A proposal for partnering with Rated to design a filtering mechanism to identify solo-stakers on-chain

Useful resources

:globe_with_meridians: Website: rated.network
:blue_book: API doc: bit.ly/ratedAPIdoc
:minidisc: Github: github.com/rated-network
:mirror: Mirror: mirror.xyz/ratedw3b.eth

About Rated

Rated is building reputation for machines. We offer a solution to the poor contextualization of validator quality and infrastructure set visibility problems. This solution is centered around reputation scores for machines and their operators, and a set of enterprise grade data pipelines maintained by a neutral third party, starting with the Ethereum Beacon Chain.

Lido requirements

Lido wants to extend its protocol to accommodate solo stakers. in order to make it happen Lido would like to create on-chain proxy mechanisms to possibly identify “solo stakers” and any metrics that represents their level of validation performance; Lido would use these mechanisms to identify likely candidates for the first onboarding round of solo-stakers, prior to more permissionless entry.

Some more detail on the set of requirements below:

  1. Produce a set of criteria that will make up the “solo staker filter”

  2. Produce a list of indices that fulfill said criteria; the list should contain not only addresses, but also additional information about them, such as:
    a. Some indication of confidence level for which indexes are more or less likely to be a solo staker
    b. Identifier if a staker is using Rocketpool / Dappnode / Avado
    c. Performance metrics CL & EL metrics

  3. Co-design approaches to reach out to solo stakers together with Lido contributors.

Window for delivery: between wk1 and wk2 of March 2023 for (1) and (2) and by end-April 2023 for (3) above.

Scope of work and deliverables

We propose the following cadence and deliverables:

Phase 1

  • Rated to produce a methodology for the “solo staker filter”. This will incorporate, but won’t be limited to the following considerations;
    • Defining who Rated has high confidence of being a professional node operator (based on our extensive existing library, and incremental clustering work we will do to fit more validator pubkeys into these material profiles) and excluding them from the list
    • Using all available Beacon Chain data (e.g. graffiti) and the Rated library of mappings to attribute the highest degree of association of that staker with an appropriate communication channel.
    • Using EL data to associate validator associated identifiers (e.g. deposit address) with off-chain comms hubs (e.g. POAP collections etc)
    • Bonus: Filtering through our Networking Layer monitor (currently in development–we have relatively high confidence in singling out solo operators from that dataset)
  • Lido to review and give feedback
  • Rated to iterate and deploy methodology to the RatedDB.
  • Rated to produce a solo-staker index dataset in csv form; this should include
    • some indication of confidence level for which indexes are more or less likely to be a solo staker
    • identifier if a staker is using Rocketpool / Dappnode / Avado
    • performance metrics CL & EL metrics

Delivery: 6 weeks from approval

Phase 2

  • Joint blog where we talk about the design of the methodology, implementation thereof and interesting findings (expected and unexpected).
  • Co-design approaches to reach out to solo stakers together with Lido contributors.

Delivery: 4 weeks after delivery of Phase 1

:information_source: We briefly deliberated on whether a Phase 3 makes sense, that involves Rated running the proposed methodology on an ongoing basis and maintaining related API endpoints. While interesting, given the additional overhead we are deferring this for discussion after completion of Phases 1 & 2.

The bid proposal

We are proposing a fee of $60,000 in nominal value for Phases 1 & 2. We are deferring Phase 3.

Fulfillment

We propose a 1:2 split in the fulfillment of the nominal value of the fee, in terms of LDO:DAI.

  • 1/3 of the total grant size in LDO tokens to be fulfilled upon acceptance of the proposal from LEGO.
    • The LDO/USD exchange rate should be computed as the 14-day moving average of LDO/USD closings, dating backwards from the date of approval, referenced from Coingecko.
  • 2/3 of the total grant size in DAI is fulfilled upon completion of the final deliverable.

Endnote

We’re all very excited to embark with Lido on yet another adventure and help the DAO get that much closer to achieving its goal of hardening its operator set and the ruleset that governs it!!

Let’s Rate!

12 Likes

Many thanks for the proposal!
Seems like something great is coming :wink:

3 Likes

Super excited to see this proposal.

In parallel with the ongoing research with Nethermind (eg A proposal for partnering with Nethermind to design a mechanism for good validator set maintenance. Phase 2), initiatives such as this one are very important in order to develop understanding around things like:

  • What do solo operators look like on chain?
  • How can we develop methodologies to identify potential solo operators and allow them to verify this without necessarily sacrificing privacy or sharing details about identity?
  • How can Lido integrate solo stakers before a fully robust end-state mechanism is designed and implemented?

I’m excited about the prospect of continuing to work with Rated on pioneering thought and analysis where meatspace meets blockspace :candy: .

6 Likes

Hey @eliasimos thank you for this proposal and continuous active participation in the staking development!

LEGO council would like to support this proposal, could you please confirm that the initial payment (8400.05 LDO using 14d TWAP of 2.380939 as at 15 Feb 2023) can be made to ratedw3b.eth?

5 Likes

Confirmed!! We’re all rearing to go on our end :slight_smile:

3 Likes

Here it is :slightly_smiling_face:

3 Likes

we appreciate it @Alex_L and team!! we’ve already gotten started and will be reporting back here once Phase 1 is complete

4 Likes

Looking forward to the Phase 1 =)

2 Likes

hi all!! looping back in here after successfully completing the milestones outlined in the initial spec. we have:

  • produced a methodology to achieve the objectives set
  • refined it taking from NOM feedback over two sessions in March and April 2023
  • shared results in a report (including sketching out avenues to explore for outreach) and validated objectives achieved with the NOM team
  • published a blog post discussing the methodology and findings (here)

we’re committed to further exploring ways to formally issue credentials/do outreach and action the execution thereof with the Lido team.

overall, we’re very pleased with the outcome of this particular run, and feel like we’ve come pretty darn close to answering one of the most hotly debated questions in the Ethereum operator community :slight_smile:

3 Likes

@eliasimos, LEGO committee has transferred the remaining part of the grant, thank you for this research!

Link - Ethereum Transaction Hash (Txhash) Details | Etherscan

3 Likes

Hey folks!

I want to revisit this subject after a period of time has elapsed…:slight_smile: Since the Rated team introduced the proposed mechanism for identifying solo-stakers, there has been significant progress made toward Community Staking initiatives by Lido DAO contributors. Specifically, we have put forward the Community Staking Module (CSM) for consideration by the DAO and outlined the primary design decisions for this module. Consequently, the potential implementation of the mechanism proposed by Rated has become more apparent.

The primary goals of the CSM are as follows:

  • Allow for permissionless entry to the Lido on Ethereum Node Operator set and enfranchise solo-staker participation in the protocol;
  • Increase the total number of independent Ethereum Node Operators;
  • Bring > 300 new independent Node Operators to the Lido Validator Set within several months of mainnet launch.

However, a challenge arises with the existence of permissionless entry, as it doesn’t necessarily guarantee an increase in the number of independent Ethereum Node Operators. This is due to the possibility that, with permissionless entry, the majority of module participants could be the same professional node operators or sybils. To mitigate this risk, we are considering the introduction of an Early Adoption period for the module, designed to increase the likelihood of a majority of independent participants.

In this context, the proposed analysis by Rated could be employed, where the solo staker index dataset could be utilized as part of an Early Adoption list for the module. It is important to note that this list will not be confined solely to the Rated dataset but will incorporate it as a part, while the rest of the Early Adoption list will consist of community members who indicated their interest in participation in Lido community staking initiatives by participating in DVT trials as community stakers, holders of CS OATs on Galxe, etc.

The Early Adoption list is proposed to be in effect for the first few months once the CSM has launched, after which it will be deactivated, allowing fully open and permissionless entry into the CSM under the same conditions for everyone. During the Early Adoption period, it’s suggested that each have a limit on the maximum validators they can set up, to prevent the dominance of large (non-solo) node operators in the CSM space.

In terms of implementation, the current proposed idea is to mint non-transferable NFTs for the deposit/withdrawal addresses from the dataset that will serve as entrance tickets to the module during the Early Access period.

Note: It is crucial to emphasize that all the considerations above are currently under consideration and require approval from the DAO as part of the module design before the CSM mainnet launch.

4 Likes

Would you consider also looking for Stereum solo stakers?