Building Ethereum 2.0, here are 5 experiences summarized on other PoS networks

Ethereum 2.0 will bring more new components such as sharding, PoS consensus, new virtual machine (eWASM), etc. Its development is independent of Ethereum 1.x based on the PoW consensus, and it is implemented step by step. We have learned during Devcon5 that people are discussing various technical implementations and community development of Ethereum 2.0 from multiple perspectives. The continuous optimization of sharding and community coordination is also expected to accelerate the pace of the arrival of "Serenity Serenity".

Compared with the PoS network that has already been launched, Ethereum 2.0 is not only a value switch between the old and new mainnets, but also coincides with the goals of decentralization, resilience, simplicity, and durability in terms of staking economic design, and is therefore consistent with the previous staking model There will be a difference, which will bring about the adjustment of the verification node business model.

Ethereum 2.0 has attracted attention for many years due to its extensive developer base in the crypto world and the size of the second largest cryptocurrency. The "world computer" has turned to a new consensus, which has attracted widespread attention from developers, investors, and regulators. This also requires this value network to be as prepared as possible and to take many forward-looking measures.

Fortunately, there are already many PoS networks "testing the water" before the arrival of Ethereum 2.0. As a verification node, stake.fish can share what we have learned from staking and provide some suggestions for Ethereum 2.0.

stake.fish is not only a validator on multiple PoS blockchains, but also a node operator for many projects that adopt the staking mechanism. We are looking forward to the arrival of Ethereum 2.0 and hope to have a go at the new Ethereum based on PoS.

During the period of "waiting" for Ethereum 2.0, many other PoS projects have been running for about a year and have produced data points worthy of reference. We have also summed up a lot of experience in the process of running nodes, and hope that Through sharing, everyone can avoid the "pit" that the previous participants have stepped on, and provide some inspiration for the staking of Ethereum 2.0.

It is said that as long as 32 ETH are locked, "everyone can be a node", but the truth is not that simple.

In terms of equipment, we can't assume that everyone runs a PC at home all the time, nor can we be sure that everyone has the technical skills to read GitHub code, or use the command line to actually run a validator.

So we think that on Ethereum 2.0, everyone still needs the services provided by professional verification nodes. We want to make staking on Ethereum 2.0 more friendly to retail currency holders by lowering the staking threshold to increase overall participation.

Before discussing the differences, let’s review the two staking services of previous infrastructure service providers:

In the case of Validator-as-a-Service (Validator-as-a-Service), since the node does not "custody" the user's assets, the token holder entrusts the token to the validation node under the condition of mastering the ownership, through a special transactions empower the network of validating nodes.

Note: To be clear, what we usually refer to as "custody" is to manage users' assets in a centralized manner, while "delegation" in staking is to temporarily grant network power to nodes through agreements. The most obvious difference between the two The reason is that the former is actually the "private key" that manages the user's assets, while the "private key" in the latter is still controlled by the holder.

In the case of Node-as-a-Service (Node-as-a-Service), service providers help set up and run nodes, and the role is a bit like AWS. The businesses of Blockdaemon and Bison Trails are examples.

However, on Ethereum 2.0, there is no "delegation". People do not have the option of staking tokens to a verification node. At that time, unless other people's funds can be hosted, "verification as a service" will be eliminated on Ethereum 2.0. Not a viable business model. And "node-as-a-service" is bound to become a commercial area for verification service providers to compete for.

Having lost an important traditional business line, why do service providers still seek opportunities on Ethereum?

Market value is a "temptation". At present, the encrypted assets that can be staking have a scale of 5 billion US dollars. We predict that its market value is expected to reach 30 billion U.S. dollars in about a year, and Ethereum 2.0 assets will account for about 8 billion U.S. dollars, becoming the main contributor to growth. Looking at the potential benefits and wanting to keep contributing are two reasons to get involved.

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1. Pay attention to user operation and optimize staking experience

The first step is to make the staking interface easier to operate.

Currently, staking is not easy. Even with a relatively easy-to-operate network like Tezos, users often ask, "I have Tezos network tokens in my Ledger wallet, where do I go to delegate, is there an operation page available". Google it, and you'll find answers that are varied and not quite obvious. For another example, at the beginning of Cosmos’ launch, there was only one desktop and one mobile wallet, and people would ask “Is there just one or two options?” At that time, many nodes also recommended command line interface (CLI, command line interface, text-based user action) because that is the safest. At the beginning of staking, people had many similar confusions.

Non-technical people may hesitate for a while when facing the command line interface. They need friendly options, which are simpler and more intuitive. Before Ethereum 2.0, some user interface should be well prepared, otherwise this problem will shut out quite a few people.

The second is to make staking easier to trace.

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2. Provide hedging for slashing risk

articlearticleThe risk of slashing has been introduced in the article. The first "double signature" confiscation on the Cosmos network this year not only caused considerable losses to the assets of the verification node and the client, but also likely ended the staking business of the punished verification node.

Since then, whether it is a large investor or a small token holder, when choosing a node, it will always ask how to not be affected by network penalties. This kind of attention from the community is necessary, and they also need a way to hedge this risk.

One way is in the form of DeFi. For example, establish an insurance market and design corresponding Defi products before Ethereum 2.0.

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3. Focus on centralization

articlearticleThe issue of "Gini coefficient" on the Cosmos network has been discussed. Due to the large differences in the tokens entrusted on each node, the centralization is very obvious, and there have been related discussions.

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4. Exchange entry and staking derivatives

Here we also need to discuss separately the topic of staking services provided by exchanges. We already know that exchanges such as Binance can provide staking services. Its advantage is that it can host the user's tokens and avoid the two problems of liquidity loss and unbinding period.

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Entrust coupons and Defi product research to solve liquidity problems

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5. Regulation and taxation

We may need to establish a working group to study the taxation aspects of PoS tokens. PoW tokens have existed for many years, and some frameworks about mining and its benefits have been established, but we are not sure whether the relevant framework can be copied to staking and its benefits in the PoS mechanism.

For example, how are staking income classified in terms of taxation? If it is said that the tax calculation is finally determined, when is the tax collected? When the reward lands in the wallet, or when the tokens are traded? Many issues still remain to be resolved.

Previously, some well-known staking participants established an organization called "PoS Alliance", suggesting that the Ethereum community can establish a corresponding organization, promote discussions with relevant rule makers and regulators, and make more forward-looking efforts to understand and Communication-related rules.

The above is stake.fish’s thoughts on Ethereum 2.0 as a professional staking verification node. We are also working on the above issues, and hope that through the efforts of various builders, most of the above issues will be effective before the arrival of Ethereum 2.0. solve. stake.fish welcomes discussions about PoS and staking, please communicate with us through hi@bit.fish and various social media channels!