With the completion of the upgrade of Ethereum Shanghai and the opening of the ETH redemption function, the amount of ETH pledged has increased significantly. From 15 million coins before the Shanghai upgrade to 26 million coins today, 9 million new pledges have been added in just 4 months. This has greatly improved the ecological construction of Ethereum, allowing staking platforms such as Lido (LDO) and Rocket Pool (RPL) to make a lot of money. The fast-growing LSD track has also spawned a brand-new track like LSDFI. For example, PENDLE, which has recently been launched on Mouan, and BLR, which has been launched on Ouyi, are both leaders in this track.
The growth and demand of the staking track
As the staking track continues to grow, the demand for staking services will become higher and higher. Therefore, SSV's distributed staking has become very widespread and has application requirements. In order to give you a clearer understanding of the concept of distributed staking, we first need to understand what the ETH2.0 staking process is like.
How to pledge ETH2.0: ETH2.0 pledge is still very difficult to complete independently. First, you must prepare 32 ETH, which is currently worth about US$50,000. You must also purchase and configure a cloud server yourself, and maintain long-term uninterrupted online work. If you are disconnected, you will be fined (the 32 ETH pledged will be slightly deducted), and the threshold for participating in staking is very high.
LiDo has found a breakthrough in this regard. You don’t need 32 ETH to pledge ETH in LiDo, the minimum threshold is only 0.01 ETH, and the issuance of stETH solves the problem of insufficient pledge liquidity. stETH can be exchanged for ETH at a ratio of 1:1. When you want to redeem the ETH you pledged in LiDo, you only need to exchange it with stETH, which is very simple and convenient. This has also allowed LiDo to quickly occupy the market in the pledge sector. Currently, 8.37 million of the 26 million ETH pledged are managed by the LiDo platform, with a proportion as high as 32.2%. However, LiDo also has pain points, which is the problem of ETH2.0 node operation and maintenance.
ETH2.0 node operation and maintenance pain points
How do ETH2.0 nodes operate? ETH2.0 divides the rights and interests of staking users into two private keys: the withdrawal private key and the verification signature private key.
Withdrawal private key: used to withdraw reward income and pledge 32ETH. After creating this wallet, users can store the withdrawal private key offline, and then use it to sign and receive money when they need to withdraw ETH.
Verification of private key: used for ETH2.0 nodes to sign each block data. Verification of private key online signature must be maintained at all times, otherwise the node will not be able to work properly.
Therefore, under normal circumstances, the verification private key must be handed over to the operation and maintenance operator of the ETH2.0 verification node, otherwise the node operator will not be able to keep the node working normally. Nodes will be punished as soon as they go offline, and the fine will be deducted from the pledged 32 ETH.
Three problems arise here: 1. Single node operation 2. Leakage of verification private key 3. Penalty for node disconnection
At present, all major pledgers are facing the same problems. For example, if the complete verification private key is given to the operator, there is the risk of exposing the private key, the risk of malicious operation by the operator, the risk of the node server being down and offline, and the risk of the node server going offline. The risk of being hacked, etc. These risks come at the cost of a penalty of 32 ETH from the mortgagor.
SSV distributed pledge solves node operation and maintenance pain points
SSV is a protocol that encrypts the validator key and splits it into four KeyShares, creatively implementing distributed staking. SSV splits the verification private key into four, and each shard private key is given to a node operator (the service provider that operates and maintains the node).
The benefits of distributed staking for all parties: Mortgage: After paying 32 ETH, you have full control of the withdrawal private key and verification private key, and they can be saved offline. Let four operators operate and maintain the node, and no operator can operate maliciously and be fined for the 32 ETH mortgaged.
ETH2.0 public chain: The upgrade and maintenance of ETH2.0 nodes is simpler. One operator's node upgrade can be stopped at any time without affecting the continued work of the other three operators. The upgrade can be completed after four turns. It is conducive to ETH2.0 being more decentralized and resistant to the risk of single-point downtime. The offline operation of a single operator does not affect node verification.
ETH2.0 pledge platform (service provider): Such as Binance, Coinbase, Okex and LiDo projects, etc. These platforms pledge a large amount of ETH. Although the ETH belongs to each user, the two private keys of the node are managed by the platform. At most, they operate and maintain a small number of nodes themselves, and most of the nodes will be outsourced to service providers who specialize in operating and maintaining ETH2.0 nodes.
Are they willing to give away their complete private signing keys? Is it equivalent to whether a currency speculator is willing to share the private key of his wallet with others? If there is a solution like SSV, they will most likely choose SSV. You can save two private keys offline. There is no need to share the verification private key, and the verification private key is sharded to different operators, so that they can do no other bad things except maintain the node.
Node operators: All node operators do not have complete verification private keys and have become pure workers, helping stakers operate and maintain nodes to earn wages without having node control rights.
It can be seen from the above that SSV technology benefits almost all staking stakeholders. After SSV technology runs stably on ETH2.0, it can be extended to other POS public chains and has the same value to other public chains.
Ecological empowerment of token SSV
The total number of SSV is 10 million, fully circulated, formerly CDT (distributed validator technology) deflation 100 times to the current 10 million. The business space of distributed validator technology is small, so the team transformed into distributed staking and achieved remarkable results.
The SSV token serves as the payment layer of the network, creating economic incentives for operators. Each operator can determine their fees and compete with other operators for stakers. Stakers choose multiple operators to manage their validators and must maintain a minimum SSV balance to pay their operator fees.
With the ETH2.0 upgrade in full progress, SSV will receive more and more node operation and maintenance orders in the future. Node pledgers need to pledge a certain amount of SSV to ensure that operators have enough profits to help operate and maintain ETH2.0 nodes (the pledged part will be slowly consumed). Operators also need to pledge SSV to ensure the safety and reliability of operating nodes, which will significantly increase Restricting the liquidity of SSV drives up the price of SSV.
SSV future value
SSV is currently in the second stage of its mainnet launch. It is not difficult to imagine that after the SSV mainnet is launched, it will be an irresistible choice for individual pledgers, pledge service providers, node operators, CEX pledgers and other parties, and it may become ETH2. 0 The rigid need for pledge node management. If half of the 26 million ETH pledged are migrated to the SSV network, it will be the largest amount of TVL in history.
SSV officially claims that SSV is Layer 0 of ETH2.0. Such an important basic technology, and in the big field of cash flow, also has very good value capture empowerment. Pledgers need to pay SSV coins for computing power, and operators also need to pledge SSV coins to prevent evildoers. It is not simply a DAO governance token. It is not difficult to expect a market value of US$5 billion, and it should be easily achievable with a price of US$500.