SOTS #42: The 4 things all Staking Pools should do

Transcript

00:45 - Welcome to SOTS #42

[Music] hey i'm superfiz from the eath staker community and this is state of the state 42 on march 8th 2021 state of the state is a kind of a video thing that i do every couple days when i get froggy to talk about advances in the ethereum 2 beacon chain network and just kind of progress toward our growth as a community i'm superfiz and i work in the east acre community with a couple of my friends nolan patricio enin

and michael who helps me produce this video today i had a really exciting thought and i just wanted to share it it's funny because like any good thought i've probably said this 10 times before but i didn't know what i was saying and it has just come together for me i want to talk about the four features that i'm looking for in a staking pool and that i hope you'll join me in looking for one of the things you may not know is that as the community we exert a lot of power over what staking providers give us and so if we settle for the least they will give us the least if we demand more if we tell our friends to demand more

03:40 - What am I looking for in a Staking Pool? 4 questions.

then staking pools will need to up their game in order to meet the needs of the community and so i want to talk about four features of a staking pool that we as the community should expect and more so that we should go out into the world and say hey as an ethereum staking entity these are things that we want and as a community we're not going to accept less with this said i want to add a few things before i get started um i am a fan of some of the pools that exist now either because i'm i've talked to the operators or i think they're neat uh even though i wouldn't really send my funds right now i think that they are um honest operators

and so in regards to them i think that they should make steps toward reaching these four goals that doesn't mean you should never use them it means that i expect to see them over the next few months and years pivot until they really take on these four conditions the second thing i want to point out is that these four conditions that i'm setting up run parallel to what the ethereum due diligence committee is doing this is not a crash into the ethereum due diligence committee this is a parallel with the ethereum due diligence committee so their vetting is very important for checking boxes for minimum standards of solvent

business uh what i'm talking about are philosophy type ideas that we should strive for as a community so when you're looking at the ethereum due diligence committee you're looking at is this node operator acting in good faith yes or no when you're looking at my four questions you're looking at does this pool honor the philosophy of a decentralized staking network so they're different things they can be complementary they can be parallel but i just want to point out that i'm not in conflict with the eddc um as a matter of fact if you know i'm you know an observer there so

no intention to come to conflict so here are my four questions is the pool decentralized that question means do the validators run in homes around the world uh in some way so that they're not running on a server um on aws in um in a colo or managed very closely by a business and what i can say right now is almost every staking pool that i'm aware of is centralized they are managing staking nodes on behalf of customers that's a model that should change in the

04:38 - Is the pool decentralized?

future i know that secret shared validators will help support that and i really look forward to staking pools putting hardware back in the hands of people and getting it out of data centers that is the way for the network to remain the most redundant over the long term my second question is your staking pool software open source so and you know it's funny like this is not a new idea we saw open open source staking pool operations uh back with eth1 mining and there are still you can download and run staking mining sorry mining pool software that's open source

05:33 - Is the pool software open source?

and what i'm looking for from staking pool operators are that their code is open source and redistributable now some people are gonna say ah that's our business model well that's okay because i'm not here for companies to make money off of stakers i'm here for stakers to decentralize the network through staking and so that brings us to this high standard of only choosing to stake with pools where they are running open source and vetted software the third question is is it trustless does the pool operator ever have access to user funds and so essentially that means that let's say i'm a node operator and i'm going to

07:30 - Is the pool trustless?

stake but first i'm going to set up a web interface and i need you to send me all of your coins and then i'm going to stake them for you and after the merge i'm gonna let you withdraw them back the risk with that is that um number one that site or that operator could be hacked number two that site or that operator could take your funds and leave with them um the most actual likely thing is number three that site operator is going to be claimed to have been hacked and then run away with your coins so if there's ever a chance that a service has control over your coins then um it is not a service i would recommend there are currently two ways that

i can think of that minimize operator control over your coins that is uh staking with smart contracts and the new withdrawal to eth1 address that's been added to the eth2 spec and with secret shared validators where you can keep keys on your machine and sign remotely so both of those technologies support trustless architecture of staking pools and as users we should demand that and not blindly give a pool our keys our coins and hope they come back to us because while i hope they do chances are there's going to be some mishap and i

don't want you to be a part of that and it's not really just fear it's good practice in good practice we need to hold everyone to a high standard and that standard is trustlessness we are in cryptocurrency we don't need to trust people and the fourth question i want to ask from every pool is who benefits most from the offering if a company a person is is the primary beneficiary of these staking rewards then i i'm not a fan what i'm looking for are public goods these are um platforms where the developers are do have the potential to make some

08:30 - Who benefits most from the staking pool?

reward but not not the idea where a group of investors or a company is cleaning house by collecting you know 10 from every validator that's not the thing that i'm looking for what i'm looking for are pools that give back to the community that enrich the community that pay the people who are doing the staking with the funds that are collected by people who need staking done and i know that's an achievable model and i'm really excited about seeing it done now after having gone through all of these i'm not here to choose favorites it's not my job as the beacon chain health coordinator to choose favorites my job is really to encourage everyone to meet this standard

10:10 - Reach for this standard and demand this infrastructure

so when i'm looking at pools when i'm talking to people what i want to do is encourage every pool every operator to reach for this standard and i want to encourage every user to demand this kind of infrastructure before they select a pool when you give your staking funds to a pool that doesn't meet these criteria you may think you're benefiting yourself but by weakening the network you're actually weakening the value of your ether ether is strong it's going to be successful no matter what we do but we as a community have a need to act in our own best interest and that's by following these four practices is it decentralized

is it open source is it trustless and who is the biggest beneficiary from the offering any pool that can answer those four questions correctly is a one that is one that i'm ready to vouch for and i really hope that we see three four or five of these pools within the next year thanks for your time today hey i wanted to send one shout out uh i feel like this community would really not be possible if it weren't for the efforts of my dear and close friend toucan spam toucan has done so much to enrich and brighten this community and he really is the cornerstone of success that brings us all together i'm saying it because

i mean it thanks have a great day