Distributed Validator Technology Supports Ethereum Long-term Decentralization

Ethereum is committed to achieving decentralization by enhancing scalability. As development progresses, modular blockchain approaches are gradually replacing single-blockchain solutions. In the modular model, the blockchain is divided into three parts: execution layer, data layer, and consensus layer. The execution layer has made significant progress through technologies such as optimistic and ZK rollups, and the current research focus has shifted to the data layer, particularly data availability sampling methods.

The consensus layer is a key component of blockchain, including the consensus mechanism and its scalability. Since the launch of the Beacon Chain in September 2022, Ethereum has transitioned from a proof of work to a proof of stake network. The number of validators has increased from 400,000 to nearly 600,000. The current focus is to make Ethereum staking more decentralized, scalable, simple, and secure, and to be more friendly to independent stakers. The distributed validator technology ( DVT ) is a powerful tool to achieve this goal.

Ethereum Staking Ecosystem

Before discussing the contribution of DVT to Decentralization, let's first understand the current Ethereum staking architecture. The Beacon Chain serves as the core, coordinating the validation process and generating new blocks. Consensus clients and execution clients are responsible for transaction validation and smart contract execution, respectively. Node operators maintain the necessary hardware and software infrastructure. Validators or service providers interact directly with Ethereum holders, providing convenient staking services.

Independent stakers can directly connect to clients, running the necessary software and hardware to achieve the highest level of independence. However, the current architecture has a single point of failure risk, with insufficient decentralization. Lack of client diversity, improper private key storage, or node operator failures can all lead to fund losses. This is where DVT can play an important role.

How DVT Works

DVT allows validators to operate across multiple machines, primarily achieved through distributed key generation (DKG). DKG enables participants to collaboratively generate a private key without a single member accessing the complete key. Each participant generates key shares, which are combined to derive the complete private key. This ensures that validators do not need to store the entire private key on a single node but can distribute it across multiple nodes.

After key sharing, a coordination mechanism is needed to ensure secure verification and communication among nodes. Common threshold signature schemes require a specified number of validators to collaborate in signing transactions, enhancing security. Some DVT products also use Byzantine Fault Tolerance protocols to achieve signature consensus among nodes.

DVT also needs to address the correlation failure issues that may arise from shared infrastructure. Certain networks allow users to flexibly allocate key shards based on factors such as geographical location, data centers, and client implementations, emphasizing the importance of client diversity.

Some DVT development companies adopt a non-custodial middleware design, ensuring that the protocol itself does not have key custody. This approach eliminates the protocol's ability to sign arbitrary data, enhancing security.

Beneficiaries of DVT

DVT brings benefits to almost all participants in the staking ecosystem. Liquid staking pools can distribute staking across multiple operators, reducing the risk of single points of failure. Independent stakers can mitigate the impact of network or power outages. Institutional staking services can benefit from reduced operational and hardware costs. Overall, the widespread advantages of DVT make it highly attractive to all parties in the staking ecosystem.

DVT's value proposition

DVT brings great value to ETH staking. It reduces the likelihood of node failures, enhances key security, and increases client diversity. This helps to lower risks, reduce penalties, and boost the confidence of stakers. However, DVT is only part of the vision for achieving Ethereum's decentralization, scalability, and security, and it requires collaboration with other stakeholders.

By combining liquidity staking pools, DVT can lower the staking threshold. If the staking pool requires node operators to provide collateral, it can also reduce collusion risks. Adding secure key storage and redundant node support can further mitigate risks and enhance validator reliability.

Future Challenges

The adoption of DVT also faces some challenges. Firstly, multi-node coordination increases system complexity. Certain consensus mechanisms may face scalability limitations in large-scale networks. Moreover, DVT may increase transaction delays due to the need for multi-node signatures. It may also increase the demand for node redundancy, raising the adoption costs for node operators.

Conclusion

The emergence of DVT is an important advancement in the staking ecosystem, providing secure, flexible, and decentralized infrastructure for staking. It has the potential to change the staking landscape and become a key player in Ethereum staking. As the ecosystem evolves, DVT is expected to meet the changing demands and drive advancements in blockchain technology. This promising technology will create exciting opportunities for the broader blockchain community.