Word is starting to spread about SSV (Secret Shared Validators) in the Ethereum staking community. Maybe you’ve heard of SSV, maybe you haven’t quite yet. What’s certain is that as a current user of Bloxstaking’s non-custodial staking service, you WILL hear about it and it’s important to us that you clearly understand what SSV technology is and how it improves on the existing staking model you are a part of.
In this article, we’ll show you some challenges with how ETH must currently be staked, and how SSV effectively mitigates those challenges by introducing new levels of reliability, scalability, decentralization, and diversity for Ethereum validators. We’ll also introduce you to some new things that SSV brings such as operators, testnet, SSV token, and the plan for taking SSV to the Ethereum mainnet. There’s a lot to learn, so let’s get started…
What are the challenges of running a validator in the current staking model?
As you are likely aware, if your validator goes offline, even for routine maintenance, it will incur penalties and be unable to earn rewards. Therefore, as a staker, validator liveness is of utmost importance. However, strict Ethereum protocol rules prohibit a validator key from being active on more than one validator client at the same time, preventing redundant, fault-tolerant configurations. All slashing instances to date have been the result of people trying to achieve active-active redundancy and fault tolerance for their validators. As a staking provider, this limits our choices and configuration options.
As a result, your validator currently exists and performs its duties from a single machine running a validator client (node). For a higher level of validator client diversification, Bloxstaking has recently included both Prysm and Lighthouse software clients on our nodes. However, as we pointed out before, the protocol rules dictate that your validator can only run on one of them. In addition, your validator key can only be stored on one cloud server (AWS), and it must also remain online for the validator to operate properly. Keep in mind, with Bloxstaking, you retain ownership of your private keys as we have always been a non-custodial staking service. Like we say, “Not your keys, not your ETH”.
So, what is SSV?
On the surface, SSV (Secret Shared Validators) is a protocol that provides access to a robust, decentralized staking ecosystem on the Ethereum blockchain. Diving a little deeper, SSV is a sophisticated multisignature wallet, with a consensus layer, that acts as a buffer between a node on the Beacon Chain and a validator client. It was started back in 2019 as a research paper by the Ethereum Foundation to address the issues mentioned above. Now, SSV is a grant-funded community-driven project with the Bloxstaking team contributing a sizable amount to its continuing development.
To put it simply, SSV effectively eliminates staking risks by allowing your validator to run on four nodes, instead of a single one. This achieves active-active redundancy without violating the Ethereum protocol rules and provides a fault-tolerant, slashing-free, decentralized security layer that allows stakers like you to sleep soundly at night knowing your validator is safely attesting online.
How does it work?
Instead of the validator key being stored on one machine, SSV, aka DVT (Distributed Validator Technology), uses Distributed Key Generation to encrypt and split it into “KeyShares”. These KeyShares are then securely distributed between four non-trusting nodes, run by “operators”. “Non-trusting” means the operators do not need to know or trust each other to perform their duties. It also means that the network can tolerate a certain number of faulty or offline nodes (up to the threshold) without affecting validator performance or incurring slashing penalties.
With SSV, you never have to give your private key to operators. Instead, once your validator private key is generated, you can store it securely offline and let the KeyShares that represent it operate the validator. Now, when your validator is called on to perform its duties, if one KeyShare is offline or faulty (due to scheduled maintenance, error, etc.), Shamir Secret Sharing, Multi-Party Computation, and Istanbul Byzantine Fault Tolerance Consensus work together to allow the other KeyShares to create the signature. As a result, your SSV validator will continue to perform its duties without fault, pause, or penalties.
As we mentioned earlier, Bloxstaking has diversified its validator client offerings to include Pryzm and Lighthouse and, while this is a step in the right direction, SSV will allow you to diversify your risk even more by letting you choose any operator configuration you want. If you like, you can have four different operators that run four different validator clients, in four different regions of the world, using four different hardware and internet infrastructures! With SSV, the choice of how you run your validator(s), along with the cost to run them, is entirely up to you.
What are Operators?
Operators are an extremely important component of staking with SSV. They provide the hardware infrastructure, run the SSV protocol, and are responsible for maintaining validators and the overall health of ssv.network.
Because the network relies on operators, a decentralized and transparent score of their quality, experience, and service, on a scale of 0-100%, is provided. As a staker, you can view and use these rankings, along with the Verified Operators List, to choose the operators that will manage your validator(s). Bloxstaking is one of several Verified Operators on ssv.network, and while we would like you to choose us, it is certainly not required. Also, keep in mind, you can change operators anytime you like. At the same time, each operator is free to determine their fee for services in SSV tokens and charge you accordingly for operating and maintaining your validator(s).
Has SSV been tested?
Yes! SSV has gone through one full round of testing on a public testnet called “Primus”. Primus completed five rounds of testing in epoch 84,838 on April 4, 2022.
This version of testnet allowed users to stake goETH and allowed the option to stake SSV along with it, providing the user real SSV tokens in the process. Real operators also joined in to run validators on behalf of stakers, allowing the interactions between validators and operators using SSV technology to be stress-tested using simulations of real-world transactions.
Here are some stats from Primus Testnet to show you the level of participation:
Validator infrastructure costs contribute to overall ETH benefits
One of the goals of Eth2 and the transition to Proof of Stake consensus is increased accessibility and decentralization. Theoretically, DIY staking should only cost about $120/year in infrastructure costs. That being said – time is money – and for a non-technical individual, the time taken to operate, protect, and optimize validator performance should also be taken into consideration.
Staking Services can alleviate the time/money factor. But buyer beware as the cost of custodial or semi-custodial slashing could be the demise of your staking rewards and total ETH at stake. Non-Custodial Staking on the other hand lets you hold on to both of your private keys, avoid group slashing events, and ensure optimal performance – effectively maximizing potential staking rewards.
Finally, total ETH staked in the Ethereum network will affect annual rewards
The more people staking on Ethereum 2.0, and hence the more ETH staked, the lower the annual reward on average per participant. Plain and simple, this is why it makes sense to start staking early on.