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Understanding the Role of DVT in ClayStack’s Native Liquid Restaking Architecture

Mar 15 2024
  • #manisha

Ethereum ushered in a new era in 2022 by transitioning from proof-of-work (PoW) to proof-of-stake (PoS) consensus mechanism through the groundbreaking Merge. In 2023, Ethereum further solidified its proof-of-stake (PoS) architecture with the Shanghai and Capella upgrades, collectively known as Shapella.

These upgrades translated into the ability for ETH stakers to withdraw their assets and move things around or do whatever they like with it. For the first time ever! 

This led to significant attention on Ethereum staking or its role in supporting the network while rewarding participants for their active engagement. It stands out as one of the most effective means of contributing to the network's vitality while reaping tangible benefits for one's efforts.

Since then, the Ethereum staking landscape has never looked back and has continued to innovate with the introduction of novel primitives such as liquid staking, restaking, proto-daksharding, MEV-boost and DVT.

While each serves different functions, they collectively enhance Ethereum's utility and amplify the capabilities of validators. In this article, we will zoom in on the importance of Distributed Validator Technology (DVT)  in achieving a more secure, decentralized, and resilient LRT architecture at ClayStack. 

What is DVT? 

DVT is a “multi-sig for validators” technology, enabling simple and accessible staking for all participants. This approach distributes validation responsibilities among multiple participants instead of concentrating them with a single centralized entity. This is possible due to the built-in fault tolerance enabling a resilient cluster even if some of the nodes go offline for any malicious reasons.

There are two main risks associated with validator staked funds on a POS network:

  • Improper key security; i.e handling and storage
  • Unforseen hardware, software or client faults

For example, this makes for a very good use-case for ClayStack to focus on ensuring that the staked ETH is not managed by centralized validator networks on the staker’s behalf. ClayStack’s DVT implementation helps in ensuring that no single entity has complete control over the validation process, hence making ClayStack a sought after alternative to custodial restaking solutions.

The DVT technology is built with five core components at its heart: Shamir's secret sharing, Threshold signature scheme, Distributed key generation (DKG), Multiparty computation (MPC) and Consensus protocol. You can go further into this rabbithole on the Ethereum’s DVT section

How Does DVT work?

Let’s break down how DVT works in the simplest manner possible.

To begin, let's consider the traditional validator setup. A validator typically comprises three components: an individual public-private key pair, a single machine, and a human or entity acting as an agent. This setup, however, is quite monolithic in nature. It relies on a single set of keys, one machine, and often one individual or entity managing the process.

DVT aims to change that by enabling the operation of a validator across multiple machines and involving multiple individuals or entities simultaneously. 

A good mental model would be to imagine four friends collaborating to form a distributed validator. Each friend holds a key share and operates their own machine. In the event of unforeseen circumstances—let's say one friend's infrastructure fails due to a fire—the validator continues to function seamlessly with the remaining friends. This fault tolerance and redundancy are critical for the emerging trends in the staking industry.

The DVT tech at ClayStack brings diverse participants ranging from individual home stakers to institutions, thus strengthening the decentralization of the network. Overall, minimizing the risk associated with providing funds and staking through a single validator on your behalf.

Hence, reducing network centralization risks and encouraging a more diverse and inclusive validator ecosystem.

By combining several DVTs, ClayStack aims to create a more robust, resilient, and democratic network.

How ClayStack Enables DVT-powered Liquid Restaking 

Let’s dive into the systematic process through which ClayStack harnesses DVT to facilitate liquid restaking, ensuring enhanced security, scalability, and yield accrual.

Step 1: The autobalancer Cron (off-chain service) verifies when the deposit manager accumulates 32ETH.

Step 2: The ClayStack keymanager service is then initiated, securely generating a key pair. The service then divides and stores the keys in shards, transferring only the public information back to the autobalancer service.

Step 3: The autobalancer service then creates a payload to initiate the spinning of a new validator, utilizing ClayStack’s EigenPod as the withdrawal credential. 

Step 4: The Node Manager is then triggered by the autobalancer service with the payload to establish the new validator. 

Step 5: The Node manager brings ETH from the deposit contract to the Node manager itself. 

Step 6: The Node manager then calls the EigenPod manager contract and stakes ETH to the ETH2.0 deposit contract.

Step 7: After successful deposit, a new SSV DVT cluster is created and funded.

Step 8: Validator keys are attached to the DVT cluster, ensuring distributed validation.

Step 9: The Node Manager Service (off-chain) selects the CS validator and begins monitoring nodes for that specific validator.

Restake With ClayStack 

ClayStack is a modular DVT-based Liquid Restaking Protocol currently live on the Ethereum mainnet. With ClayStack, you can now mint csETH by depositing native ETH. csETH holders will automatically accumulate CLAY Points and EigenLayer Restaked Points, unrestricted by EigenLayer deposit caps. All while earning rewards on your staked assets! ClayStack is one of the very few LRTs that use native restaking instead of an LST wrapper.

Through leveraging Distributed Validator Technology (DVT) and introducing the Validator Funding Provider (VFP) initiative, ClayStack focuses on eliminating minimum capital requirements for Ethereum validator nodes, ensuring scalability, and prioritizing industry-leading safety.

ClayStack is backed by top investors like Coinbase Ventures, Coinfund, Parafi, Animoca Brands, Hashed, and more!

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