The Blocknative team is live at ETHDenver to meet with BUIDLers and the community at large. We’re soaking in all the discussions and will be highlighting a few of our favorite presentations from each day. Be sure to check back tomorrow for a new round of topics and follow us @Blocknative on Twitter for live updates!
Day 1 Highlights
Why Some Staking Providers Will Fail After Shanghai
Ethereum's Shanghai update that enables staked ETH withdrawals is right around the corner. Sili Zhao, Director of Business at InfStones Global, walked through how this will impact the staking landscape.
Why it Matters:
How the Ethereum staking economy will react to the ability to withdraw from the Beacon Chain is one of the biggest question marks facing the industry. Because staking is responsible for the health of the network, understanding what to prepare for allows staking protocols and infrastructure providers to prepare for this unknown. As a provider of enterprise staking and node management infrastructure across 70 different protocols, InfStones can provide unique insights into this process.
- InfStones believes that crypto is trending towards more decentralization and that Ethereum is the leading blockchain for proof-of-stake decentralization.
- They believe that the amount of Ethereum staked will rise dramatically after the Shanghai update and that there will be a surge in validators being deployed to the network.
- This is going to put stress on staking providers as they will struggle to keep up with demand. Important to begin planning now with experts that have the ability and experience launching large amounts of validators simultaneously.
MEV: Past, Present, and Future
MEV (Maximal Extractable Value) continues to be one of the most fascinating topics in Ethereum development with The Scourge being the latest addition to the Ethereum roadmap. Joey Zacherl, CTO of Rook, took to the stage to discuss how MEV on Ethereum has evolved.
Why it Matters:
MEV creates a centralizing force for block construction and validation due to the sophisticated nature of the task. The Ethereum Merge’s introduction of proto-PBS, separating the block builder role from the proposer role, helped address some of this risk.
- An explosion of MEV opportunities happened when DEX protocols such as Uniswap became popular. This led to an arms race in MEV with searchers exploiting a Wild West landscape of bad UI/UX and scattered liquidity.
- The Proposer/Builder Separation created by The Merge has focused MEV extraction at the block builder level, but it does not protect ordinary users of blockchains from unfair outcomes when trading due to MEV.
- If Ethereum is to reach its full potential in harnessing MEV for good, mechanisms for the capture and redistribution of MEV to users will need to be put in place.
DVT and the Future of Ethereum Validators
DVT stands for Distributed Validator Technology. This tech allows Ethereum users to participate in the network's validation process in a more modular manner. This talk was a panel with Will Shannon of Lido, Clayton Menzel of Figment, and @composeus of Obol Network.
Why it Matters:
The technical and economic hurdles to becoming an Ethereum validator are clear centralizing forces. If this is not accounted for, the centralization of Ethereum's validator set could create existential issues for the network's future. DVTs look to address this by allowing "a cluster of nodes run by an individual, group, or community of operators to act together as a single validator on Ethereum". DVT is considered a technology primitive that will allow ETH validators to be run on more than one node or machine.
- Obol is at the forefront of DVT with a validator that is already live on Ethereum's mainnet. They view DVTs as a gateway for smaller operators to get involved in staking. Currently, their design for DVTs is done in a semi-trusted manner where participants know each other, but in the future, they will be moving to fully trustless DVTs.
- Figment is the 7th largest ETH staker and plans to adopt DVT technology to further decentralize their operations.
- Lido is the largest ETH staker in the world and is also planning to decentralize their validator set with DVT. Specifically, DVT is outlined in their Lido V2 paper as a solution for diversifying the protocol's operator base.
MEV Relays: Dumb Pipes or Something More?
MEV relays like the Blocknative Relay are a crucial but sometimes overlooked piece of the post-Merge Ethereum landscape. Alex Nathan of Metrika discussed what ETH community members should know about relays.
Why it Matters:
MEV relays are currently responsible for transmitting roughly 85% of all ETH blocks per day. To help the community better understand how they work, Metrika has created a public dashboard that tracks individual relay performance. This dashboard has an eye on the most important metrics that validators/node operators care about. Thanks to their experience building and maintaining this dashboard, Metrika can offer key insights on the relay landscape.
- Relays operate on large trust assumptions. Validators must trust relays to provide them promptly with valid blocks, builders must trust relays to transfer bids promptly to validators, and validators with regulatory obligations must trust that relays meet those needs.
- Monitoring relays is not simple. Metrika's dashboard takes into account 13+ different general, operational, and economic performance metrics.
- Relays are not dumb pipes. They impact everyone in the ecosystem and smart monitoring of them is essential to allowing members of the Ethereum community to make informed decisions.
Blocknative Highlights of the Day
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Whether it's boosted MEV rewards for validators, programmable infrastructure for builders and searchers, or our Web3 Onboard for dapps and wallets, we provide real-time infrastructure that's helping shape the bright future of Ethereum. Our team will be at ETHDenver in force and we want to meet with you to hear what you're building with Blocknative and how we can help. You can schedule time via the form at the bottom of our official ETHDenver page.
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