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Starting with Staking, four ways to control the Ethereum network

0xTodd

23-02-10 19:07

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Original article by 0xTodd, Ebunker

Staking today by Kraken. Staking is somewhere else. Analysis:

- Essentially, Staking is all about staking the ownership of 2 private keys

- By Staking different rights to two private keys, four staking schemes are staking

I believe that with this long thread, you will have a deeper understanding of Lido, Rocket, Coinbase, Kraken, SSV, and Ebunker.

If Ethereum is a company, the validators responsible for Staking would be employees. Its job is to validate transactions and then package blockchains (although building blocks has been slowly outsourced to MEVs).

First of all, as the validator, you need to prove your employee identity, after all, not everyone can come to the verification. After paying 32ETH deposit, you need to hold a certificate (i.e. [Verification key]) to work.

The first step to Staking, in theory, is creating a staking key. You then take your verification key, your work ID, to stamp each transaction.

Second, Ethereum has kindly designed a second private key to receive the deposit (32ETH) just mentioned.

When you go to be a verifier, you will be asked to fill in a "withdrawal address". It is the address where you will withdraw your principal and wages in the future, and the private key to that address should theoretically be in your hand (i.e.

Let me use an analogy. This is your pay card.

So 2 private keys: verification key (work card), cash key (payroll card) use, I think we all understand.

Then, depending on where the two private keys are Staking, there are four staking solutions:

-CEX class

- Pool subclass (Pooled Staking)

-SaaS class (Staking as a Service)

-Solo class

Staking Scheme 1 CEX class/full Hosting If you use the Exchange staking scheme

Binance, Coinbase, or Kraken, who just announced today that they will stop Staking. You will find that you have not created a verification key or filled out a withdrawal key at all, so this is standard "full custody".

So where are the two keys?

- Verify that the key is in the Binance Pool or Coinbase Pool

- The cash key is Binance and CB's cold wallet

You don't have to go to work at all, and the exchange holds your payroll card for you. This plan is the least worry, and there is a guarantee.

But not for people who want to decentralize, because FUD happens every day, and the US doesn't even allow you to do that.

Staking, staking, and staking. Staking)

So that's Lido and Rocket Pool's Staking proposal. You still don't have to create two Keys, managed by Lido and Rocket, so what's the difference between that and an exchange?

Let's talk about the verification key:

The Exchange: Apparently, it operates under only one of its own, itself.

Lido: lido & NBSP; 1.0 has 29 professional operators, and Lido assigns ETH to them to manage. Therefore, the verification key is relatively dispersed, and 29 operators each take part of it. It means that Lido is a group, which has 29 employees. You don't have to work by yourself, but let the professionals of the group help you work. So, the operator gets a 5% cut, and Lido gets another 5%.

Rocket Pool: Rocket Pool can have numerous operators. Anyone with machine/cloud server +16 ETH can be an operator. That's equal to saying Rocket Pool is a crowd-sourcing platform, which owns a bunch of Meituan riders, with electric vehicles (machines/cloud servers) and machine rooms to help you run nodes.

Of course, they get a cut.

Let's talk about the cash withdrawal key:

Staking is somewhere else. What staking is all about?

My previous posts and simple upgrade and withdrawal, introduced Shanghai portal https://twitter.com/0x_Todd/status/1619950421124206593

As we all know, Ethereum is two chains: Ethereum 1.0 (implementation layer) Beacon ain (consensus layer). When you go to gaining, the first step is to put the ETH remittances to the etheric lane 1.0 Beacon vault address (https://etherscan.io/address/0x00000000219ab540356cbb839cbe05303d7705fa)... Lock the bin and then the Beacon Chain gives you the corresponding eth in the consensus layer.

Note that these ETH are locked, not destroyed at 1.0, or cross-link to beacon On the chain, it's just locked - mapped.

After Shanghai upgrade, cash withdrawal will be a new type of transaction. When you withdraw money:

1. Your node notifies the Beacon Chain and sends a withdrawal signal

Step 2 Wait in line

3. When the queue reaches you, the Beacon Chain notifies the vault of Ethereum 1.0

4. Ethereum 1.0's vault address sends money to the address you specify, such as 0xTodd.eth

Therefore, my withdrawal key is essentially the private key of the address 0xTodd.eth.

Lido & Rocket's cash key adds 3 more layers:

1. You inform Lido\RPL that I want to withdraw cash

2.Lido\RPL informs the operator that X node wants to withdraw cash

3. Carrier notification Beacon Chain, so and so node wants to withdraw cash

Step 4 Wait in line

5.Beacon Chain notifies Ethereum 1.0 Vault

6. Ethereum 1.0 vault address to Lido\RPL cash vault remittance

7. You destroyed the stETH\rETH, Lido\RPL smart contract to send money to your address.

PS: In case of exchange, step 7 is for CZ Armstrong to add the balance directly to your Binance Coinbase central account.

For large pool schemes, steps 1, 4, 5, 6, and 7 are impeccable and purely on-chain operations.

The weak links are at steps 2 and 3.

In theory, big pool schemes can deny your withdrawals, such as if you were sanctioned by the US OAFC for using tornadoes, then steps 2 and 3 do not send you a message.

The reason why I call it "big pool" scheme is that the withdrawal addresses of all nodes are filled with the same address, namely the withdrawal vault smart contract address of Lido\RPL.

Of course, for CEX, they are still a big step forward.

However, due to the existence of operation space in Step 2 and Step 3, this kind of scheme has become a very close to "full hosting" scheme. After all, the withdrawal key is still technically owned by the pool, and all you have is the withdrawal address of the withdrawal address.

Therefore, I prefer to put all projects under "full trust" where I do not know where the final funds will go.

Some Rocket Pool supporters often claim that it is completely decentralized, a slogan that has taken root.

But when you get to the end of thread, you'll see that it's in the validation key section, and it's decentralized, so anyone can be a validator (Lido V2 is working on that too).

In the case of the withdrawal key, the user is still unable to participate, and your assets are still sitting quietly in the wallet of a third party.

Of course, Lido, Rocket, which operates a step or two more than exchanges but is more decentralised, is still a good compromise. Lido, in particular, and stETH's excellent liquidity (currently far outstripping all other LSD schemes) are important plus points.

Solution 3 SaaS (Staking as a Service) class/subclass

By step three, Staking is more fundamentalist. I'm a bit of a decentralization freak, especially after a series of CEX thunderstorms.

Just made a metaphor, verification key is the work card; The cash key is a payroll card.

So, naturally, people wonder, is there a way to let someone else work for me while I get paid?

There is no such thing in real life, but the Ethereum network does, which is SaaS or VaaS (Validator as a Service). We use unmanaged mine pools. Take for example.

So the first thing we're going to do is we're going to put the validation key into the Ebunker Pool as a keystore. Next, the professional mining pool maintains the block of this node. At the same time, fill in my own withdrawal address, that is, I control the ultimate Ethereum withdrawal right.

To sum up:

[Verification key], mine pool and I each copy;

Only I have the cash key.

That is: mine pool work/I take money/mine pool take percentage.

What's the difference between this scheme and the big pool class? The difference is:

For the Pooled class, the withdrawal address is uniform (that is, the Lido\RPL vault), so it is the "big pool."

In SaaS, the withdrawal address is everyone's own, so it's a "small pool".

PS: The term "big pool, small pool" was coined by me. I think it is very vivid and easy to understand.

Then you may ask, like SaaS class, if the mining pool does not help you go to the Beacon chain broadcast, you still can't withdraw ah?

Here's the key, because you have your [verification key] in hand, and if the worst happens, such as a pit rug, you can still run this node and broadcast it yourself.

Also, you have a cash key in hand, so you can withdraw your money in person and get your principal back intact.

In the big pool scenario, if the worst happens, you don't have the ability to do that, because you don't have the verification key or the withdrawal key.

Then you may ask the second question, SaaS solution, small pool mining pool can do my money away? That's where Ethereum Staking is staking, because when you create a node, you staking your own cash address, which the mining pool can't tamper with. So, even if the pit rugs, your principal can never be taken away by the pit, because the difficulty of stealing it attacks Ethereum itself.

In the big pool scenario, if the worst happens, it could theoretically take the money and run. Simply, it upgrades its vault contract, transferring its ownership to the attacker. Of course, this is the worst case scenario, and it's very unlikely to happen.

To counter this, Lido introduced multi-signage to manage smart contract upgrades; Rocker Pool, on the other hand, seems to have been very secretive about this and has not been available to discuss the contract upgrade.

Therefore, for those who do not want to work (after all, 7*24 operation and maintenance nodes is not an easy job), and have security requirements (do not give third party management funds), choose SaaS services is a good choice. Except for @ebunker_eth A number of other pools offer similar "unmanaged" services, which can be Rated.

The downside, of course, is that none of the unmanaged SaaS classes have an LSD solution. The reason is also very simple, people do not have your private key, how dare to issue a passbook (LSD) to you? Of course, some SaaS mining pools will also provide large pool solutions, which can be used for LSD.

In simplified terms: who has the private key determines whether or not you can LSD. CEX and large pool solutions are all OK, but small pool and Solo solutions are not OK.

After the upgrade in Shanghai, the maximum withdrawal time of Ethereum 1-2 months, SaaS class small pool program, liquidity has been guaranteed, so this is my personal favorite program, save worry/a little trouble/don't give the private key to others /APR is good.

The fourth type of solution: the Solo class

And finally, the final Holy Grail. Staking.

Solo, as the name implies, is a solution of playing by oneself, without introducing any third party, decentralization and security to the full star.

Solo miner, own verification key and withdrawal key. The advantages are obvious, security, no one takes a cut, adds variety to Ethereum, and... Meet the needs of the spiritual world!

The downside is obvious: the cost of working yourself: time (maintaining it), capital (renting servers/setting up physical rooms). Without 24-hour maintenance, your APR will be slightly lower because of the penalties.

For example, at present, the block output efficiency of the whole network is 97%. Vitalik may be a Solo miner, but if he is a professional, he can only achieve 96% efficiency. Rocket Pool is even lower, which is crowdsourced, and the efficiency is only 95%.

I think the threshold of Solo should be at least 10K Ethereum, that is, more than 30 groups of nodes. On the one hand, the stability of the block can be considered (it is also very uncomfortable if you fail to grab the block of MEV). On the one hand, income is uneven cost.

However, if you have enough aether, even more than 30K, 50K, then you can consider hiring some people to run it, after all, it is cheaper to pay the salary than to be taken by the big/small pool on a percentage basis, and it must be more surplus.

Also, Solo is the eternal Holy Grail. If the numbers are large enough, I strongly recommend looking at Solo. If the quantity is below 100K, it is recommended to review categories 2 and 3.

Also, insert a spur line.

What is SSV for? SSV is actually a researcher of the DVT technology, and for the time being it is not a competitor but a partner with the above four types of solutions. DTV is used to split the authentication key.

When your verification key is split into four pieces, here's what's cool:

If one carrier drops a call, the other carrier can replace it immediately.

At the same time, each operator does not know the complete verification key, which makes the verification process more decentralized. It can make Lido class, SaaS class and Solo solution stronger.

Finally finished writing this article! This is a long article, but hopefully this article will help you figure out what Staking is all about. Welcome mark, review anytime. If you have any questions about Ethereum or Staking, please tweet @0x_todd to DM.

The last of the last! Welcome everyone to be the verifier! Make your contribution to Ethereum network security