Since adopting the Proof of Stake (PoS) algorithm, one of Ethereum's problems has been the centralization of staking. A new alternative, SSV Network emerges as a way to promote a more decentralized and self-custody environment for validators.
SSV Network is described as an infrastructure for building decentralized Ethereum staking applications. The development has publicly launched its mainnet (and is the first of its kind to do so, according to its creators). This launch means that any user or developer can now use it to create applications without prior approval. The milestone is the use of distributed validator technology (DVT), which differs from the current model that predominates on Ethereum.
“A new staking standard is here,” says the announcement from SSV Network. Staking, which consists of depositing ethers (ETH) to become a validator of Ethereum and ensure the operation of the network, has been centralized in a few pools last year. In this sense, Lido and Coinbase accumulate almost half of the 889,000 validators that Ethereum has today.
The problem is such that even Lido is looking for solutions to mitigate it. According to Alon Muroch, one of the co-founders of SSV Network, Lido has been in talks with SSV Network to improve the decentralization of its operations. “We are in our third round of testing with Lido and we hope to launch the mainnet with Lido in the first quarter of next year,” Muroch told to the portal The Block. Likewise, he did not rule out similar collaborations with other players in the Ethereum staking market, such as Coinbase.
What does SSV Network bring to Ethereum?
SSV Network enables the ability to “run your validators on SSV in a non-custodial manner. This means that, unlike what happens with centralized staking pools, the user does not give up custody of their ETH by being a validator through a contract on SSV Network, either alone or by associating with an operator with DVT created on that network. It also does not depend on a single node, as would happen if it were a validator on its own.
“Distribute your validation responsibilities across a set of distributed nodes to improve the resiliency, security, vitality, and diversity of your validator,” the SSV Network app explains. The requirements to run a distributed validator are to have an active validator on Ethereum (through a deposit in the network staking) and to have SSV tokens to cover operating costs for commissions. Annual commissions are around 3 SSV for operators available at the time of writing this note.
Another possibility is to participate in the SSV Network as an operator, for which you need to have an SSV node. The hardware requirements in this case include 4 gigabytes (GB) of RAM and 5 GB (minimum) of disk storage space.
Who is SSV Network for?
These options, which are based on the interaction with smart contracts in SSV Network, are aimed at both individual users who want to be validators on their own (depositing 32 ETH for this) as well as for institutions, liquid staking protocols (such as Lido) and related service providers (such as other staking pools). "This is a truly decentralized and accessible infrastructure for distributed validators that also contributes to the health of Ethereum," they say.
In just over two months, over $160 million was staked through the SSV Network. More than 2,200 validators and 74 node operators use the DVT-based network infrastructure.
In addition to that, they detail that the user accesses transparent information about all operators and has full control over it. Additionally, validators using the SSV Network have the ability to receive the SSV token for their participation in the network, with an annual rewards program that varies depending on the number of participants in the protocol.
