Distributed Validator Technology

    Q1. Explain what Distributed Validator Technology (DVT) through the Obol network is and why it might help with decentralization on Ethereum 2.0 or other Proof-of-Stake chains.

    What is Obol

    Distributed Validator Technology (DVT)

    Ethereum 2.0

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    Obol Labs is a remote-first research and software development team focused on public blockchain network Proof-of-stake infrastructure. Internet Bonds, Distributed Validator Technology, and Multi-Operator Validation are three specific areas of interest. The core team now consists of ten members from all over the world.

    The core team is developing the Obol Network, a technology that promotes confidence while minimizing staking via multi-operator validation. This will allow low-trust users to gain access to Ethereum staking yield, which may be used as a fundamental building block in a number of Web3 products.

    Ethereum 2.0 is a massive network upgrade comprised of successive phases that will conclude in the transition from proof-of-work to proof-of-stake consensus mechanisms, making the network more scalable, secure, and sustainable.

    Why DVT might help with decentralization on Proof-of-Stake chains

    Proof-of-stake is a cryptocurrency consensus mechanism that is used to process transactions and add new blocks to a blockchain. It allows cryptocurrency owners to confirm block transactions depending on the quantity of coins staked by a validator. Proof-of-stake (PoS) was developed as a replacement for Proof-of-work (PoW), the initial consensus technique used to validate a blockchain and add new blocks.

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    Understanding Proof of Stake

    Charon

    Distributed Validator Technology (DVT) is the main focus of Obol Network. The premise behind distributed validator technology is that as long as less than 33% of the nodes in the cluster crash or go offline at the same moment, the Ethereum validator can remain operational. The remaining active nodes can still reach an agreement on what to sign and provide valid signatures for their staking tasks.

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    Charon was created by Obol, a GoLang-based HTTP middleware that allows any current Ethereum validator client to work as part of a distributed validator.

    Charon acts as a middleman between a typical validating client and its associated beacon node, intercepting and proxying API activity. Multiple charon clients are designed to speak with one another in order to reach an agreement on validator tasks and act as a single unified proof of stake validator.

    The most widely used implementation of ETH 2.0 staking pools today is based on a single operator model. Single operator systems rely on a single operator with a single validator key to operate a certain staking pool, which is typically 32 ETH.

    These networks frequently feature programmed constraints on the number of pools that any one network operator may manage, as well as a shared withdrawal key that employs threshold signing. Users investing less than 32 ETH are more likely to have their investment backed by a single operator, introducing the danger of single operator failure. 

    Existing ETH 2.0 staking pools can use a DVT configuration to enhance provider diversification over existing single operator setups, attempting to further safeguard depositors against inadvertent cutting and downtime.

    As a result, we can conclude that Distributed Validator Technology can increase the decentralization of ETH 2.0 or other PoS chains by dividing the one operator into smaller validators and distributing their validator signing power across a distributed collection of active redundant nodes, while also greatly reducing the probability of validator failure and associated downtime penalties.