Thread by @michael_lwy

1/ One item highlighted in @VitalikButerin's Ethereum roadmap is Distributed Validator.

What is 𝗗𝗶𝘀𝘁𝗿𝗶𝗯𝘂𝘁𝗲𝗱 𝗩𝗮𝗹𝗶𝗱𝗮𝘁𝗼𝗿 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 (#DVT) and could it be the next big narrative for Ethereum after Shapella Upgrade?

🧵 A thread

2/Since Ethereum’s Merge, we have witnessed the Liquid Staking Derivative protocols like @LidoFinance @Rocket_Pool @fraxfinance flourish.

The rapid expansion of the liquid staking, however, has led to concerns about concentration.

3/ For instance, @LidoFinance and @coinbase collectively control 90% of the $ETH liquid staking market (Lido alone claims 75% of the market).

4/ Liquid staking protocols have the power to allocate ETH to validators and manage the staking and withdrawal processes, which could have direct impacts on Ethereum's network security.

5/ The security and stability of a blockchain rely on the number and diversity of validators hosting it.

Distributed Validator Technology (DVT) can thus be seen as a way to scale the consensus layer, enhancing accessibility and fostering greater participation among validators.

6/ The basic idea is that DVT enhances the resiliency of validators by enabling them to run on multiple nodes, thus reducing risk.

DVT allows a cluster of nodes to act collectively as a single validator which lead to a more robust and accessible staking experience

7/ DVT distributes the job of validator using tech including:

1) Distributed key generation,
2) Shamir's secret sharing,
3) Multi-party computation and
4) Byzantine fault-tolerant algorithms

(Image: @ObolNetwork)

8/ Normally, Ethereum validators use active-passive setups: backup nodes stay offline while the active node is online.

DVT allows for 𝗔𝗰𝘁𝗶𝘃𝗲-𝗔𝗰𝘁𝗶𝘃𝗲 cluster redundancy, minimizing the risk of penalties due to downtime or double-signing.

(Image: @MoonrockCapital)

9/ So who are the major players in the DVT landscape?

1. @ssv_network

SSV began as a joint research project with the Ethereum Foundation in 2019. On March 30, 2023, SSV Network introduced Jato, the latest iteration of public testnet.

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SSV Network also has its live token $SSV with a total supply of 10 million. The primary use cases of $SSV are for payments and governance within the network:

11/

2. @ObolNetwork

Obol Network is a multi-operator validator network that aims to decentralize Ethereum staking. Obol is right now in the Bia public testnet phase, followed by the mainnet launch. In terms of progress, Obol is slightly behind SSV.

12/

Some other players in the field include @divalabs, @staderlab_ and @parastateio.

Specifically, Diva aims to merge LSD and DVT models to develop a comprehensive solution for liquidity staking and distributed validation.

13/ END

So how does DVT fit into the to staking and liquid staking landscape? And could it be the next narrative for Ethereum after The Merge and Shanghai upgrade?

Find out in the full post on @theBlockcrunch

tinyurl.com/mtp8c6r8