways, different types. But for me personally, one of them definitely stands out which is community staking module by LA. And I don't want to just promote you something. I really want to tell you why I believe there is a difference between all of the homestaking solutions and community staking module. So what we have now in the community staking module, it is a tool that is easy to use that offers lower bond requirements on the market.

1.3E to spin up validator. I bet you cannot find such conditions on the mainet. You have the highest rewards possible. I mean multiplier of your rewards per bond. And you have this cool thing called performance leeway, which means that if you are offline for a while, you will not lose your rewards. And I personally live in Spain. And a couple months ago, I faced this wonderful situation where I got no electricity for 12 hours. And you know what? Since rewards in CSM are distributed on a monthly basis for this month because this was the only downtime that I had, I still got rewards. So that's cool. And that really accounts for the realities that home stakers are

facing. And in terms of numbers and in terms of what we have is we have more than 300 new node operators in LA thanks to CSM over the last just eight months. So CSM has been live on mainet for just eight months. Cool. We have friendly community and a lot of you guys here are from this community and we have uh which I personally think is one of the best things. We have a lot of home stickers from distant locations from locations that are not that well represented in Ethereum and it is in it is CSM right now today. But there are also some problems. And the one that worries me the most is that even though CSM offers way better conditions than vanilla home

vanilla staking on Ethereum, still professional operators and homestakers most likely get the same treatment in CSM. So we are about to solve that and we are about to solve that with community staking module version two which I arguably call the most sustainable homestaking solution. And while there's a fancy list of features uh described here and you can read more on them if you will scan the cure code. You can see that there's things called entry gates, custom parameters and a bunch of security features. But to enable all of them we need one feature that is not listed here which lies out offchain and that is

crucially required. It is how to find homestakers and how to identify them and solution here is community stakers identification framework. an absolute masterpiece that later contributors came up with that is abuse and civil resistant and you all will get a chance to try that and if you all if you wish to abuse it go give it a try very very soon. It is transparent to the community so you will clearly see why you got identified as community staker or why you are still why you still have not enough score or whatever to get identified. It comes with no mandatory KYC. So there would definitely

be a pathway where you can share zero private data except for addresses and the fact that you own this addresses. But again, you do not need to share who you are. You just need to post a signature. That's it. And it will definitely be easy to access both for seasoned homestakers and solo stakers and newbies. The core idea of this system is that it's built on top of three pillars or proofs. Proof of engagement, proof of experience, proof of engagement, and proof of humanity. So you just need to provide a bunch of addresses that will be assessed in a automatic or semi-automatic form. And should you have a significant score in

all these three categories, you will get identified as a community staker. But I know that this is you maybe want more details on that. So you can read more details here. But the other option is to join us on our side event on Thursday which I will tell you more about later where Sasha is not just pres will not just present the system but she will also have a live form of assessment. So one of you guys will be able to stand on the stage and uh really give it a try.

Give it a try to pass the system without KYC. Okay, next up we've identified community stakers and all of you have passed the system and now all of you are identified as homestakers. What you will get in return because that's the main question, right? There should be a difference. There should be uh something why are you even doing that and what would distinct you from professional operators and here I will briefly walk through three main things. The first one is and lighter contributor Max who's sitting somewhere here in the audience. He told me once that there should always be a way for community staker to join CSM. I got so inspired by this phrase I cannot tell you how. So that's why we have priority

cues in CSM. And the idea is super simple. If you are identified as a community staker, you get a certain amount of spots in the top priority queue. But if you are an unknown or professional operator or simply not identified as a community staker, all of your requests will go to the default queue. Which means that for a brand new homestakers who are just thinking about joining Ethereum, there will be no need to stand in the super long queue like we've seen like we see in CSM right now. But they will get the ability to get certain deposits faster and will only compete with the other identified community stakers. that I swear there wouldn't be much of a competition here.

Next thing, increased rewards. And again, we start with a quote. The other lighter contributor who is also sitting in this audience whose name is Will once told me that identified community stakers in CSM should be able to pay off their validation hardware within a year. So that's why we have this graph. And the coolest thing about it is that with this extra rewards that you can see by green line here, identified community stakers running 16 validators over the year will get additional.4 4 ETH worth of rewards, which is more than enough to compensate for a DIY hardware

and depending on ETH price should it go up maybe to even to uh pay off a very cool DAP node. And the last thing is Lois Berer and again we have contribute lighter contributor easy who's also sitting right in front of me who told from the day one we've started working on CSM that for community stakers for homestakers there should be some benefit some edge in terms of entry barrier and this is the the thing that we already have today so identified community stakers in future and early adoption participants today can join CSM with just 1.5e and a cool fact that 1.5 E is just 5% of 32 E. So imagine you don't need 32 E, you need 5% less than 5% of

it to start your validation journey. Isn't that amazing? And in future uh the early adoption list is fixed and not upgradeable. So if you're not there, you cannot get it now. But with identified community stakers framework, you will be able to get it as soon as this autumn. And all of these features will come with CSM version two which goes live this summer. What we expect with CSM version two? First of all, we expect a significant increase in number of independent operators because this with this identification framework and with this cool set of benefits that identified community stakers can get, we expect people to get more and more and more

involved into the process because with CSM validating Ethereum is not just oh some geeky thing for geeky guys. No, it's a way to make contribution to Ethereum network while still earning a very meaningful rewards. We expect more than 10% of LIDO being controlled by community stakers. We expect that total number of LIDO node operators will finally surpass a thousand. And the thing that I like the most, I believe that the more we push CSM, the more we work in LA for this community staking module, the more we are getting closer to the point where Ethereum staking is becoming a hobby, a common hobby, not

for gigs, but for typical Ethereum users. And as I've mentioned with this identification system, one of the pillars is engagement. So here is the thing that will contribute to your proof of engagement. That's a simple po like thing which is called oat but it's yeah go claim it and that would definitely help you pass this proof of engagement proof. And the next thing, if you want to learn more, if you want to see me not sitting on a chair, but dancing on a stage telling you more about how CSMV2 is cool and diving deep into the features, passing this identification framework

with Sasha, who's the author of this system, and learning much more about homestaking, having great conversations and so on. Join us in at Stakers Guild this Thursday, not far from here. Uh, yeah. So let's make homestaking sustainable and an E we trust. Thank you. [Applause] [Music] [Applause] In case you have any questions I think we have time. Any questions?

Wait please. Um hello everyone. I'm Mandre from Humanote and I just wanted to ask you guys u in terms of proof of humanity what are you using? Uh so the the the currently the proposal is live on research forum. The currently current proposed solution is uh I believe passport XYZ as the main one but we are also considering other options. So if you believe that uh human node should be uh included or used as as a proof of humanity here feel free to go to lighter research forum and submit your proposal.

Yeah for sure. Okay. Thank you. Okay. If no more questions then I wish you will all go and home stake after my talk. Thank you. Bye. [Applause]