Derek Rickert - Restaking is for Everyone

Transcript

ready okay good morning next up we have Derek who is going to talk about reaking is for everyone hello hello thank you everybody for coming yes I'm talking about how reaking is for everyone and that includes solo stakers so first I would like to just kind of talk about how reaking what it can do is it can really democratize access and give additional rewards to all of the different people who are involved with staking currently a few things to note before uh

I might be talking about reaking cloud or K2 technically reaking cloud is the network K2 is the protocol um but I might use them interchangeably a little bit about me disclaimer I am uh working with reaking cloud and part of lock swop Labs as well here's kind of what we're going to cover we'll get into what we see as ethereum strengths Define what we mean by safe assets get into using native delegation middleware security report reporters all that so what are we looking for in reaking I think that that's really important for us to First address and that is a way for everybody and anybody

to be involved with reaking without altering any sort of operations or adding any additional risks to the ethereum staking infrastructure so when we look at eth there's hundreds and thousands of daps trillions of dollars settled every year it really is this global settlement layer and there's 870 validators this is really where people want to be building that's why reaking is coming into eth that is why people want to build on eth it is by far the most robust Network there is now when we kind of look at ethereum's core strengths we see that there's it really comes down to

inclusivity you know Open Access avoiding centralizing entities just really anything that can help it grow in any different way now I think it's it's really important for us to kind of take a step back and Define what a safe asset is to get a good understanding of where we're going with reaking and there's different pillars to a safe asset the first is that it needs to be low risk it needs to be something where you're putting your assets somewhere and it's yielding right and you don't have to worry about any external causing risk to these assets

similar to say like a a Government Bond uh another thing to actually be a safe asset is the idea that you are yielding in the same currency that you're staking if it's USD you're going to want to get USD if it's eth you want to get eth other than that you are really more or less yield farming for these different types of tokens now once you get this sort of base layer and you get that safe asset it's easy to underwrite that risk and you can build addition applications on the top of it this is really the core pillar of where the monetary system is now they get safe assets and they can build additional assets on top of this and keep reusing

that Capital so eth validator is crypto safe asset and when we take a look at this this the solo Staker is really the most vulnerable out of all the stakers there's they could just be one person it could be be the majority of their assets majority of their net worth is in this validator and when we're talking about reaking we want to make sure that this person can be included without them feeling like they need to give up certain aspects or certain ideals of being a solo Staker we need to incentivize them just as much as we're incentivizing anybody else within the

group we need that user to continue to hold ownership of their keys and we do not want their to be affected by any sort of third party so let's protect the solo stakers let's make sure that they can get involved and get the same yields as everybody else so just to kind of sum up where we are so far we have ethereum's core strengths we want to keep these in mind anytime we're talking about anything around ethereum we have the largest settlement layer we have crypto safe asset and now on the top of that we want to add reaking and we need to do this this tactfully there's this concept of e at stake and the whole idea of eth at stake

is that dexes money markets any sort of defi app layer can get access to the security of ethereum without actually slashing any assets on the consensus layer right now nobody can slash consensus layer assets Bes besides the actual consensus layer anything that is slashing against them is more of a lean on some sort of withdrawal or or is you know additional collateral with additional slashing So currently nobody can slash besides the consensus layer no matter what app you're running so now what we want to try to do is offer this concept of eth at stake while maintaining the idea of the safe asset we want to make sure that people

can get access to these yields get access to whatever might be and we can do this through a concept called State replication and what state replication does is it creates a realtime replicated version of the consensus layer asset so that it can be tracked on the execution layer so now we have this concept of native delegation and we have a native delegation Bill of Rights we want to make sure that anybody and everybody who accesses reaking is able to do so in a way that's safe for them they're not putting assets at risk and they are able to have the freedom to choose any they

want to do we want them to maintain full optionality run any software they want run clients use DVT use solo staking it really should not matter when we're talking about reaking everything should be the exact same as it was before so now we have what you put eth at stake with the same concept of native delegation and what we get is this ability for people to access different validators and different e that stake for their individual Network again without being able to slash the underlying validator because that's how ethereum works we

want reaking to really map exactly how ethereum Works itself some key features that I I want to run through as far as what is possible with Native delegation um you know there's there's no need for withdrawal credentials that means that people hold on to their assets to actually get involved with Native delegation it's it's quite simple sign a transaction with the signing key uh there's a few different ways to do this there's through a web browser which a lot of people aren't comfortable with but that's okay there's also a CLI where people can run and then basically just upload the proof and once they're done with that they can set their fee

recipient address and they can start receiving eth payouts for the reaking now what's important to keep in mind here is that these validators are only able to maintain being part of that reaking Network as long as they're maintaining a good quality validator in ethereum if they're not upholding everything that's good in ethereum they can no longer natively delegate we really want to tie that that um connection together with these consensus Assets Now with Native delegation to to keep that idea of safe assets there is no additional slashing risk to an eth

validator really I I'll get into this a bit later but any sort of slashing or any sorts of payouts are handled at the pool level because you have middleware on one side you have east sakers on the other side and this can be handled in the pool and not put that risk on these re on these resters who aren't exactly sure what software they're running or or anything like that so at the end of the day people can keep the exact same business logic if they are running for lsts they can continue running for lsts all validators are accepted and this is really incentivizing this base layer this is saying that not operators whoever is holding the signing key whoever is running the validator that is who gets access to this and again there's no

there this is all entirely on Smart contracts so there's no opportunity for veto or anything like that and it's completely deterministic and again passive for these stakers so now to get an idea of what's possible with reaking we we want to take a look at what would the progression be of assets that people can build so from the onset we have infrastructure and I really think that a a good analogy to this is the idea of the GPS where the GPS PS originally for military use $300,000 product I don't know I'm making that number up I'm sure it was super expensive when it first came um and it

was just reused for military operations that's that's really the infrastructure of where we're at when we're talking about reaking right node operator networks Oracle networks really anything that is very fundamental but as this moved up they put that they put that military device they put it in a car and people can finally find out where they're going right and this is very similar to the idea of a Dap layer where people have different sorts of applications that they see a need for and they can bring in reaking to solve those issues now where I think this gets super super exciting is once we get into native utility because native utility is

now where the GPS is on the smartphone every app is tracking your location they're giving you relevant ads they're doing whatever it is you don't even think about it and that's where reaking is going to get to it's it's more closely related to you know pinging an API point to access reaking not where you need to go through this long process of getting additional software setup it's just right there available simple to use the middleware have a very easy time getting through this process right because they can Define any sort of slashing logic they want and when I say slashing logic if we if we go back here slashing with infrastructure that makes sense but slashing is actually a good

thing where if somebody says say wants to use reaking and the backing of ethereum to for account recovery and every time that they want to recover an account there's a little bit of a slashing that's actually a very positive thing that means that it's working means that account is recovered uh so once a middleware defines what that is through a simple typescript type logic they go into the DAP and they can choose which eth or how much eth that they want to borrow and they can simply go in there they say I want to put up this much eth this much uh because this is how much I want access to and they will really just pay for services as they go and because this is all smart contracts this is all uh very symbiosis

people are able to modify the logic they want any time they can cancel any time they can they can come back and change things they can add additional security whatever it is that they want to do but it scales with them very simply and they don't need to talk to anybody they just go to this app and they're there so really there's two ways that middleware uh are able to pay for their service there's one they pay for interest to the resters for how much eth that they want how much of the eth at stake that they want but then there's also the slashing and liveness and this is more of the pay as they go type of service where every time a call happens

they they pay I'll get into the reporters a bit later but they pay for these reporters to verify different logic or have these different types of slashing now the middleware could decide to pass these slashing risks onto a separate node operator set and not pay for them themselves or they could have different people pay them every time that the service is run but at the end of the day they're the ones that are taking out that initial loan for this eth it's where we come up with pay as you go pay as you grow you can start off with $100 you can test this all out you can cancel any time get that eth back but as you want to add additional Services you come up with different

ideas you want to try something else out you are able to Simply do that you just go back to the app you set your new what your new logic is you decide how much eat that's worth for you to to have that covered and there you go now we're getting into the reporters these are the Vigilantes it is a completely ad hoc network these are the slashing mechanisms where people can come in anybody can be a reporter download the simple software and any sort of that logic that the middleware has outlined these are the ones that are enforcing it they're super lightweight zero knowledge proofs so again you have your old smartphone nobody wants to use their old

smartphone but if you can use your old smartphone to make a little bit of money buy yourself a new smartphone that's where the reporter comes in because it's so lightweight it's completely automated anybody can run it which really gives so much additional decentralized support to this reaking network it's not one person who's enforcing slashing it's anybody who wants to enforce the slashing can enforce the slashing so here's a bit of a a diagram on what this could look like when we're talking about an ad hoc ZK Network you know we have reporter number one here they're always online they they're made a business out of it they want to make

sure that they're going to catch every slashing report that they can they want to report report report reporter two currently offline no big deal reporter three sometimes they open up the laptop let it run sometimes they don't they they don't really care same with reporter 4 here's really an overview of what the reporter does it's ad hoc network anybody can join or leave anytime there's no penalties they're not putting up any additional Capital At Risk so what they're able to do is they can just when they're online they can get paid when they're offline they don't get paid and all of this payment that they're getting is in eth there could be some separate agreements where people are

getting paid ER c20s but the whole Crux of reaking well staking and now staking is eth and these reporters even though it's ZK Tech it's super fast we actually have an implementation of this already in another one of our protocols the reporter now we made it more generalized for uh restak and Cloud but it's already live in mainnet if people want to check it out it does you know it's milliseconds of time it takes for these reports to go through and be verified now there's this concept of preferred reporters as well where where people can build out specialized Services specialized reporter services but there's going to be a lot of basic stuff

for people to run as well so now where do we go from here got a lot going on let's figure it out the preferred delegator delegations and preferred reporters so from the onset everything is generalized anybody can be a middleware anybody can be a reaker everything it's a it's perfectly matchmaking type of system but as things progress people as they get more and more sensitive information or more and more sensitive like protocol operations that they want on reaking we can add in these preferred delegations and what that could look like is a protocol could say

hey I need 100 eth of eth at stake of security and I trust these particular node operators maybe they want to go with solo stakers maybe they prefer to go with commercial Lo operator or their friend doesn't matter and they could have a separate agreement saying if you're going to provide my e that steak I'm going to provide you some additional incentive now even though the pool is completely autom managed what this will do is completely section off a piece of that e that steak for them so if liquidations do occur or if people start if rakers decide that hey I want to leave because there's nothing holding any reaker there they're able to know that they're at least covered with

these particular people now on the other hand preferred reporters are also very interesting because there could be specialized services that are run off of these you know as the more and more I talk to people the more ideas they give me on how this stuff can be ran and this preferred reporter was actually from somebody else outside of our organization who came up with some of these ideas saying that they could run services that if there are liquidations they can essentially cover that and make sure that they're the ones who who are winning these eth bids and making sure that these people are made whole afterwards is this another app chain not currently but it will be and I'll tell you why because when we're talking about

slashing and when we're talking about you know this base level where we're talking about right now we're on the infrastructure layer where where there could be slashing and liveness and these are more less frequent types of events it doesn't matter as much but the costs of e are going to get more and more expensive so as this develops what we're going to do with reaking clout excuse me is deploy a separate app chain for it and what this allows for is these super fast interactions where people can access these reporters access e that stake similar to an API Point without

actually needing to spend all of that eth gas cost a lot of yield going on here so when we get to the yield where are we at currently we have staking yield we have me we have lstf all this amazing stuff now how do we add on this ecosystem yield on top and that's where people who are coming in as resters they're staking a token they automatically get this LP token and this LP token is yielding in eth from all of the different applications that are building on top of restak Cloud now this is powerful because they don't have to worry about

anything besides that their eth value of this token is acre and ACR now this token because it's a simple erc20 LP token can be reused in defi it can be used in literally any different ways that people want to do and it'll just acrew acrew and acrew where looking at about a 5 to 10% APR is estimated on for the resters from the onset all in eth so we want to grow the ethereum ecosystem and to do that again we want to keep solo stakers safe we want to

make sure it's fully inclusive anybody who wants to join can join on any level we want it to be completely available and we want full participation from anybody who wants to that's why we made the reporters so simple to run is because those reporters can be anybody old laptop old computer run it resters anybody using native delegation 860,000 validators are available to natively delegate plus the LST tokens and we want to make sure that those people the Bas Network work is not at risk so how can you get involved there are really three different ways to get involved there's

the low lift you can restake your lsts you can do your native delegation and that keeps things very simple for people they just come in they just collect more and more eth now what somebody else could do is they could say hey well I also want to run the reporting software they can download that software it auto updates it's very simple lightweight very easy to do now the heavier lift obviously you want to develop an application specifically for reaking or increase the the security of your app that is all possible as well now somebody could also come in

here and and say a a middleware or somebody building app chain could have a bunch of eth at stake as well um they could also become a reporter so what they could do is they could ensure the security of their Network they could hedge off some of their costs with being resters themselves and have their app be run so this is this is something super powerful for people who are already working with staked eth who already have signing Keys who already have lsts whatever it might be they already have the node infrastructure people can kind of pick and choose right so it could be very easy for a solo Staker to use native delegation just basically sign up with

their signing key and then set their fee recipient they're done then they could run an additional software they could run this middleware on the same machine get paid for that as well and they can just sit back collect e and that's that's what we have so thank you everybody are there any questions so you made this quite bold statement that you can just earn another five to 10 or 5% 10% with these restake initiatives uh where do they come from it's usually always a risk return

question so additional yield or interest doesn't come for free right so so that's where the middleware is actually paying for access to this e that at stake uh if you if you look at it where the middleware are the ones who understand what the risks are to their application the middleware are the ones who wrote the contracts they they know what they want done so it's more like they're paying for a service and what they're doing is they're paying to get access to this eat that stake now they're doing this in the two different ways where they're paying interest on the eat that they want to borrow and they're also paying every time that they have a different type of slashing event

whatever it might be and because the middleware are taking on this risk themselves and it's not a separate party they're actually able to do this with essentially a bit of Leverage so they can pay more for Access for Less slashing events might hurt their position a little bit more but they understand the risk that they're taking so the actual eakers or rakers in this circumstance will can get more yield for their e other questions okay then let's thank Derek again thank you thank you and next talk is in 10

minutes