The new frontier of liquid staking by Jordan Sutcliffe

everyone please take your seats we're about to begin hello alrighty thanks everyone for joining my name is Jordan Sutcliffe I am the business development lead at stakewise um The Talk today is going to explore our vision for liquid staking liquid staking on ethereum has been around for a couple of years now um but I want to share with you what we're building at V3 and ultimate statewise and ultimately where we see uh the liquid staking models going and that future is ultimately modular so as a quick background um stakewise has been around for two years now we launched on mainnet on ethereum back in March 2021 uh we've got about over 85 000 Eve staked right now um during this period of time like stakeholders originally came about because our co-founder wanted or our founder wanted to stake ether and he didn't have enough Capital himself to stake um by him by on him on himself so he needed a way to share capital and pull Capital amongst his friends lo and behold stakewise was built as a way for anybody to access staking on ethereum we started off with a single node operator in stakewise Labs but in January 2022 we launched it cause V2 where we enabled third-party nobot operators to join in a permissioned node operator set we then launched on gnosis chain and we're currently the largest liquid staking provider on gnosis and last year around September we announced the the Third Edition of Statewide stakewise V3 and this is where we take our permission node operator set and turn it into one that's fully permissionless and essentially unlock a completely new model for liquid staking uh we announced this in September and we've just launched our test net this week which is a massive milestone for us uh super excited to have the something live on it's on Gurley and we're hoping to ship uh V3 in the coming months so what is Statewide V3 the way I like to describe it is the foundational staking infrastructure for ethereum ethereum doesn't have a native uh delegation service like other proof of State networks do um and so essentially we've built one from from the ground up stakewise V3 has two layers the first layer is one we call volts and this is essentially uh the volts are individual staking pools and this is where the ether effectively gets staked directly onto the beacon chain on top of volts we then have a layer which sits on top which is layer two and that's where the liquid staking token comes in OS and osc turns the Baseline liquid Baseline e staking from volts and turns it into liquid staking let me explore these two levels in more detail so what are volts so volts imagine volts as individual staking pools currently the every single staking protocol out there today has a single staking pool where all the capital is mixed stakewise V3 moves away from that model and enables multiple staking pools all to run in parallel each of these each of these pools will be fully isolated so the risks of say slashing and penalties are isolated to in each individual pool these volts or pools are fully permissionless what does that mean it means anybody can create their own pool can become a node operator within the statewise ecosystem you can create a pool by yourselves as a single node operator or as a group of node operators we very much hope that operators work together creating their own liquid staking pools within our ecosystem these pools are non-custodial all deposits into these pools receive a token in return this token these tokens are unique to each pool again the pools are isolated so you need to have unique tokens to represent deposits into each pool and effectively these tokens are non-fungible with each other another thing to mention is that these pools are highly customizable you can make them public which means anybody can delegate eth into one of these pools or you can make them private so only a set of whitelisted addresses can deposit into these pools and it's the the creator of the The Vault the creator of the pool who controls whether it's public or private and automatically controls who the stakers are they also control who the node operators are within the pool um now you can also set the fees they want to charge it's a fully comprehensive solution for anybody who's looking to accept essentially if delegations and run nodes on ethereum and on gnosis chain the pools are fully automated so they accept allegations of any size they automatically bundle The Ether into bundles of 32 automatically submits that to the beacon chain and Spinner validators they also automatically handle the fees when an operator creates a vault in stakewise V3 they specify the fees they want to charge for that for their for their service and those fees are automatically accrued in a smart contract or a to an address that is specified by the node operator the other thing the flag as well is that you'll be familiar with permissionless node operators joining staking protocols often require collateral now we are not requiring collateral in this system whilst it's it's going to be necessary it's not a requirement and by removing that requirement it unlocks a lot of interesting functionality that this protocol can can do essentially so what does it look like in practice well you end up with an ecosystem where you have multiple liquid pools or staking pools all running in parallel um and we like to describe it as a Marketplace and as you can see here we've got like Vault one this is the current stakewise pool which is live today and has been for the past two years uh this will perform the first Vault within this ecosystem and the underlying node operators will continue staking the eth for that pull but as you can see you can have other pools cropping up alongside this this Vault one and they can be of whatever flavor you can imagine essentially so it could be a group of solo stakers all running a DVT solution we're working very closely with oval and SSV to integrate their Solutions it could be a commercial grade node operator foundry's used an example here I'm sure you're very familiar with the name a massive Bitcoin miner uh years of experience in blockchain infrastructure recently announced they're joining Eve staking recently and it's also great to have them join us in the test net for V3 it also could be just a single solo Staker or a community of sellers takers I'll go into some examples of V3 in more details uh in a short while but you can see how um you basically end up with a marketplace where the there's a whole range of different staking pools that people can ultimately choose from the next layer OS eth vaults are isolated I mentioned they have their own tokens and these are non-fungible with each other and so what we're creating is a single token which sits on top of this entire ecosystem called OS eth it stands for over collateralized state eth and it creates a single layer of fungibility within this ecosystem the key thing to mention here is that OS is over collateralized includes in the name the reason for that is because we need to make sure that if somebody has minted OS eth against Vault 4 and say that Vault 4 experiences a slashing event we want to make sure that that event is isolated and does not impact the rest of the V3 ecosystem in order to prevent that we have over collateralization built into the osc's token to ensure that and absorb any penalties that happen throughout the ecosystem the osc is given that it's over collateralized uh actually has inbuilt inbuilt slashing protection for a subset of users which I'll explain very shortly but the key thing here is that osc enables this effectively isolated and illiquid uh staking ecosystem to turn it into a liquid staking token to access defy um so what are the use cases for stakewise V3 they are numerous and I'm actually yet to speak to somebody who hasn't got a specific use case for this for this platform so let's look at the the most simple type of staking every day staking we're very cognizant that we need to make staking as simple and as intuitive and user-friendly as possible so and so it's important that you enable people to one click stake essentially turning The Ether straight into a liquid staking token and this is what will happen with statewide's V3 anybody can simply buy OSD for the secondary Market it's a repricing token and so it's a simple Buy and Hold to actually earn the staking yield and then you can simply sell that token at a later date there is also a next layer which we can explore which is a little bit more complex but that is where you actually choose the your specific staking pool from the state choirs Marketplace and this is a really powerful thing maybe you want to stake with I don't know solo stickers or maybe you want to stake with an operator which is based in South America or one which runs a certain client set um you will have the power as stakers to choose exactly who Stakes your Capital it shouldn't be up to us stakewise Dao to decide the node operators who run your Capital you can do that yourselves so you can essentially take your ether explore the Statewide Marketplace find an operator you like or a staking pool you like and stake into that pool directly you will then be able to mince OS against your stake to turn it into liquid it's also worth mentioning that this OS e flare is actually optional uh staking into the individual vaults is staking you receive like as I mentioned each a token representing your deposit into the into these individual staking pools and again these tokens are also just repricing you can simply hold the operators in the underlying pools are staking your Capital so at this point you are staking um it's whether you you then have the option to Mint OS eth on top of that if you actually want to start playing around in D5 and I know a lot of people who are currently staking with liquid staking providers who actually don't do anything with their liquids taking tokens and so in this ecosystem you can actually remove that layer altogether if you want to but we're also very cognizant that liquid staking is growing in popularity and so we want to enable people to liquid stake if they want to and that is where ose comes in so that's like every day staking the next thing is solo staking now the reason why we design stakewise V3 as we did is because we wanted to unlock more utility for solo stakers these are the people that run infrastructure at home um they are the gold standard for decentralization in the ecosystem but until today they've not been able to access liquid staking they've had to make a a choice between staking on their own home node and liquid staking I.E accessing a liquid staking token V3 solves this problem a solo Staker can create a pool on our platform set themselves as the node operator and stake their own Capital onto their node they will consequently be able to Mint osc against their own capital this is a really powerful tool which we hope will encourage more people to stake from home because they can now do more with their staked capital the other thing to mention is that because you can Set Pools to either be public or private you can actually attract delegations from other people from the public if you create a public pool so this means as a solo Staker you can actually attract each capital and run validators for others and you will be earning the revenues that you specified in your pool and effectively maximizing the potential of your node there's a lot of solo stickers out there who only have the capital to maybe stake one or two validators I.E they've got about 32 to 64 ether whereas their node could actually handle potentially hundreds maybe even thousands of validators and so this system is a way that um solo stickers can actually start maximizing the potential of their of their Hardware one of the big questions is how can stakers attract capital and there are multiple methods within the V3 protocol the First Dimension is operator scoring we will have a native scoring system which is based on various criterias such as historical performance how much collateral is posted whether you contribute to client diversity Etc and this would be a key way for people who are exploring the marketplace to decide who is a quality operator or quality stake importer stake with um and the other thing to mention here as well it's a bit of a nuanced use case but again highlighting how powerful this tool could be and that is like staking with friends maybe you're a node operator and you have friends who have ether who want to stake on your node currently there's no way they can do that without actually giving you custody of their own Capital whereas this system they can your friend who's the who's the the tech expert can create this the private staking pool they can be the node operator and you can delegate your if to them in the fully trustless Manner and it removes all the custody and the concerns that could that could come with you know giving essentially giving someone your ether state for them what else we also have um so V3 actually acts as like a white label liquid staking solution um there's a lot of commercial node operators that were in contact with who currently offer either staking but currently cannot offer liquid staking it's worth mentioning that the volts layer alone is actually a really appealing product for a lot of these operators because everything is automated um it's actually a very powerful solution it makes running a staking pool very very simple um there's a few examples here so I appreciate this is a complicated slide it highlights two things the first thing is this commercial node operators can create a pool Within stakewise they can have clients stake into that pool that node operator continue can continue running their their normal node stack there's no requirements in from us as a platform for The Operators to run a specific Hardware or clients what have you they can run whatever staking infrastructure they would like continue receiving Eve delegations from their clients but because the capital has flowed through a stakewise vault their clients can now access the liquid staking token and this is really powerful liquid staking has often received over 70 of the deposits onto the beacon chain and the reason is because liquid staking itself is a powerful tool and this protocol allows node operators essentially any node operator to set up their own liquid staking business another thing I wanted to flag with this uh this slide is another very powerful tool that's likewise V3 offers and that is the ability to segregate Capital Pools um based on various criteria so the example I've chosen here is on jurisdiction so this is let's let's think of Institutions who are currently based in Europe they're regulated in Europe um but currently they do not have a way to liquid stake with European custody like regulated custodians and node operators stakewise V3 will offer this they can create so in this case the example is like Foundry working alongside for Noah for Noah a German regulated custodian um they can create a staking pool that's completely ring fenced purely for European institutional capital and this can really remove some of the key issues that institutions have we're staking right now and that is polling Capital with other entities and obviously they can still access the osc player should they desire another example again this is just illustrative purposes it's not this is not necessarily going to happen but like if if um with the regulatory space moving in the way it's moving there may be a might be a direction where operators want to offer uh staking to us retail but again want to do it in a way where they do not mix U.S retail Capital with any other capital and they can do that Again by a specific U.S pool the last example is actually one where you can remove the need for Capital polling altogether if you're an institution you can actually have a private pool where it's only your Capital that's staked into that pool and you can still stake with your preferred node operator and access a liquid staking token so this is a really powerful tool and there's a few other things to mention here like there's loads of different ways we can go about this like we'd love to see people set up staking pools where all the money goes towards Charities or public goods funding you know there's also the way for dowels to be staking their capital in a liquid fashion like we'd love for dowels to be using Statewide V3 to stake on their own nodes this platform will enable decentralization and it gives people the power to stake on their own terms and the ellipsy at the end here is because honestly the opportunities are pretty endless here every day like we're having discussions and people are coming up with some great ideas on how to use this protocol and so it's a very flexible design and we're really excited to see what people ultimately end up doing and building on top of this protocol and that is all from me foreign [Music]