Distributed Validator Technology and Ethereum Long-term Decentralization

As Ethereum strives to achieve scalability and decentralization, a modular blockchain approach is gaining momentum. In this model, the blockchain architecture is divided into execution layer, data layer, and consensus layer. Currently, the execution layer is relatively mature, and the research focus has shifted to the data layer and consensus layer.

Ethereum completed its transition from proof-of-work to proof-of-stake in September 2022. Over the past 8 months, the number of validators has increased from 400,000 to nearly 600,000. The current focus is on how to make Ethereum staking more decentralized, scalable, simple, and secure. The distributed validator technology (DVT) is a very promising solution in this regard.

Ethereum Staking Ecosystem

The Ethereum staking ecosystem consists of multiple key participants, including:

• Beacon Chain: Coordinates the validation process and generates new blocks.
• ETH2 Clients: including Consensus Clients and Execution Clients
• Node operators: Provide necessary infrastructure
• Validator service provider: Provides staking services for users
• Independent Staker: Directly running nodes and clients

The current architecture has some single point of failure risks and lacks sufficient decentralization. DVT technology is expected to improve this situation.

Working Principle of DVT

DVT allows validators to run on multiple machines, mainly achieved through the following technologies:

• Distributed Key Generation ( DKG ): Collaborative generation of private keys, no single node needs to access the complete key.
• Threshold Signature: Requires multiple validators to collaboratively sign the transaction
• Byzantine Fault ( Tolerance BFT ) Protocol: Achieving signature consensus among nodes
• Multi-client implementation: enhances system diversity and reliability

Some projects like SSV Network and Obol Network are actively developing DVT solutions aimed at enhancing the security and decentralization of Ethereum validators.

Advantages of DVT

DVT brings benefits to multiple parties in the staking ecosystem:

• The liquidity staking pool can disperse risk.
• Independent stakers can enhance reliability
• Institutional staking products can reduce costs.
• Overall improved the system's security and decentralization.

DVT combined with other technologies such as liquid staking, collateral requirements, etc., can further enhance the security and accessibility of Ethereum staking.

Future Challenges

DVT also faces some challenges:

• Increased system complexity
• Scalability limitations of consensus mechanisms
• May increase trading delays
• Increased costs for node operators

Nonetheless, DVT still represents an important advancement in the staking ecosystem. It provides a more secure, flexible, and decentralized infrastructure for staking and is expected to become a key technology for future Ethereum staking. As the ecosystem continues to evolve, DVT will continue to drive blockchain technology forward.