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Liquid staking is redefining how incentives are earned for holding and staking assets. Conventional staking requires depositors to lock up an asset for a predetermined amount of time, and that asset cannot be used for any other purposes while staked. With liquid staking, users can still utilize their staked assets in other DeFi protocols while continuing to earn rewards. This increases the overall yield while also providing stakers with additional flexibility and control.

Everyone knows about Lido, the clear leader in the space. And many have even heard of the newer entrants like Coinbase, Rocketpool, Frax, Stakewise, and others. But what about a veryyy new LSD that touts new technology that no other LSD can currently claim? Let's dive in...

Diva

Diva is a Distributed Validator Technology (DVT) Liquid Staking Derivative (LSD) protocol for Ethereum. It provides depositors with a liquid staking token that automatically gains value through staking rewards without the need to manage infrastructure or rely on a central party. The protocol also utilizes DVT with a group of bonded node operators who conduct staking responsibilities using a non-custodial design. In addition, it distributes staking benefits to the members of this cooperative: Stakers, Operators, and the Diva DAO, in order to balance the network's interests.

While other staking projects offer either liquid staking or DVT, Diva is the only non-custodial solution that offers both (albeit Lido is trialing DVT currently).

DVT

Distributed Validator Technology (DVT)  is similar to multisig for validators, as it distributes validator keys across multiple nodes. DVT enables several nodes to share the responsibilities of an Ethereum validator, boosting fault tolerance and resiliency. In doing so, it increases validator uptime and reliability by decentralizing failure points and decreasing the likelihood of slashing events. With DVT, solo-stakers no longer need to worry (as much) about maintenance concerns that might reduce their long-term gains. Obol and SSV are the two leading DVT options, and both are live on testnet.

With Diva, each validator is hosted on a subnetwork of nodes chosen at random. Due to the features of the Diva validator set, only "n of m" signatures are required to rebuild the complete validator contribution signature. Consequently, Diva validators may withstand up to "m - n" failing nodes without affecting validation, making them resilient to periods of multiple node unavailability.

When the Diva staking smart contract reaches 32+ ETH, an event is triggered to generate a new distributed validator that will be detected by all Diva Nodes. Diva Nodes then evaluate their likelihood of belonging to this distributed validator. The nodes then execute (or do not execute) a Distributed Key Generation round to generate a new validator key.

Each group of Diva Nodes proposes to the Diva Smart Contract a validator public key (publicly auditable process). If they have the highest score, they may register the newly constructed distributed validator and carry out their responsibilities by signing block proposals and attestations.

Competitors in DVT

On the Goerli Ethereum testnet, the Lido protocol has completed a pilot integration with Obol Network, a provider of DVT. Eleven Lido node operators participated in the pilot to demonstrate the practicality and benefits of Lido validator operation with DVT, enabling Lido to scale and open up its permissionless operator set while limiting the hazards of single operators. Two groups of operators created entries in the Lido Node Operator registry during the pilot. They took part in distributed key generation ceremonies to establish validator deposit data and private key shares. Future testing of the Lido protocol will continue with Obol and another DVT supplier, SSV Network.

Economics

One divETH is always representative of one ETH held in the Diva staling contract. If a staker deposits one ETH, they will receive one divETH. divETH is a rebasing token, meaning as staking rewards accrue, the divETH balance increases to represent ETH's underlying value. Balances are updated daily to reflect your ETH staking earnings and can be used similarly to ordinary ETH to earn and lend rewards. There are no minimum deposits or lockup periods.

The Staker is now in possession of 1.01 divETH, 1.02 divETH, etc. divETH cannot be withdrawn from the staking contract until Ethereum mainnet implements ETH withdrawals in the upcoming Shanghai fork sometime in H1 2023.