Squad Staking in 2024: Opportunities for Solo Stakers With DVT | Brett Lee - Obol Labs

Hello I'm am really pleased to introduce Brett Lee who is the chief growth officer at obal Labs he previously worked at consensus and has been leading growth and marketing teams for over 14 years so I'm excited to hear what you have to share with us thank you so much hi everyone really happy to be here um excited to share today and hopefully give you guys some Alpha for opportunities to solo stake uh just add a curiosity quick show of hands how many of you have either run a node or solo staked before ah decent amount okay not too bad not too bad um so where I wanted to start is to talk about why solo staking is so important to the ethereum ecosystem um in many ways solo staking is the heartbeat of ethereum and if you go on the ethereum foundation website today you'll see that they say solo staking is the best staking option for securing ethereum and in many ways this is true it contributes to decentralization uh to resiliency of the network and while the uh professional validators play an important role in the space to give more opportunities for people to stake I think everybody would agree that solo staking is still vital to the long-term health of the ethereum network with that said today solo staking is still a really small fraction of the overall stake uh being secured by the network today uh there's estimations of anywhere between 1 and 6% of stake is being run by solo stakers with the rest being delegated to liquid staking to centralized exchanges to staking pools and so you must wonder why if solo staking is so important to the ethereum ecosystem why there isn't a higher percentage of solo stakers well that's because there's actually a lot of challenges to solo staking today first we're in the midst of uh what I would dare say the next bull market uh I think we're all quite excited about what's going on this week but the downside of this is that you now require more than 100K I think the accurate count is 115k USD in order to run a validator uh that's the equivalent price of 32 eth which is the bonding requirement and that's not a very accessible Financial amount for many people in the world second it's actually pretty hard uh you need to be able to uh run command lines uh you need to have some devops experience you need to know how to provision a machine that is sizable enough um to be able to handle a node so there's a lot of barriers uh to getting people started to begin with and then it's even harder to do well uh you know as you're validating keeping your nodes up is not always easy uh troubleshooting issues that arise not always easy and so for many it's just much easier to go ahead and delegate your stake to a professional validator to be run so how do we address these challenges with solo staking today and what I'd like to introduce to you guys today is a new term well I guess it's not really that new anymore but this idea of squad staking uh this term originated uh from Anthony Sano uh and in a conversation with the bank uh Team about a year ago this last April and Anthony Sano was participating in obal's uh early Alpha mainnet launch uh running uh a DV cluster on mayet and he introduced distributive validators as this idea of squad staking um essentially running a node with a group of people uh together so what does that mean uh so let me first introduce you to distributive validators which is actually is the technology that enables Squad Stak it's actually pretty easy to understand it's essentially the concept of taking a single validator and running it across multiple machines uh where each machine is running a partial key share and you have to have at least 66% of the nodes up and running in order for that validator to be online but with that simple concept there's actually a lot of benefits and it provides a ton of opportunities for solo stakers what are those first well it reduces the eth requirement for each operator uh you can imagine that I no longer myself need the full 32 eth Bond I can have four people with eight eth each have seven people with whatever that math is less eth each and 10 people with 3.2 eth each all pulling that together in running a validator secondly it greatly releases uh increases the fault tolerance of the validator so as I mentioned you only need 66% of those nodes to be up and running in order for that validator to be up and run running which is very different from what it is today where a single validator is a single machine or a single node if that machine is down that entire validators is offline and so it's much easier now for solo stakers to maintain really highquality validators because you have that inherent fault tolerance built directly into the validator itself third there's a natural team camaraderie to this you're now sharing with a group of three others six others nine others the responsibility of running running a validator you can support each other you can learn from each other you can have expert validators now running with more new or novice validators all for the good of having more Solo stakers in the ethereum network and finally I think it's really important to understand that this also greatly reduces Byzantine risk so what is that well today uh every validator has a full private key if that is a bad actor or if I want to trust my stake with somebody else and they have my full validat private key what's V in them from taking that private key and running away with my eth there's not that much protection and so with squat staking now no individual in that cluster ever has the full private key and so it's much easier for a third party to trust their stake with a community cluster because you increase that Byzantine fault tolerance and what this has introduced is the idea of Home staking so what is that it's essentially you as a solo what previously was a solo Staker being able ble to run a validator in your home but have third party eth flowing into you because there's increased trust properties to that Community cluster and this opens up a ton of opportunities for solo stakers because you no longer have to have in some cases any eth to start to run validators for the ethereum network so what that translates to now are opportunities in this year for solo and home stakers to be able to participate in securing the consensus uh layer of the Network and I'd like to share some of those opportunities to give you a little bit of alpha as to what those are first we're seeing a lot of organically created Community squat staking clusters uh in the world today so um currently at obal we're in our uh main it open Beta release which means anybody can go ahead and run a cluster DV cluster with Obel uh up to one validator um and in some cases we can increase inrease that limit uh so what that has led to is organically uh created Community cluster some started by super Fizz uh now starting to see others basically organize themselves through Twitter through other means getting a group of 10 people together and starting their own cluster pulling their eth um and starting to run a community validator uh there's a lot of now uh KS uh influencers um heighten up with uh and other individuals in the community so to take interest in running squat staken clusters second we're also starting to see this permeate to web 3 core teams um though there's a lot of development and uh exciting new Innovations happening in uh ethereum and the ethereum network today not many people are actually participating in securing the base layer of of ethereum which is the consensus layer and so recently Aragon uh they actually reached out to us to start this idea of Team staking which is getting more web 3 core teams to squat stake within their teams and not only are they participating now in securing the network they're learning some of the foundations of what makes the ethereum network strong and adding and contributing to the overall ethos of the network so uh if there's any web Three core teams here this is a call out that if you're interested in team staking please reach out to us and uh we'll be able to help you third as I mentioned with home staking uh there are now more and more liquid staking protocols looking to decentralize their node operator set and because of the Byzantine properties now of uh DVT they can trust Community clusters with uh allocation of their stake the first example of this is ethery um and we launched operation solo Staker actually about 6 months ago uh if not more and it's essentially the opportunity for solo stakers to become uh node operators for uh The Ether Fi Network um currently this program has uh Solo stakers in 35 countries across six different continents um and we actually had the first distributed validator set up using starlink in Kenya and so some of the uh fa tolerance properties of uh Squad staking is enabling people to start staking from and running validators from parts of the world that never used to have this opportunity because of poor internet because of uh the cost of a machine uh Etc and there's no bonding requirements here um because of the again increased fall tent of businessing properties um as long as you are experienced in running a node uh you can join ethery as a node operator without any bond today second uh s last but not least uh is Lido simple DVT so for those those of you that are uh familiar with Lio um Lio recently uh launched their V2 uh where they're introducing new modules with different uh setups for operators the first additional module in lov2 that's going on mainnet here in a few weeks is called Simple DVT uh which is a community oriented module where there's smaller solo stakers home stakers participating in uh as a not operator for the Lio uh the Li network uh this was approved by the Lio Dow uh to proceed to mainnet and this will introduce 139 new operators to Lio which about 4x's their existing operator set this is the first time that Community validators are being added to the Lio Network we're going to start with about half a percent of stake uh of overall Lio stake and grow uh to 2% and more over time so this is also open to any solo community validators that have experience running validators or running distributor validators uh today uh again there is no bond requirement to this um and we are actively together with Lio looking for uh participants in the next phase of the test net uh which would then qualify you to go to mayet in future phases so these are all these four uh examples are all exciting opportunities for any solo Staker who wants to start uh running validators an opportunity to do so whether you have eth and you want to stake your own e or whether you don't have any uh e that you would want to stake yourself but you want to earn opportunities for these uh liquid staking protocols to be able to run out operators for so the last question I think some of you uh may be asking those of you that are already uh experienced uh as well this also applies to you by the way is how do I get started you know if I uh want to earn these opportunities if I don't feel experienced or comfortable enough running a validator myself how how do I actually get started what we've introduced um is uh the Obel Techni credential and this is solving a really important Gap in the market today where solo stakers it's very difficult to Showcase or to prove their experience um you basically have to take them at their word and so for many liquid staking protocols and uh and those looking to allocate stake to uh Community clusters or solo stakers it's hard to trust solo stakers today and so thisch credential is actually something we've introduced to try to bridge that Gap so what is it first it's an opportunity um to learn and gain experience running DBS um there is a a large community that we've run and support structure in place to educate people who are interested in running validators and running distributed validators to start to do that second once you are able to run a distributed validator um you will earn a soulbound token that proves uh your experience running a DV and so that is an attestation that you have this experience and that is onchain and provable uh in order to earn this credential you also have to hit certain requirements around uptime Effectiveness Etc that not only shows that you can run a DV but you can run a validator well and what are we going to do with this well this is being socialized with Lio with ethery with other liquid staking protocols that are looking for Community know it operators and this is a way for you to prove that you have experience running a highquality validator that were that would earn you opportunities um into these various Community staking uh modules finally this is an opportunity for you to join the over 34,000 uh people within our uh obal Community um and basically start to learn and network with other operators in the space and we are putting a lot of support and resources into making this credential successful F and something that becomes recognized in the industry to provide more opportunities for solo stakers uh to start running uh uh validators on mayet so just to close off um this is a call to action for all of you I think squat staking is an opportunity now for everybody those that want to are thinking about are interested in running your own nodes to be able to start doing so and in turn what you are doing is helping to decentralize the overall ethereum Network to make it more resilient and to further the ethos of ethereum and so I encourage everybody to start looking into this and if you have any questions uh happy to answer them uh afterwards thank you all