Decentralizing the staking ecosystem

Transcript

[Music] no no no no no no no no no no no no no no no no no no no no no no no no no no no no everybody thanks for your patience I'm James I'm from the ethereum foundation it's good to be here I'm going to talk to you today about system and a few key points that I'd like to bring up I saw oscenes talk about an hour ago so I made some rapid changes so

bear with me because I wanted to make it a little bit uh different to some of the parts he brought up as well so and then I want to talk to you about DBT and how that can change some of the design choices in the staking ecosystem so if I give you a fast and I also made this because DVT is quite dry so that's why there's lots of colors going on a dvt-101 if you don't know is one validator running on many machines and it reduces a lot of single points of failure this distributes the power of responsibility from the large players and at the moment lots of node operators have a won't be evil attitude rather than it can't be evil DVT helps change

this as well but look taking it back a slight step we can see with if you're building a staking startup and this might be a slightly controversial view there's not much money in staking operations so if you're the largest staking pool you're making around 18 20 million how much money do you have to put in to compete with that staking pool to get that market share and that's why we're not seeing a lot of big entrance into the market and a lot of people wanting to compete as well you've got user access liquidity and first mover advantage one of the big things a great example is coinbase they started about six to nine months later than other staking pools

and they offer no LST and they offer double they charge double the fears other people and they grew to be one of the biggest staking providers out there how do they do that user access and what we're not seeing is uni swap are they other big players offering staking Services because they have users there as well a lot of the staking pools I speak to have thought really highly about the different features and processes they can actually have they're not thinking about their go-to-market strategy they're not thinking oh I need to do some Partnerships with wallets with likes of exchanges and uni swap for instance as well and that's really where a lot of the growth is very prohibitive

then you had withdrawals and there was a big the great reshuffle was what what people were calling it and it turns out nothing happened um one of the actual key points here is it reminds me of bank accounts how many times do you move bank accounts in a lifetime you don't staking is also very sticky so if you're a staking pool that's new you have to find new people with new eth because they're not moving it I speak to some exchanges and they tell me the average user holds around six hundred dollars of staked eth that is not worth the gas fee to move it is not not even worth the four percent to move so there is a lot of apathy there to move your steak to eat unless there's a better offer

so how does DVT level the playing field well I think node operators have to run expensive Cloud expensive cloud validators or lots of serious Hardware with rigid requirements other staking pools have a bonded system which prohibits growth quite a lot and the key considerations for any staking for is reputational risk and performance as well so how does DBT level the playing field it may not help professional node operators that much but if you're a solo operator and you join with six friends or six strangers on the web your performance and uptime can really increase and you can start competing with node operators you can then start offering a better charging cost to the to these providers

as well you can start joining forces and offering staking pools as a DVT solution which is more resilient and robust on cheaper machines which I think is really exciting because we've seen with withdrawals and staking startups you can't change the way that the the current makeup of five entities controlling over 50 percent of the stake teeth but if you can change the underlying infrastructure the way that it's built I think that's the most interesting thing that DBT really offers um the fault tolerance is really good on DVT you're running multiple different clients we've seen that with an incident last month and also that you've got different geographical areas a major

exchange had to stop staking operations in California for instance and that could have had a really bad effect if there was um a large node operator or staking provider base there with DBT you escape a lot of these issues as well um in a nutshell I wrote some things that maybe if you're not aware you don't share your keys so it really turns you from a I can't be evil I won't be evil to it can't be evil and lots of node operators also I should say don't want that label as well they don't want to be evil um but it's better if they can't be this is dvt's journey ahead and the way

I hope it plays out so you also get a reduction in bond because you start building Trust Systems and you start seeing with other new staking pools coming out the number of eth you need is getting lower and lower but I also think you'll get to a point where there's a zero collateral needed as well and then really far in the future is one signatures which um is probably a good decade away from being being built out and lastly I want to say that DBT is a really exciting um thing coming through but there's not a lot of node operators there's not enough solo operators or mini node operators actually learning and participating in

this as well so myself and iridian who's um Loosely part of each Staker and also has written a lot of documentation for oboe and SSV is actually we decided to fly to Kenya as a proof of concept so we set up an ethereum node there and apart from the cleaner trying to swipe our setup twice we managed to get it working and it performs extremely well and it's it's participating and we did it to build some awareness around DVT that it can be a really good proof of concept and we're looking to give those two nodes away at Eve Safari in September for someone to manage those as well so a big shout out to DAP node and home node for providing those as well but we're now running a DVT cluster across

Australia Germany the UK and Kenya as well and the United States so it really is a proof of concept and I'd encourage you to go to DV stakers to learn and start participating more about it because I think it's the start of where you as a node operator or solo operator can really start earning rewards without putting up so much collateral as well and I think that's most exciting thing is that we can spread that that Revenue around as well that's a short take and a few uh hopefully this is discussion points for you as well um does anybody have any questions yeah I'll repeat so you're saying that

DVD is basically several nodes which are implementing the same validator and you say it cannot be bad but if you're the entity that spins all those notes like why if your bed can those two all all the nodes you're spinning also be bad um was it the the say you've got your seven or eight nodes you actually have a split key generator so a hacker or somebody malicious would need access to each every single machine to be able to be malicious so no one person controls the key so you can't you can't take advantage of that as well exactly yeah and hopefully they'll be they'll be uh blind DVT so you don't

know who you're partnered with so there can be no um collusion in the back end as well so how do you eventually get to just the signature level requirement where you don't even stake Eve you don't stay zero eat you just have signatures like tell us about that end game oh the one shot signature yeah um that's actually a Quantum cryptographic uh Theory I should say at the moment where um it's still in the very much a research phase but it will lead to trustless staking pools and trustless staking where you won't actually need a

lot of pause to do anything as well the same thing for um well actually the best place to go is the Reddit ask me anything and Justin Drake wrote a whole paragraph on this recently so that's the best place to check it out but it's about a decade away so it's still very much in the theory stage so at the moment DBT is one of the best Solutions and I also don't think it's over I think there's room for more DVT solutions to be built I only see a handful of middleware operations coming out and a lot of people think that that the build is over but it's really not so if there's any Builders I encourage you I think there's still space what do you expect the ratio between the

steak is and the revenue for the stakers if they if they need to stake less is so would the revenue decrease the appropriately or should it stay the same and just earn more for it and I don't understand your question you mean with um people that are running notes or yes with their own eth or with um I well personally in my opinion I think that staked eth will go will tap out around 30 25 30 it may go a little bit higher if eigenlayer starts adding a percentage on top of this as well um but I would assume that with a lot more players players coming into it your Revenue will go down and then a lot of people are staying with it based on what

the token price might do okay thank you one last question uh the DVT landscape is super narrow right now with the number of protocols that we have um how do you see that playing out do you see more DV more DVT Solutions coming online or them all adhering to One spec um I'd love to see more DVT Solutions coming online especially clients so it's uh maybe a non-governed DBT solution where a cluster could form together organize themselves and almost offer a node operation through that as well so that would be ideal and then I hope we just I think that DBT gives lots more design choices in the staking space than

current than the current situation because a lot of you have to build in a certain way and DVT opens up the opportunities so I hope we start seeing some different specs coming through thanks [Applause] [Music]