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Ethereum Shanghai upgrade before chat LSD and DVT

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After the Ethereum Shanghai upgrade, the LSD track may also have better data performance.

原文标题：《以太坊上海升级前聊 LSD 和 DVT 》

Author: 0x1, IOBC Capital

In Vitalik's article and some Roadmap proposed by the Ethereum community, a core idea is mentioned for the post-Eth2.0 planning -- centralized block out and decentralized verification.

After ETH2.0, mining is changing from PoW to PoS, and ETH Staking is growing fast. After just over a year of Staking, ETH Staking counts more than 16.5 million staking and 517,062 Validators.

Data source: Beaconcha

However, in terms of the share proportion of ETH Stakers, head pledge platforms are mostly centralized platforms, such as Coinbase, Kraken, Binance and other centralized trading platforms.

Data source: Dune

In addition to recent rumors that the SEC wants to eliminate crypto asset pledge services for retail customers in the US, Kraken announced that it would end its crypto asset pledge service for US users and pay $30 million to settle SEC charges that it offered unregistered securities.

This incident has prompted the industry to think about anti-vulnerability after ETH2.0. Centralized platforms such as Coinbase, Kraken, and Binance will all be affected if the rumored policy is implemented. In view of this expectation, LSD, DVT concept of Token market prices once bucked the trend.

LSD: Another promising business model in blockchain industry

LSD (Liquid Staking Derivatives), liquid staking derivatives agreement. At present, it mainly includes Lido, Rocket Pool, Frax, Ankr, Stafi and other projects, among which Lido occupies more than 73% market share in the field of LSD, accounting for 29.27% of the total pledged ETH.

Data source: Defillama

LSD is another promising business model in the blockchain industry. Many traditional entrepreneurs are confused about the blockchain industry, because they think that only some "water-selling services" in the blockchain industry have relatively mature business models, such as trading platforms, bitcoin mining and so on. The Ethereum LSD track's coin-based returns may be another attractive opportunity -- as things stand now, Base Reward annualized returns are around 4.1%, Tips annualized returns are around 2.2%, MEVs annualized returns are around 1%, The total Validator returns 7.3% on an annualized basis.

Staking is in excess of 1,640W ETH, and Staking is approximately 13.6%. Compared with other public chains, the pledge ratio of ETH is relatively low. For example: ADA, SOL, BNB, AVAX, etc., the pledge ratio generally exceeds 60%.

The size of the market for LSD has room to grow. After the Ethereum Shanghai upgrade, the LSD track may also have better data performance. Speaking of Ethereum Shanghai upgrade, many people worry that Shanghai upgrade unlocked ETH will bring selling pressure to the secondary market.

In fact, this selling pressure will not hit the market like a sudden flood, because the validator exit rule is that 7 Validators can exit per epoch (approximately 6.4 minutes) (Total Validators currently 517062), 1575 Validators can exit in a day. If the number of Validators does decline across the net, the rate of decline will be slower.

Content source: Beaconcha

I personally believe that Staking would be Staking a little less in the short term, then maybe something else will be staking. Staking is an opportunity to Staking ETH. Then, if you are staking, then you are staking your ETH. This is just like the bank deposit. Before, it was fixed deposit, and later it was changed to current deposit. Besides, the calculation method of deposit interest is basically unchanged.

DVT: Enhanced equity proof blockchain anti-vulnerability

Distributed Validator Technology (DVT) is a decentralized verification technology. DVT refers to a technology that allows Ethereum proof-of-interest validators to run on multiple nodes simultaneously and could land a trusted network for the Staking infrastructure to ensure security and decentralization of the blockchain network. DVT circuit currently mainly has SSV.Network, Obol Labs and other projects.

In plain English, DVT is a network of node operators, like a distributed network of blockchain, and each node in the cluster of node operators of a DVT provider can have a different client to reduce the risk of a single point of failure.

Take SSV.Network as an example: it is a fully decentralized open source ETH pledge network based on Secret Shared Validator (SSV) technology. The SSV manages its verification network based on the Istanbul BFT Consensus mechanism through the MPC Threshold scheme to decentralize verification. The overall running logic of SSVS is as follows:

1. ETH holders become Stakers by Stake ETH to SSV (these ETH holders may be individuals, institutions, or LSD platforms like Lido), The user was supposed to Stake ETH to the Validator Client to become a Validator for the Ethereum Network, and the SSV Network aggregated a lot of Operators (Nodes), These Operators help the Stakers properly perform their Validators' duties under the IBFT consensus mechanism;

2. SSV protocol distributes Validator keys among untrusted Nodes by Distributed Key Generation through Distributed Validator Technology. These Nodes perform the duties of Validators as Operators under the Istanbul BFT Consensus mechanism;

3. Stakers are required to pay SSV tokens to the Operators for executing the Validators, and a liquidator mechanism is in place to secure the interests of the Operators.

The main advantages of DVT technology in this process are: A distributed network of validators can be formed, relying on a consensus mechanism (IBFT) like a blockchain node network to jointly perform the duties of validators, and the diversity of Validator clients can be achieved, improving the fault tolerance rate. At the same time, the risk of single point failure of Validator is reduced.

LSD platform and DVT technology providers can work together. For example, Lido can realize the decentralization of node operators by integrating SSV.Network's DVT solution to solve the risk of server downtime resulting in the deduction of pledged ETH due to the authentication key being held by a single node operator.

All in all, as the Ethereum community has consistently argued, the Ethereum community is likely to stick with anti-vulnerability in the long term.