SOTS #36: Solo Staking vs. Staking Pools

Transcript

02:28 - staked.us slashing event

[Music] hey i'm super fizz this is state of the state probably 35 or 36 today is february 13 february 3rd 2021 and today i have a lot of exciting things to talk about let me go ahead and talk about staking yesterday a big pool staked.us was slashed for about 75 validators this is the biggest mass slashing on the ethereum beacon chain main net yet um it's a big deal for a lot of reasons and i'd like to go through those this is

one of the reasons that i consistently say that pooled staking is not ready for prime time i'm really encouraging home stakers to wait until about june to submit deposits to pooled staking and a lot of people will say fizz you're crazy you're you're an old fart you're too worried well that may be true but i think that i'm on a good path and i get ver validated for that every time we see one of these slashing events where a pool loses funds uh because they misconfigured something or weren't ready the validator clients have been the have been in the implementation phase for about three

years the pools are really very new and they have not had a lot of opportunity to be tested in the real world but because they're a money making business they're very eager to accept your funds and i'm sure they're very optimistic that they can do a great job i'm optimistic they can do a great job too but i really feel like they need time to to mature and to test their product before they accept a lot of user funds that's kind of what we saw with stake us they have good intentions but they have misconfigured their servers twice now in a way that has led to user slashing i have to come back to the community and say staking pools aren't ready and i'll be honest with you what other

pools are going to say is that's them that's not us we are professional we know what we're doing we'll never get slashed i don't intend any disrespect i'm i don't intend to say that you're not honest what i intend to say is that it is in the best in the community's best interest that we wait until something like june to send funds to those pools and you'll have 50 years of staking after that one of the other things that that people who hold ether say is that they're ready for the risk and kind of what i think they're saying is they don't think anything bad will happen to them if you've been around the sector long enough you know that bad things can and do happen we're still very early

04:30 - Solo Staking vs. Staking Pools

in this i would not be surprised at all if a major client a major pool lost user funds and they were irreplaceable that leads me to talk about how much is charged for slashing and why it's a good idea to consider staking at home as a home staker with one two three validators even 10 15 validators um you're not seen as a real threat to the network if you commit a slashable offense and that really just means if you run your validator keys in two places the network doesn't see you as a real threat so you are slashed but you're gonna lose three five eight percent of your deposit now if you're a medium-sized staking

pool uh like snake us and you lost 75 validators to slashing your penalty is going to be more in the 15 range now let's say that you're one of the big exchange based stakers and you have none of them have this now but imagine they get to 33 percent of um the validator stake if they're slashed if all of those validators are slashed they will lose their entire deposit and those could be your user funds so this idea that going with a bigger company promotes safety is really not accurate the safest way to stake and preserve funds is to stake

uh at home on your own validator um you might say well i don't know how to run the hardware there are services like avato and dapnode that will send you a pre-configured hardware box and all you have to do is connect your wi-fi send your funds and watch it stay keep the power and electricity and and internet on so those are really great options for home stakers i was listening to a pool operator um speak recently and he sort of said staking is too complicated for home users and while that ruffles my feathers a little bit maybe he's on to something and that's one of the reasons i've encouraged the community to develop single-click installers and i know that

05:39 - Ways Solo Staking will get better

buddha from our discord is working with the group right now on something called the orgy client i hope they change the name and that's a single click installer that will essentially install any of the staking nodes in a single click installation and so i'm really excited about that i hope other teams work on the same thing and i hope other people join buddha's effort to develop the client they're working on i also know that most home stakers have used something like samarasat's medium guide to set up their staking node and uh samara is in the process of open sourcing those guides so that the community can shepherd them and steward them and kind of improve them as we go

07:32 - Alternatives to Pooled Staking

so i'm really looking forward to that improvement one of the other things that uh that i've picked up is the idea that validator pools have professionals who are more able to manage a stake node than a home user as a matter of fact i heard someone say that professionals should stake because home users don't know enough about how to do it and the data really contradicts that the data suggests that most of the slashings on the network of the vast majority of them have been produced by validator i'm sorry by pools who tweak their validator clients so much that they lead to um

a redundancy that results in slashing so i'm aware of i think three pool slashing events that um that are responsible for over 90 percent of the slashings on the network so if the pool tries to suggest to you that they are a safer staking option than home staking the data totally contradicts that and well you know individual pools are going to try to convince you that they are safer than the alternatives the fact is that until we have years of data we can't really judge anything except what people say to us and that is why the best option right now is to stake from home or really here's something fizz doesn't

say a lot hold your funds don't stake just keep them the price of ether is going up right now and risking your funds in a pool or locking them up may not be the best financial choice for you if you have enough ether that you can stake some solo and still have enough to sell if the price goes up then by all means that's great but the risk proposal for staking with pools right now is just too great some things that we'll be looking forward to are the withdrawal to contract uh pull request i think that's um the spec

08:03 - Withdrawal to Smart Contract

github uh pull request 2149 i believe that will kind of formalize this idea that that staking funds can be withdrawn to a smart contract address when the merge goes through that's something that i feel like is going to happen very soon we can talk about ways to nudge that along the big picture here is staking from home is and always will be the best option from staking staking pools are fine i support staking pools i support staked us and i hope they get back on their feet and become more successful than ever i support other stake pools i like a lot of staking pools and their operators but it's not time let's wait until june

09:23 - Big picture view by Superphiz

until we deposit funds with a pooled staking platform that gives us a little more time to make sure they're doing the right things slashings are slashings only happen by a misconfigured validator and that misconfiguration usually nine in fact every time so far has meant that validator keys have been run in two locations at the same time if you set up a validator at your house and leave it alone you're going to be absolutely fine please don't buy into this belief that slashing is something that could happen to you by accident because it's not if you set up a home validator and keep it running you're going to be fine please don't buy into this idea from staking pools that you're

better off staking with them that is marketing and i don't fault them for marketing but i hope you can see through that and recognize that it's probably not the best thing for you even if it is the best thing for the pool i also i look forward to results from the ethereum due diligence committee we're hoping to see our site launched around february 10th where you can get some preliminary results from our due diligence committee and we'll continue to iterate and develop these results as we go again the idea is we're forming ideas about the best pools but we're not really ready to send our funds to them yet if you've already done that i think it's okay to step back as much as you can and just

10:16 - EDDC progress update

wait a little bit i know that you're going to be you're going to feel like you're missing out on gains but you're also holding valuable ease against the risk of people who would mismanage it or lose it on your behalf this is superfiz this is state of the state and i hope you have a great day thank you