The Importance of Distributed Validator Technology in Ethereum Decentralization

Ethereum is focused on achieving decentralization through scalability, and a modular blockchain approach is gaining traction. In this model, the blockchain is divided into execution, data, and consensus layers. The execution layer is already relatively mature, and research has shifted towards the data and consensus layers.

Since September 2022, Ethereum has transitioned from a proof-of-work to a proof-of-stake network. The number of validators has significantly increased, currently reaching nearly 600,000. The current focus is to make Ethereum staking more decentralized, scalable, simple, secure, and more friendly to independent stakers. The distributed validator technology (DVT) shows great potential in this regard.

Ethereum Staking Ecosystem

Ethereum staking architecture includes several key components:

1. Beacon Chain: Coordinates the validation process and generates new blocks.

2. ETH2 Client:

   • Consensus client: verifies and processes transactions
   • Execution client: Execute smart contracts and handle complex operations

3. Node operators: responsible for operating the infrastructure required for network participation.

4. Validator/Service Provider: Such as exchanges or staking pools, providing users with convenient staking services.

5. Independent Stakers: Individuals who run the necessary software and hardware directly.

The current architecture has the risk of single points of failure and insufficient decentralization. DVT technology is expected to address these issues.

How DVT Works

DVT allows validators to run on multiple machines, primarily achieved through the following technologies:

1. Distributed Key Generation ( DKG ): Participants collaborate to generate a private key without any single member having access to the complete key.

2. Publicly verifiable secret sharing ( PVSS ) and verifiable secret sharing ( VSS ): Ensure the correctness of key generation.

3. Threshold Signature Scheme: A specified number of validators must cooperate to sign the transaction.

4. Byzantine Fault Tolerance ( BFT ) protocol: Used for achieving signature consensus among nodes.

5. Multiple client implementation: Reducing the risk of failure for a single client.

DVT also addresses the issue of shared infrastructure, allowing users to flexibly allocate key shards based on various factors. Some DVT solutions, such as the Charon of the Obol network, adopt a non-custodial middleware design, further enhancing security.

Beneficiaries of DVT

DVT benefits multiple participants in the staking ecosystem:

1. Liquidity Staking Pool: Reduce reliance on a single validator.

2. Independent Staker: Mitigate the impact of network or power outages.

3. Institutional Staking Products: Reduce operational and hardware costs, potentially lowering insurance expenses.

The Value Proposition of DVT

1. Reduce the possibility of node failure
2. Enhance Key Security
3. Increase client diversity
4. Reduce risk and inactivity penalties
5. Enhance Staker Confidence

However, DVT is only part of achieving Ethereum's decentralization, scalability, and security. Combined with other technologies and methods, such as liquid staking pools, collateral requirements for node operators, secure key storage, etc., it can further enhance the efficiency and security of validators.

Future Challenges

1. Increased system complexity: Multi-node coordination presents challenges.

2. Scalability Limitations: BFT protocols may face performance degradation in large-scale networks.

3. Potential Increase in Delays: Multi-signature nodes may increase transaction processing time.

4. The demand for node redundancy increases: it may raise the costs for node operators.

Conclusion

DVT represents a significant advancement in the staking ecosystem, providing a more secure, flexible, and decentralized infrastructure for staking. Despite facing some challenges, DVT has the potential to change the staking landscape and become a key technology for Ethereum's future staking. As the ecosystem continues to evolve, DVT will adapt and drive advancements in blockchain technology.