Should investors and traders be worried about the centralization of Ethereum after the Merge? Certainly, a question that came to the minds of countless people. The move from Proof-of-Work to Proof-of-Stake was not only difficult from the technological standpoint, but also from the ideological.

As the time has already shown, there is a place for this worry, since the behaviour of several staking protocols and bigger addresses such as exchanges, has caused the centralization to increase and the debate around it to spark even more.

Is there an easy solution to this problem? It seems that an answer to that question would have to be “no.” But it turns out that the community around Ethereum has been working on some rather interesting propositions, technologies and solutions. One of them is SSV Network, which aims to help with the whole centralization and security issue thanks to DVT. How can that be done?

What is Distributed Validator Technology (DVT)?

Distributed Validator Technology (DVT) is an open-source protocol built around decentralization as the core value. It allows the duties of a validator to be distributed amongst multiple parties (nodes). DVT thus helps with provision of a decentralized staking layer right on Ethereum with one key change. It allows for creation of a validator over multiple fault-tolerant machines, which means that if any one node becomes faulty or is offline, the validator can still continue in performing its duties as intended.

Distributed Validator Technology combines several technologies and ideologies together. These include distributed key generation, Shamir’s secret sharing, multi-party computation as well as Istanbul’s Byzantine Fault Tolerance. Each of them has a crucial role in the overall system.

• Distributed key generation: the private key is encrypted and shared amongst all participants and includes calculating and sharing of the given private key such that there is no single party that can take control over the key.
• Shamir’s secret sharing: allows for splitting of the key so that each participating validator client holds only a specific part of the key and cannot sign anything without other participants.
• Multi-party computation: thanks to this function, the contributing operators are allowed to share their secret signing messages. Thanks to that, they are able to perform computations without the need to have the keys on a single device, thus eliminating the threat of centralization during the computation. It is thus the key to decentralization of DVT.

Istanbul Byzantine Fault Tolerance: If more than 66% of the Beacon nodes of Ethereum agree that block is valid, it is added to the blockchain. This happens due to the Istanbul Byzantine Fault Tolerance algorithm, which chooses one node from Beacon nodes. This node then proposes the block and shares it with the Beacon nodes.

Simplified version of DVT consensus mechanism, Source: rattibha.com

The combination of all of these technologies and approaches can be thought of as a multi-signature scheme with a twist. Instead of confirming the transactions, the DVT is used for consensus-required validation.

What is the Secret Shared Validator network (SSV)?

Secret Shared Validator (SSV Network or commonly referred to as ssv.network) is one of the leaders of DVT development. As of now, it supports over 50 different development teams that are building the next-gen ETH staking applications. SSV is not subject to one single solution, but rather offers various use cases, which range from staking services to solo stakers.

The SSV Network is a decentralized platform that aims to enhance the security and privacy of Ethereum’s proof-of-stake (PoS) network. It achieves this through the use of above-mentioned and explained Distributed Validator Technology (DVT), which enables validators to remain anonymous while contributing to the network’s security.

Recently, the SSV Network launched a $50 million ecosystem fund to support the decentralization of Ethereum’s PoS network. The fund will provide grants to developers and projects that contribute to the SSV Network’s mission of enhancing the security and privacy of Ethereum’s PoS network.

DVT is a critical component of the SSV Network, providing validators with a high level of privacy and security. By allowing validators to remain anonymous, DVT helps to protect them from potential attacks or coercion. This enhances the overall security of the PoS network by making it more difficult for malicious actors to target specific validators. Additionally, the SSV Network provides additional security features such as redundant network paths and a decentralized consensus algorithm, which further enhances the network’s reliability and security.

The SSV Network’s ecosystem fund represents an important step forward in the development of Ethereum’s PoS network. As the network continues to evolve, the SSV Network is likely to play an increasingly important role in ensuring its security and reliability. The fund will provide support for developers and projects that contribute to the SSV Network’s mission, accelerating the development of the network and increasing its adoption by the wider Ethereum community.

Secret Shared Validator (SSV) is by many thought to be very similar to DVT. It is even used interchangeably as they both refer to Ethereum validators running on multiple non-trusting nodes. Both of them also lead to provision and improvement of security, decentralization and fault-tolerance proof.

SSV Network can however be seen as an implementation of DVT network, as it enables multiple validators and node operators to run on the infrastructure of the network.

The importance of SSV Network and DVT for Ethereum

”Distributing Ethereum’s security layer has never been more important. The protocol is currently secured by a small group of companies which, when put together, control the entire Blockchain. DVT’s aim is to distribute Ethereum’s security by offering quick and easy access to an open-source, public good which will completely change the way staking is operated today. There are already more than 20 companies building on top of ssv.network’s DVT protocol and that list is expected to grow significantly with the Eco Fund’s launch.”

That is the belief of Alon Muroch, Core Developer Lead of SSV Network. The importance of the whole SSV Network, its implementation of DVT and the future of Ethereum has been highlighted more and more, should Ethereum 2.0 succeed.

While DVT is believed to be a key component of Ethereum’s road map, the SSV Network is the first implementation that should lead to better decentralized Ethereum 2.0. It has currently placed itself as the Ethereum’ security layer, since with each validator the network uses, it not only becomes more decentralized, but also secure. Overall, it thus becomes more uncensorable by anyone.

The high hopes that are placed towards this solution can be seen through several actions or statements like those of Muroch. For instance, VP of Growth for DCG, Samantha Bohbot, has stated the following:

“We believe that it is a pivotal moment in ETH staking. We expect staked assets to increase as staking yields are considered the benchmark return for ETH owners. A near-term tailwind is Ethereum’s Shanghai Upgrade, which is due to be released in the first half of this year and will enable liquidity for those contributing to the network’s core infrastructure. Few teams are as well-positioned as SSV to convene the diverse and cutting-edge products and applications that are using and developing staking technology. We are excited to support those projects as a founding member of this ecosystem initiative.”

The launch of SSV Network’s $50 million fund

More importantly, the SSV network has launched a $50 million ecosystem fund quite recently. It has the sole goal of supporting the decentralization of Ethereum and its PoS, via helping the developers and projects that try to contribute to this goal.

How to become a validator on Ethereum network, Source: consensys.net

This has happened only 12 months after the SSV Networks DAO pledged $3 million for developer grants and allocated $1.2 million to 20 leading PoS companies. This included such names as Moonstake, ANKR, Stader or Blockscape. The purpose of all of these financial incubators, grants and funds is to help solidify DVT as critical infrastructure for Ethereum.

The importance of DVT is vast as it solves one of the key challenges of Ethereum 2.0. It responds to the criticism of centralization and high barriers to entry. However, with DVT, both institutional as well as retail investors can meet the requirements to become validators and would not have to worry about staking too much money (32 ETH), or be scared of safety and liveness checks which would slice their potential profits.

Conclusion

The stakes, figuratively and literally, are too high for Ethereum after its successful switch from PoW to PoS. The problem of centralization and high barriers to entry have been emphasised by numerous experts, analysts and critiques of the project. Hence the success of DVT as well as the SSV is crucial if Ethereum wants to silence the criticism surrounding the centralization and security debates. The new SSV fund can only help enhance this process.

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