foreign
[Music]
my name is Steve Berryman and I'm from
attestant attestant is a an ethereum
only staking company and what we're
going to look at today is an alternative
to liquid staking liquid staking has
been phenomenally successful
phenomenally successful and as with
anything in the ethereum ecosystem
something that becomes that successful
becomes centralized and then becomes an
issue so we we at a testing and been
talking to some other staking companies
uh try to come up some other ideas
around how to transfer validators from
um from one owner to another without
going through the exit queue so really
this is one idea that we've been
floating around and we are looking for
you know other staking companies to to
to to to
be part of this building this out if if
we think it's a successful Direction so
I've kept is quite light
in the way I want to go with this is is
um is to really give the justification
for what we're trying to do and the
detail on getting into the weeds really
I think if you're interested come and
speak to us and and we can sort of talk
through some of the detail but it's
really the rationale why we're doing
this
so
let's have some context around what what
is staking in the first place what is
staking in ethereum so this is a very
high level clearly there's a lot of
complication goes under underneath the
hood of this for ethereum staking but in
from a very high level in in how we want
to view this is uh we're locking up
funds uh 32 each you send 32 each to the
deposit contract this was that this
started in December 2020 uh you sent
your 30 to 8th
um to the contract and that basically
gave you a ticket onto the beacon chain
and that that ticket enables you to
build a validator and go through a
certain number of steps and duties and
if you carried out them duties you
receive the worlds so some of the things
you see receive rewards for are testing
that's the uh you're doing that every
six minutes it's the bulk of the rules
you receive and if you're online and
you're testing you get a very small uh
small amount anybody that's used the
blockchain uh website has got a
validating you'll see their walls the
rules keep chipping in
um and proposing a block doesn't happen
very often now there's 7 200 blocks a
day there are 44 000 validators out
there so roughly every 62 days you'll
get a block but they were the only two
uh places to get rewards back in
December 2020. then we had the uh our
fork and that introduced sync committees
sink committees are even there than
blocks block proposals you'll get one of
these I think maybe now once every three
years but when you do when they do turn
up you make a lot of money during that
period it's only for two days so if
you're offline then two days it's uh
unfortunate
and then of course what we've seen with
the merge the merge and this is really
everyone's excited because now we can we
we're not only getting transaction fees
which used to go to the miners but now
we can spend it and we couldn't spend
before so this you know it's exciting
for the first time after almost two
years of having money locked up finally
we've got some we can spend and of
course move comes in here as well you
know so that that's that's staking in a
nutshell or ethereum
okay liquid staking so briefly what
liquid staking is
and it's hard really not to
um really not mention live though
because live is the biggest player and
there's going to be trying to be other
players but again it's another
centralizing Force so what is liquid
staking and why do people go for this
this approach well currently over 30 of
the staking rewards go to library and
that's not great but then again liveo
runs under different node operators so
it's not quite as centralized as you may
feel but still you know it's an
ecosystem we want lots of various
different options but why has this
become so popular well
however easy you know some of us techies
think it is to run a node is just not
easy and there are lots of complications
and you have to keep the thing updated
and you know number of people I speak to
go oh it stopped working well you know
you've just not committed enough in
what's going on in the community so it's
difficult it's difficult to stay on top
of things
um and so
and so with that people are going to
want an easier solution to pick up some
rewards and of course you've got slash
in I mean you mentioned slash into
somebody and they're going that's it I'm
not even going to touch touch
homestaking but being in the staking
company we always try to get people to
stake at home but I mean you know the
Technologies for most people is probably
out of the reach and they've got to be
want to do it so when you know Lido came
along it's just a perfect it's
convenient it's so simple you just go
and buy their token you go and take your
you know you're easy go and buy some uh
token you've got two choices you can go
and mint it directly or you can go and
buy that buy them for on the exchange
uni Swap and and basically you're there
that's it you stick it into Cold Storage
you forget about it Lido uses a rebase
token so your rewards go straight to
your wallet there's there's no missing
about cost you 10 percent
but you haven't got to set up a box and
you haven't got to worry about it
um
so so and it's been you know a
phenomenal big success
what's the downside to it well one of
the downsides is you lose control of
your ether uh however good Lido are you
are handing it over you're handing over
your ether to a pool of ether
and you're getting effectively an IOU
now for individual small investors less
of an issue for large institutions this
is a No-No it won't get past the
compliance Department
there's also some other issues which are
very interesting regulatory issues
um you're in the pool the pool gets
tainted with tornado cash
it comes tricky so people don't want to
necessarily large institutions don't
want to be involved in in a pool system
and of course there is a tax thing in
some jurisdictions going from one token
to another can be seen as a disposal and
a taxable event
so that is something I think probably a
lot of Lido users probably don't realize
that many jurisdictions put that as a as
a taxable Within
Okay so
so what is an uh an alternative approach
we've been throwing this idea around for
for a while but the thing is is you know
there was this little thing called the
merge that sort of kept us busy for a
while but now that we're sort of over
that and you know it is I think Danny
said you know it was uneventful which
was for a staking company that's what
you want uneventful so now some of these
things come back on the radar and also
they do require some extra changes to
the evm in order for some of this stuff
to work but our idea is that we make
validators transferable so that they can
change ownership now when I say
transferable I'm not talking changing
staking company the the validator will
stay with the same staking company but
you can transfer the ownership to
somebody else and
um at the moment the way validators work
you have a validator key and that's the
thing you have online to create your
rewards and you have a withdrawal key
the withdrawal key is just a regular
ethereum in fact it can be ethereum one
address or it can be a BLS address but
when submerged once the um
once you get past to the withdrawals so
let me just go
Um it gets to withdrawals this thing
doesn't have to be just a withdrawal key
it can actually be a smart contract
and we've already got a smart contract
that handles this sort of thing very
well nfts
so we could use an nft smart contract
which issues a receipt to the to the
validator and now the validator is
transferable it can be moved around
and it's also an energy that's actually
valued something it's not you know it's
not a jpeg underneath it has actually
got 32 East under it so so this idea
um
once you've got once we create this
smart contract then we've got a lot more
flexibility and
it's in one way it's not up to us to
decide what the market does with this
it's just quite interesting to put the
great thing with D5 you put stuff out
there and see what happens but you know
I've got a couple of my own use cases
where I think this would be particularly
useful for example you've got a large
institution wants to buy a thousand
validators and somebody wants to sell a
thousand validators now you can
off-board it it takes at least 15 to 24
hours if there's no queue or and then
somebody else on boards it's quite heavy
on the network as well for ethereum to
do that and also both sides are losing
accrued interest so if you think if this
is a bond you know you're losing money
for for the 24 hours and if there's a
cue it could be a lot longer so wouldn't
it be more convenient if there was a
marketplace where two people just bought
the validators off each other this
instant settlement
uh the ethereum network handles it
extremely well it's just a transfer
um we've still got the same validators
running
and
you know it just becomes a much easier
way of large institutions to be able to
buy and sell I mean clearly the
marketplace has got to have liquidity to
do this but you could imagine
you're just about to get rid of a
thousand validators you would go to the
marketplace first if there's a liquidity
you're going to get a better price or
you're likely to get a better price than
just unwinding it because you're going
to lose a day's worth of interest and
Rewards
um
some other stuff you could do with a
receipt
and I don't know if this is an advantage
or disadvantage I'll let you decide but
it could be used as collateral in defy
so all them wonderful things and the
great thing with this it comes with a
revenue Stream So anybody's into
Financial engineering could come up with
many different views of ways that this
could be used and it could be very
interesting
um
and I think a marketplace where buyers
and sellers can come together I think
would be very interesting
um and as I say it's for the network for
the ethereum network it's also better
not having these ether huge amounts of
ether coming in and out of the system
and and you know why wouldn't this why
wouldn't this be the better way of
transferring and providing liquidity to
staking assets without you know without
going through the uh the the on and off
boarding
Okay so what are the benefits I mean the
biggest one is you still own the ether
it is a receipt you still own it it's
yours it's not pulled okay so it means
decentralization because you know we
we're
you know people are not pulling this
thing into library or into another
pooling system so
um and the other thing with this is
something as a staking company we think
about if you're a good staking company
in Lido or you're a bad staking company
nobody cares because all the rewards are
just mixed
with this we start to find out who are
the better ones because the marketplace
can monitor it the marketplace can can
do uh can look at all the stats for all
the different uh validators and clearly
we think that's a good idea and uh it's
something that also if you think of
these things are starting to look very
much like bonds
credit spread could actually be these
are like credit spreads so the the
staking uh the staking companies become
credit spreads and I think that would be
quite an interesting Marketplace
I think this is also the vanilla Vision
we've got but I could imagine we could
take a step further on a lot of this
stuff and we could build insurance we
could build fees we could be a lot more
because now it's a smart contract so
everything's up for grabs really so why
hasn't this already been done
the obvious question
can't do it or we can't do it easily we
can't do it easily
the biggest problem is we've had the
merge and
so what's the problem with these two
things and now talk to each other but
they don't they don't we we did the
minimum to get the merge over the line
and so at the moment the evm
can't talk to the beacon chain
so we've got no way of being able to
test the state and test you actually own
that validator so there is actually an
EIP which is is aiming for Shanghai
which is the 4788 and what this does is
produces an OP code for the evm which
allows you to see the beacon route the
state route and what does this able to
do you can build a miracle proof and you
can prove the validate is yours and then
you build the nft so it just needs this
little bit of glue and then we're away
and hopefully this will get included
into that uh Shanghai and we will be
testing some ideas around this yeah so
so really that's the main thing of this
not being done is just we're waiting for
the next the next thing for the you know
this this EIP to come through hopefully
in the next
uh
hopefully in in the next round of
updates
right potential issues there's always
going to be some
um
you know
it's the same thing as the advantages it
can be used in defy you know and you
know we we see we've seen the good and
bad of that so
let's just be wary of it
um
and we could have bugs it's a smart
contract
you know I've seen a few of them as well
in the last few years I think with the
bugs thing though this stuff is used in
the standard technology we're using an
nft contract we're not doing it we're
not putting any innovation in new stuff
we are gluing it together differently so
clearly lots of audio around that but
we're not going out and building some
new smart contract we we're using
technology that we've all been using for
the two or three years right and that is
the end of my talk as I say it was quite
lightweight to give you a rationale of
why we of why we're looking into this
um if people want to get into the weeds
please come and contact me we um you
know we're looking for getting more
staking companies involved this thing
only really works if other staking
companies it's a network effect you know
it's if it's just a test and it's not
going to work so so clearly we need
other people involved to build the tools
out to to make this you know if if the
community thinks something like this is
is an alternative and even if it takes a
small percentage from people using Lido
that's going to help the
decentralization
and I think I've
thank you Steve
we have four or five minutes more so
maybe a question from sure yeah so here
um thanks for the presentation so you
mentioned that uh just taking a liquid
stacking tokens are subject to attacks
here we are also like receiving a
receipt that receipt will include some
yield right for staking rewards so yeah
I think it's the same disadvantage here
correct you mean from the tax point of
view right so it could be I mean it does
depend on jurisdiction because you could
argue and you know we're
I'm not know much about tax but you
could argue that a receipt is different
from a token transfer you know it's all
you're doing it is like a receipt for
goods I know the UK government doesn't
do that so I know you're right in that
fact but there is a lot of debate going
on about it but really there has not
been a transfer of assets so that would
be the thing I would like tax
authorities to look at to go look you've
just got a receipt you still own these
assets right but you're right in that
it's uh it's messy it's a messy it's a
messy field and that's for the
collateral I mean that sounds messy
right because well because
collateralizing nfts I mean nfts are
unpangible by definition yeah so uh yeah
I mean
I mean NFD as a collateral for a defy I
mean it is already done so and I'm not
suggesting this is a good idea it's
already done we've seen there are many
platforms already doing this and you
know it's not it's not for us to try and
decide where the market takes this stuff
it's it's just a point that you can use
it for collateral and I'm sure somebody
will do that so right thanks yeah hi
sorry
question but um I'm gonna take the
chance to embarrass myself so validators
don't they run with Hardware
um is that a thing so how how are you
then going to kind of transfer the
hardware right so I didn't go too much
into that but it is a good question
because there's a certain assumption
I've made in in the presentation this
would be done by staking companies okay
so we as intestine we would still be
running it so it's not transferring from
the point of a staking company so if
you're if you've got a validator you're
still and it's with us you're staking
with the test and you're just selling it
to somebody else so an attestant is
still doing its job so the the hardware
and all that stuff doesn't stay I mean a
validator is basically made up of two
keys a validator key which is what a
testing hold and then the withdrawal key
which the client holds so you know all
you're really doing is is changing the
ownership but what we're not doing is
changing the people that are doing the
validating
have you all thought about what this
looks like with shared operators inside
of the nft so it's not just one staking
company but it's a collection of people
running together
um I've not really I've I personally not
really thought about that we've kept it
very very simple in a way of you know
providing some liquidity to clients who
would need it this where this has really
come from and you know it's just a way
of taking the pressure off the network
that you know it seems silly to me we've
got a lot of validators coming in a lot
of validators leaving and really it's
one big organization once wants to buy
it and another big organization wants to
buy so it seems a natural way to do this
I mean there are also some other things
that like you may you know one
institution may have all their staking
with one company and another institution
has all their staking with another
company and I can imagine for risk
management they may actually swap some
of their validators over to split the
risk so you know I'm sort of making up
use cases but this is the sort of thing
that once you've got a Marketplace then
then and it's liquid enough I think
people would probably use that sort of
facility
uh so you mentioned Lido I'm curious if
you think there are ways to synergize
with existing like pulled staking uh
derivative projects
um or if like if you have any thoughts
in that direction I mean definitely we
talk a lot with light out I mean um we
we write a a software stack called vouch
if any of you are familiar with but
vouch 22 of the Lido operators use vouch
so that we there is constant
communication and with these guys
um whether they will get involved in
certain things but certainly lied I
don't want to be 40 of the network I can
tell you that so it's in their interest
to have
um you know options that work to to
spread the load so you know we talk to
them about various different things so
they will certainly be in the
conversation
uh
could do again I think let the market
decide all right because you know you
could would it make sense to do many
things with this stuff I think I think
being able to transfer ownership is the
big use case for for my thinking but you
know there I can imagine there'd be lots
of funky projects a product built off
the back of it so yeah I was somebody
involved as a thank you thank you so
much