SOTS #35: Ethereum Due Diligence Committee and Staking Pool Considerations

Transcript

01:54 - What is the EDDC and how does it rate Staking Pools?

[Music] hey there i'm super fizz this is going to be state of the state 35 today i want to talk about a really interesting idea that was passed to me by someone else and it's one of those things you hear this great idea and you're like oh my gosh why didn't i ever think about that before many of you know that i am kind of a pusher behind the thought of the ethereum due diligence committee you can find that at ifdc.org it is a committee of people that meet every week and work to vet staking products

that are in the community's best interest so for example we send a questionnaire out to uh staking hosts and we ask them to provide to return it to us and we use that information to compare them to each other and really to give us the best idea about which staking pools are really legitimate and which ones throw up red flags the ultimate goal there is to there are a couple ultimate goals but maybe one of them is to have like a green light yellow light red light system the real thing is we're looking for pools that throw up red flags that suggest to us that users might lose funds if they participate with that pool i'm not really interested in like comparing good pools like that's fine

but the real goal is to identify the pools that are shady and help users avoid those pools so that nobody loses funds in the long run we've done this so far by requesting information from pool providers kind of verifying that information and saying like is it is it a good practice like do you hold users private keys do you hold user funds do you use smart contracts have you been audited are you a known entity in the space uh do you have an educational background to support what you're doing what country are you located in so those are really the kinds of questions we're asking i found out this week that one of the things we're really missing is chain data

03:30 - Using Graffiti to help validate Staking Pools

and daniel huang who is a an affiliate of one of the staking pools had this chat he and i had a chat where he said we're doing the right thing and we're proud of our work and we use graffiti to announce our validators to the network i realized that that's a great way to get a measure of success of validating pools now when we look at the two pools that have been slashed so far these pools are kind of kind of on the down low about what happened either they want to play it off or they want to deny that it happened or they they really don't want to take

responsibility for the slashing event and i think that a slashing event is a really very serious for a pool to go through if i were staking with a pool that has slashing event i would actually remove my funds and maybe stake with a pool that was doing a better job a slashing event is not an example of a mistake it's well maybe it's a mistake it is really some evidence of and i don't mean this in a negative way but it's poor pool operation it means that in some way you ran software that caused the network to believe that you were malicious and therefore those validators were removed and so it is a

04:20 - How can we use Participation Rates of Staking Pools?

a big deal as end users that data can be helpful to let us choose which pools we want to participate with participation rate is another one uh so the network gauges how active a validator is by how quickly his anticipations are received by the network and these are metrics that could be used in a global dashboard to let everyone see the performance of different pools and ideally we would see most of the pools doing a plus work they would have attack stations if submitted quickly they would have proposals that are submitted on time and they wouldn't have slashing and it would be really great to see

their success and i would feel more comfortable about saying hey yeah that pool has a lot of history behind it on the network and i'm more comfortable with it and that also gives us this leverage to say to pools who are not providing this data we have more difficulty trusting you because you're not actually telling us where you're about what your validators look like on the and i promise you that the first thing unscrupulous pools will say is well it's a security risk it's not a security risk it's just not a lot of uh node operators willingly put their identity in the in the graffiti field and it's just an excellent way to give the network a better idea of how your validators are

05:24 - Is identifying validator pools a security risk?

operating i view staking pools in many ways as a community good a community service and one of the difficulties i've had with sticking pools especially when it comes to eth2 is that they are opaque about information they do not want to let the users know exactly how they're and that's dangerous it sets all of us up for this black box type of operation we're expected to to give money to someone else to stake on our behalf and hope that they're doing it right i really think the right approach is to turn that around and for staking pools to make that information public so that we know how many validators they have basically that lets us see how big

07:44 - What is the correct direction for Staking Pools?

they are and also if they ever become so big that maybe they need to stop accepting new deposits and that's okay that would be a responsible choice it also allows you to identify a tiny validator or maybe one who is someone who is trying to pull the wool over your eyes and act like they are you know we have thousands of worldwide customers when really you find out they may have one or two validators so it's just a great way for end users and the community to have a better view on what's happening with these staking pools the end game for this would be dashboards dashboards that could be open sourced maybe i know that beacon chain has mentioned being willing to to host one of these where we can just quickly pull up

metrics about how all of the staking pools are performing if if you've ever been if you've been in ethereum long or if you've been in bitcoin very long you know that block proposals on proof of work chains always have that identifier it used to be a point of pride and the fact that it's not included in these staking proposed blocks is a poor choice and something that we as users should stand up and speak out against uh so we'll be bringing i'm sharing this with the eddc i hope that they will hear this uh this call to action will i'm inviting a guest on to the next call if the edc welcomes him

and he'll have a chance to state this case as well it's something that i plan to move forward with because right now i i'm not aware of any reason we shouldn't be doing this i'm open to new ideas i want to get it right but i think this is the right direction i'm superfiz and i am a part of the eaststaker community you can find us at reddit.com r eatstaker or in our discord invite dot gg slash eat sticker i hope you have a great day thank you