Community Staking Module

Thank you @micho for sharing the feedback here. @Izzy and others have shared their thoughts on other elements of your post but to address your specific point here on the fee split, while 7.5% is “just a number” at this point I think it directionally does make sense for the fee split to be higher than the curated NO set, given the profile of NOs in the CSM. Simple reason being that there’s known economies of scale for running validators & aggregating stake within a single operator – which is to say to even approach the same type of economics (margins) as a large operator like those you’d find in the curated set, solo/home-stakers ought to be paid more on a %-basis.

You can kinda see similar logic at work here in Staking Router Module Proposal: Simple DVT which has a proposed 8% / 2% fee split (DVT cluster operator / DAO).

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Dear Lido team,

On behalf of Nethermind, we are all very excited to see the CSM initiative progress!

Furthermore, we would like to offer our services in making interaction with the CSM more accessible to the Ethereum community, via our Sedge tool—a one-click setup tool for PoS network/chain validators and nodes.

As an Ethereum Node Setup Wizard, Sedge can be extended to support the CSM initiative, by developing the integrations required for it to streamline and facilitate the onboarding of new permissionless operators to the Lido protocol on the Community Staking Module.

We are looking forward to discussing this collaboration further in the upcoming RFPs, and in this way, assisting with the facilitation of permissionless liquid staking within Lido!

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Hi all,

Fernando from Ethereum on ARM here.

After reading the discussions about the CSM, this is very promising, particularly given Lido’s significant presence in the staking market.

For CSM to truly enhance and bring balance to Ethereum’s validator landscape, the participation of Solo stakers is crucial. This not only represents a key aspect but also a significant challenge. Ensuring fairness and avoiding negative impacts on other groups is vital (as @micho said). We should remain vigilant, and ready to implement changes if necessary.

We are all very interested in LIDO moving to a more decentralized staking model and will support it from our side.

Regards.

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Following the discussion with @micho during LidoConnect me and @Mol_Eliza prepared an explanatory post about bond and staking rewards economics. We have decided to make it a separate post to have a dedicated place for the further discussion.

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Eth Docker was created to make solo staking easy. It integrates with RocketPool and SSV, and people run solo validators alongside RocketPool validators (“minipools”) with it.

It makes sense to me to also integrate it with CSM. I see this as “one more”, not “take NOs away from other protocols”.

Lido Finance have already created a Proof-of-Concept of an integration, is my understanding. My role would be to discuss the design so it fits with the rest of Eth Docker, then accept a PR into upstream. Ongoing maintenance To Be Discussed.

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Snapshot vote started

We’re starting the Lido Community Staking Module Snapshot, active till Thu, 14 Dec 2023 16:00:00 GMT . Please don’t forget to cast your vote!

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This proposal is very detailed and well-articulated, highlighting its potential value in the Ethereum ecosystem. I fully support the initiative and look forward to its implementation, but I have a couple of questions:

  • Could you elaborate on the reasoning behind the difference in planned fees for node operators in the CSM (7.5%) compared to the Simple DVT Module (8%)?
  • Regarding the allocation of ETH deposits to operators within the CSM, how is the order determined? Will it follow the same approach as in the permissioned module, or will it incorporate performance metrics as a factor?
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Hi, @iicc! Thanks for your questions.

Could you elaborate on the reasoning behind the difference in planned fees for node operators in the CSM (7.5%) compared to the Simple DVT Module (8%)?

The 7.5% staking fee is just a reference. Actual numbers will be proposed closer to the module deployment. I see no major reasons to propose CSM operator fee to be less than Simple DVT operator fee.

Regarding the allocation of ETH deposits to operators within the CSM, how is the order determined? Will it follow the same approach as in the permissioned module, or will it incorporate performance metrics as a factor?

Stake allocation is described in the Community staking landscape - HackMD. TL;DR stake will be allocated to validators in an order similar to the keys upload (bond lock) order.

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I see a few actually

  • Total TVL of CSM will almost definitely be larger than that of S-DVT (since threshold will be multiples higher)
  • In S-DVT there are multiple NOs per validator (which means you need to run more total validators in order to have the same absolute revenues, as an NO)
  • Total number of validators that will be runnable by a single NO will also be multiples higher (CSM is permissionless, technically one operator could take up the whole module I guess if they wanted to, this isn’t possible in S-DVT)
  • While S-DVT doesn’t require a bond, the CSM bond itself is proposed to be staked (which means that the opportunity cost of the bond is a lot lower than in other LSPs) and current design points to NO getting rewards on entire 32 effective balance vs just [32-bond].

I’m not sure 8%/2% makes sense for CSM, to be honest, we need to do quite a bit of of analysis here. It may make sense at like 1% but I really don’t think it does at 10% module threshold.

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Hey! I really wanna help and implement alerting for CSM on Forta. I’ve been working with Forta bots at Threat Research Initiative (TRi) for about a year and now I want to write alerting based on the existing Lido repo (lidofinance/alerting-forta). Also I’ve already contributed on Lido via PR #431 and will continue to improve bots

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Hey Lido Community!

Having examined the proposal for the Community Staking Module, we have voted in favor of its integration into the Lido protocol, and look forward to seeing solo stakers deploy distributed validators (DVs) to make their CSM validators more resilient and performant.

DVs allow to address challenges currently faced by solo stakers—namely, how to attain and sustain uptime and performance comparable to professional operators. The application of DVs presents a great solution to level the playing field for at-home stakers.

At Obol Labs we have participated in relevant Solo Staker initiatives, such as Operation Solo Staker in collaboration with EtherFi, Dappnode, Avado, and the DVStaker + ETHStaker teams, where distributed validators have been key to enable solo stakers all over the world to run Ethereum validators.

Solo stakers wanting to become Lido node operators through this module can have several key benefits by leveraging DVs, including:

  1. Improving Uptime and Effectiveness through Squad Staking: DVT allows solo stakers to collaborate and run validators on Ethereum as a squad :slight_smile: This allows solo stakers to run fault-tolerant validators, improving uptime and effectiveness. DVs enable active-active redundancy, ensuring the validator remains operational even when one or more nodes are offline (as long as the threshold of online operators is met).
  2. Protection against Private Key Compromise: Through Charon’s Distributed Key Generation (DKG), the private key never exists fully in a single place. In a DKG, each Charon client finds one another on the internet, establishes a secure and encrypted line of communication, and then creates BLS private key shares in a manner where no one client ever controls or knows what the full private key is. This mitigates risk caused by private key theft if the operator were attacked.
  3. Lowering Maintenance Overhead: DV clusters provide a safety net for at-home operators. In the event of a node failure, other cluster members can continue operating the validator, reducing the need for 24/7 maintenance and minimizing the impact on accrued rewards.
  4. Lower Bonding Requirement: Given the derisking nature of DVs, the bonding requirement that is posted by solo stakers to the Lido protocol could be potentially reduced if they are operating with DVs, considering the probability of your validator getting slashed with a DV cluster is significantly reduced. Today, validator redundancy can only be achieved through active-passive setups. This creates slashing risk as both active and passive environments could be up at the same time, which could cause double-signing. Active-active setups inherent in DV clusters solve this problem.
  5. Client Diversity + Geographical Distribution: Each node in a DV can run different consensus, validator, and execution clients. This reduces the risk operators have of client failures or bugs while improving client diversity for Ethereum. Additionally, nodes can also be run across different geographies. This benefit was evident during May 2023’s Beacon Chain incident (the chain stopped finalising). DV clusters remained unaffected due to their diverse client configurations.

To further deep-dive into how distributed validators can help at-home stakers, check out this article:
How DVT Helps: At-Home Validators.

For more details on DVT, check out this article: What is DVT and How Does It Improve Staking on Ethereum?

We look forward to seeing this module deployed in the future!

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please init a new post instead of replying in the unrelated thread. will removed it.

Snapshot vote ended

Thank you all who participated in vote, we reached a quorum and “Approve” option wins! :pray:

Keep an eye out for updates and news.

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Appreciate community support for this important game changing initiative!
I’m glad to be a part of the contributors team to develop CSM :saluting_face:

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Great! We plan to support Lido CSM with Stereum.

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Thanks everyone for the discussion here!

I’m putting here the link to the RFP for CSM integration and inviting everyone who has indicated their interest in developing an integration with CSM to check it out!

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That’s awesome! You should make a thread about this as I’d love to know how to integrate.

Very excited for the potential of the Community Staking Module as one of the initiatives to expand the Lido node operator set massively via permissionless entry!

Wanted to highlight that the initial proposal suggests a gradual increase from 1% to 10% of the entire Lido stake presumably based on becoming competitive with RocketPool, the leading competing solution in this market. I believe Lido DAO decision-making on stake distribution should be disconnected from module development and acceptance proposals and requires its own mechanism to ensure a long-term optimal and sustainable solution.

This is what I am taking an initial deep dive into via recently LEGO-approved Staking Router Distribution Mechanism research. I invite people interested in this topic to join the conversation and communication channel established around it linked in the thread!

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I think it’s a bit less about competition and more about addressable market size + taking into account the relationship between “bond-bearing” stake and unbonded stake the balance between them, and allowance for other likely bonded modules in the future. I know we use the “target share” phrasing, but I think it’s more accurate to think of this as a “stake share ceiling” rather than a “target” share. It’s very likely that multiple modules may eventually have 100% “target share” parameter values – it just basically means that the mechanisms of the modules are sustainable and battle-tested enough to be able to accommodate 100% of the protocol’s stake if needed and the supply+demand conditions and constraints are met. Which is why a more mature and intelligent distribution and reallocation mechanism will be needed by that time as well!

Regarding SR distribution and re-allocation mechanisms, while the research is important I’d just couch this desire with a consideration for timeframes here. Given the complexity of major changes to stake distribution mechanisms in the SR, I think these changes would be unlikely to affect what the mechanisms will likely look like in the next 12 months or so.

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Makes sense and fully agree to the last point. This is likely going to be a longer journey to see through if some decision is reached and implemented, so some intermediate solution will definitely be needed.

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