Lido on Ethereum: DVT Pilot with SSV Network

Over the past month, as a part of the execution strategy for Lido’s Next Chapter, Lido has conducted an initial pilot integration of Distributed Validator Technology (DVT) with SSV Network on the Goerli testnet. Eight Node Operators (NOs) participated in these initial tests by creating Lido-specific SSV Operators, running a shared Operator in the Lido Node Operator Registry on Goerli, and successfully operating performant validators using the SSV protocol.

Why DVT?

Distributed Validator Technology enables multiple Node Operators to run distributed validators, decreasing single points of failure and providing important benefits across decentralization and diversity, infrastructure resilience, and security. Additionally, Lido anticipates that DVT will play a crucial role in the path towards enabling permissionless validation for the protocol.

By integrating DVT solutions, Lido will be able to add validators run by a mix of permissioned and permissionless actors, as well as reduce relevant operator risks for validators created by the Lido permissioned Node Operator set. DVT will allow Lido to increase the decentralization and stake distribution of the protocol by allowing a far greater number of stakers to participate as node operators, while still maintaining the benefits of a permissioned set (for more information regarding Lido on Ethereum metrics see the Q2 update). Lido is committed to allowing solo stakers to participate in the protocol, and DVT is among the most important mechanisms for this to be enabled.

SSV Network Integration

As part of Lido’s continued commitment to researching DVT technology, Lido Node Operators conducted the first tests of SSV Network’s Shifu Testnet. Two groups of operators created entries in the Lido Node Operator registry by coordinating through a multi-sig, creating Lido-specific SSV Operators, and splitting a validator key between the respective group members. Over this time both of these distributed validators have shown consistent attestation performance, even in certain cases where a given operator missed their attestation duty.

The two Operators in the Lido Node Operator registry, SSV-KCCA and SSV-DHRR can both be seen on operators.testnet.fi/. The first group consists of Kukis Global, Chainlayer, Cryptomanufaktur, and Allnodes, the second of DSRV, HashQuark, RockLogic, and RockX. Both SSV-KCCA and SSV-DHRR’s validators (linked) have shown consistent attestation performance above 80% (note that average validator performance on Goerli is lower than on mainnet). Although both validators have missed a block proposal, this is due to a limitation of the current SSV Network Shifu testnet implementation. The performance of the individual operators for both SSV-KCCA and SSV-DHRR (linked) can also be viewed through their respective SSV Network explorer pages.  

This first trial of setting up SSV operators tied to Lido has demonstrated the ability of Lido Operators to operate performant validators using the SSV protocol. Lido will continue to work with SSV Network to expand our testing under different scenarios and as new features are added to the protocol.

Next Steps

While SSV’s Shifu testnet has demonstrated proof of concept for Lido to implement DVT, there are still a number of changes that need to be made (both on Lido’s as well as SSV Network’s side) and further testing that will need to be undergone before a mainnet launch. As further enhancements are made (such as support for block proposals, distributed key and deposit data generation, and multi-sig support), Lido will conduct further tests with the broader Node Operator set to “stress test” our procedures at scale. Among these features, zero coordination DKG will be a critical element of our strategy to reduce the trust requirements currently necessary for creating and submitting validators.

Lido Node Operators have started to conduct similar testing with Obol Network, where DKG ceremonies will be held to create distributed validators between groups of Lido Node Operators. Over the coming months the protocol will conduct additional testing with Obol and SSV to better understand how Lido Node Operators can best utilize the protocols to improve decentralization, infrastructure resilience and distribution, and overall security of staking assets.

Over the coming months we will continue to update the community on Lido’s progress with DVT testing and experimentation, and our plans to adopt the technology on mainnet.