The State of Staking in July 2022

The total amount of ETH staked continues to grow at a much slower rate than previously, but has now crossed the 13.1M mark. The validator activation queue is empty, so if you want to stake new validators, now is the time! 🙂

Examining the great data provided by beaconcha.in further, we can see there was a slashing event a few days ago. What’s interesting is that the validator in question received its deposit only five days before the slash. Examining the transaction hashes and from account further seems to indicate that the funds for that validator came out of Gemini.

The big news however is that a timeline has kinda been announced for the Merge. The Goerli/Prater testnet merge, the last testnet merge before Ethereum’s transition to Proof of Stake consensus mechanism, will happen around August 11. This will be followed by the mainnet/Beacon chain merge around September 19. And that’ll be that.  

In the meantime, the foundation and client teams are conducting multiple shadowfork merges, even configured incorrectly to prove out and duplicate previously found issues. A shadowfork is an intentional fork on a blockchain. It is different from a testnet or devnet in that it copies data from another network. For example, a shadowfork on the Ethereum mainnet will copy all data and accept transactions that go onto the mainnet. Shadowforks help test network upgrades with existing data from the original chain. 

We should take a moment to recognize the enormous effort that has gone into getting Ethereum this far. While there can be no flag waving until it’s all over and the merged chain is happily finalizing, the work and collaboration that has taken place to get here is amazing. If you’re ever feeling disenchanted with the Ethereum ecosystem, then my remedy is to connect to the R&D discord server and read through some of the channels. I’m always impressed and refreshed to read all those super-smart people delivering for all of us.

On that note, I thought this was a great explanation of how consensus will work on Ethereum post-Merge.

Past the Merge

It feels like a good time to look a little past the Merge at the next big thing: withdrawals. We’ve talked about withdrawals before but I thought this was a good moment to remind everyone of what’s currently planned to arrive in the Shanghai update after the Merge:

• Full Withdrawals: This feature will allow withdrawal of ETH from validators that have been removed from the active pool. Essentially, a complete reverse of the deposit process.
• Partial Withdrawals: This key feature involves conducting a sweep on a regular basis of all validators and transferring “excess” (more than 32) ETH to the withdrawal address on the execution layer. This will minimize churn of the validator population and encourage stability in the consensus mechanism.
• Withdrawal credential change: Early stakers who used a BLS key as the basis of their withdrawal credential will be able to migrate to an ETH1 address withdrawal type. This will also allow those validators to benefit from the partial withdrawal process mentioned above.

The spec with details can be found here.

Codefi Staking

We’re continuing to make progress getting ready to go through the Goerli/Prater merge in early August. Unfortunately, we’re also discovering that using a consensus layer client from a team not in your organization does present new challenges! Ah, the heady days when we just used Teku and they treated us like royalty. 🙂

As part of that work, we are also planning to deploy MEV-Boost alongside our consensus layer clients. Recently, a very interesting detail came to light:

When a block is built by a Builder, the fee_recipient for that block is set to an address as specified by the Builder. The Builder, when pushing that block to a relay, will specify a share of the transaction fees plus any MEV, to be paid to the proposer. However, actual payment of that share when the block is proposed is made through a normal transaction contained within that block.

For staking providers such as ourselves, this does present a problem of identification so that we can prove that our customers are receiving all of the MEV and transaction fees as promised by the Builder to the customer’s proposing validator. We’ve highlighted this to Flashbots and are hoping we can resolve this sooner rather than later

The good news is that it doesn’t affect how much you earn – just the transparency of it.

Other References

There are so many great places to get detailed information on what’s happening with the Ethereum roadmap. A good place to start is Ben’s fortnightly update. Anthony Sassano’s Daily Gwei is also a fun daily update on all things Ethereum: https://thedailygwei.substack.com/