Radek Sienkiewicz - Trials and tribulations of solo staking

Transcript

okay solo stakers wake up next up we have radic welcome hi hello and uh my talk will be about solos staking so what kind of things what kind of problems you have when you decide to solo stake and what kind of things you need to think about when solo taking when you which you don't even need to consider when for example uh doing like uh pool staking like liquid staking or something like that uh this is also based this all is

based on my own experience and this is also mainly targeted towards like staking at home so you can be solo staking like uh buying a uh VPS somewhere and uh like on AWS and and solo staking there but that's not what I will be focusing on and this is just like the the purest version of staking which is solo staking on your own Hardware at your own home uh so this is what we will briefly discuss today Hardware software security connectivity uh ease of use best practices couple of story is from my own

experience uh and a list of tools that are helpful uh when solo staking and then if we have time uh some question and answers so this this is the like not even a complete list of things that you need to think about when solo is taking and you need to think about all of them to to do it effectively so first of all what are the reasons to do it why are you solo staking at home uh then is it like do you want to solo stake or maybe do you want to to do like pool staking like liquid staking uh once you decided uh and answer those two questions then okay so which Hardware which software how do I make it secure because I'm responsible for everything

uh how do I make it online 100% of the time how do I connect to it if I'm away uh what happens when power goes out for example how do I manage my own Keys uh what about privacy do I want the whole world to know that I'm solo staking and how much or do I try to isolate it as much as possible and do not broadcast that then to Mev or not to MF we had uh a presentation like two two presentations ago about MF and in detail uh and then also Randomness uh solo taking is like kind of Lottery so

do you embrace it or do you try to minimize the randomness and the last is the like taxes uh death and taxes is something that you always can count on so first reasons to do it so why solo Stak why solo steak at home number one reason for probably most people or everybody is money you want to stake to earn the rewards and uh the rest is probably secondary but uh it's it's important nonetheless so do you want to do it because you want the network be healthier be more decentralized uh do you want to

contribute to client diversification which we saw in the previous presentation which is also important in terms of the network and the whole protocol do you want to be part of the staking Community or like ethereum community in general uh and an active participant at that uh or do you again uh talking about the whole protocol do do you want to make it more secure and stronger by uh like giving your own one single brick or a few or did you also do it for fun because uh all all the things that are mentioned here are fun for you and you also like to Tinker with

Hardware with software uh you maybe like some kind of uh some degree of Randomness uh and it's it's all fun for you and that's why you want to do it I probably have like a little bit of all of that that's why I'm solo staking uh another question that you need to answer before solo staking is that do you want to do it yourself or do do you want to go just like pull stake and uh and why solo staking for all the reasons that I just mentioned pull staking could be that you don't have enough e to solo stake you don't have like 32 now it's better because you can you can start solo staking with eight you can start soon maybe like beginning

of next year you can start even with one eth uh so that could be one reason you you might want to do it but you don't have maybe enough eth uh or you don't like the risk you you want to have predictable income you you don't want uh that Randomness and that's why you do you go for pool staking rather than solo staking uh or you don't want to Tinker with Hardware or software you don't want to have anything everything up to date and uh you just want to set it and forget it and that's it so the first uh important thing once you decided and answered those questions for yourself and that you decided that you want to do

it yourself at home so the question is what Hardware to choose and this is just like what some some of the set set ups that people have at home so this uh this is the setup this is the things to to consider so for Optimal Performance like the price is around from 700 to $2,000 depending if you want to have something that can run a note and a validator or something that is really powerful and uh future proof for a few years ahead uh then you probably closer to like 2,000 uh a really good setup can be like I

think like around $1,000 uh dollar for uh for solo taking so you need to do a cost benefit analysis for yourself so if I pay $1,000 today then what kind of rewards can I expect and when will I break even and after that uh when will I start earning on top of what I already paid for Hardware so so uh there is a staking rewards calculator uh that you you can find here you enter and you can do it also for liquid staking for different protocols and so on so I chose ethereum run ethereum validator yourself 32 e and then after one year you get don't want if you see it like

1.08 e on average because it it's it varies a lot but on average you get 1.08 e so it's around 2,00 uh in today's prices so you break even basically in around six months after six months you start earning on top of what you paid for Hardware uh and maybe you win a lottery a few times and and hit those like large uh block rewards so that's uh that that's first one about hardware and you also need to think about Hardware life cycle management so how long will this run for you if if it's $700 or like aot old laptop that you have maybe you will need to change that and upgrade it after a year if you

go for something more expensive then it might uh might work for you for like a couple years or even more so recommendation would be to go with three 32 gigs of RAM 4 terabytes 4 terabytes is uh probably an Overkill from today's point of view but if you don't want to upgrade in a year or a little bit more maybe uh then I think four is reasonable for now 2 terabytes is also enough uh CPU is not that important as long as it's not some some shitty stuff from a few years ago and googly eyes because googly eyes are good for everything and it just looks better if you have them so that's that's the recommendation you don't need to do it uh now and this is my bad boy and I don't have google eyes

unfortunately uh mine is a little bit beefier mine is 64 gigs 4 terab 12 cores but no googly ice so it's not really according to my own recommendation now that you have Hardware the next thing is software and here it wasn't the case like a year ago where it was really hard to run a validator and a Noe on your own you really had to be like a CIS admin and to Tinker with all the stuff download all the packages manually uh configure thing uh install all like the whole system

from scratch uh secure the the system from scratch and get the the node software the validator software manually make them talk to each other and so on so it was a lot of work and it could break in many places if you didn't know what you were doing now there's a lot of good software packages that are almost like one click software or said it didn't forget it dap note is uh especially user friendly you just make a few selections during the wizard at the beginning and then you can even choose like auto update all the software and it will keep everything updated uh on its own uh but also tap

note is very simple and I've I used it for for a long time but I switch to eth Docker and this is my number one recommendation at the moment because it's also very easy to set up almost as easy as dap node but it gives you much more control of what you can do Tinker with some settings uh easier and faster maybe a little bit to start and stop everything so once you know and you are comfortable with the the software you know how nodes validators work talk to each other what are the optimal settings and you want to be more in control uh you should go with e Docker if you want

to just like do it once and not not touch it any um any longer then D note is is a good one and a few others rocket pool if you want to run nodes with less than 32 E and A couple more newcomers relative new camers isum and avado which are also good ones for uh for validation and nice note is a really really good one but they Al only have a uh validator not not validator that they have running a node but not no staking node validator yet but they have it in plans so this can be a nice newcomer in the in the near future so this is

software and things that you need to think about in terms of software so how Hands-On do I want to be uh then you need to be able to have all the dashboards to see how your Note is uh performing uh is it working well is it missing at the stations uh you're your validator do you have enough memory uh is everything synced and so on so all the dashboards everything that you might need is in E Docker in Dap node so you have the full visibility of what's going on you also can set up alerts when things go bad like your validator goes

down and then you get immediately and alert that something is happening and you need to go and fix it uh so yeah the recommendation the easiest to use is D node best combination of e and US user control is is e Docker security challenges so this is another one so what do you need to think about when when uh solo is taking so hacking and theft this is always a security risk with uh with crypto malware and fishing attacks wallet security key management you need to manage all your keys yourself uh the staking Keys the the keys for withdrawing for for

everything uh authentication and also like security of your validator and no so do you open the ports to the whole world so that others can connect as well uh it you might want to do it if you want to connect yourself with a VPN remotely but it's an additional risk that you are putting uh how to have the system up to date all the time how to prevent hacking theft uh fishing and so on wallet security wallet separation do you ever use the wallet that has the keys for the validator or do you just set it up once and never even touch that wallet and it's impossible to hack that because you never use it in it's somewhere offline

and uh it it's safe there uh but there there are a lot valid a lot of validators that I set up with a wallet that is just like daily active on ethereum meaning that it's probably someone's like hot wallet which is absolutely not the way to do it uh Key Management authentication uh another thing that you need to think about the next thing to to think about is Network so if you're staying at home it's it means that you have probably like home level um internet connection quality it's not like office quality in in the office building where they have many

failovers uh backups and so on for example at uh at one of my my apartments that I lived at uh every day at like 3:45 a.m. or something like that the internet went down always for 2 minutes because I don't know they figured out that everybody is sleeping at that point and they probably restarted something or just like yeah just just in case I don't know but at 3:45 a.m. every day it it was gone for a few minutes so it's not good when you have a validator running because every time it happens you need to catch up with your validation with your note uh so so this

is not the way to go so you need to think if your connection is good enough do you have any failover do you have any backup if your network goes down if if it goes down for a longer period of time what do you do then or if your power goes down uh does does it mean that your internet also goes down do you have a power backup even for like a few minutes because maybe usually it's like temporary uh usually the power is not gone for hours uh do you have the UPS to to run your system for for a few minutes or for half an hour so these these are the things that you need to uh take into account and also quarters and limits uh at some areas and in different countries you might have

some relatively low limits of traffic that you can uh that you can have in a month I don't have that problem and it's the the internet connection doesn't reset anymore uh every day so it all goes well but cost also is very good for me and also I use it every day so uh it's not like I paid on top of what I need to pay but these are all the things that you need to think about because maybe you need to upgrade your uh your internet connection if you want to run a validator at home then keys not your keys not your crypto where do you store them do you store them offline do you store them online uh do you use the multisig do we have a hit by a bus scenario so if something happens to you

does anybody has access to your keys does anybody know what to do with them where to find them how to unstake what you have stake and so on privacy uh I mentioned briefly at the beginning so do you want people to know that you are staking or not do do you use like a completely fresh wallet to fund uh 32 e uh to to start validating or do you just like fund it from your main browser so that everybody can see that uh you are funding that you are staking that you are a solo validator and if you want to have a fresh wallet how do you fund it fund it do you go through I don't know binance or coinbase

or whatever else then you will not see it on ether scan who who funded that but you then you need to trust that binance or coinbase will never be hacked and nobody will learn that this is your address and this is your validator so you need to trust those centralized exchanges so there there's a lot of things to think about security uh from the solo staking point of view now to MAV or not to MAV uh I think that the previous or the one before the presentation was clear enough that if you don't meth and you do solo staking then it doesn't make sense because they are not getting a really large and ever larger percentage of uh rewards which is right now about 25% but

like the number of blocks which are MF boosted is these are the the ones and and it's only growing so uh you need to to enable meth uh and these are pros and conses I will not go through all of them uh we don't have enough time but also then if you decide that you want to meth the question after that is do to offact or to not Offa so do you want to use all the MF boosters even those who are censored so the the ones that do not include all the blocks because of some governments telling them that you

have to block this and that address you have to block this pool or whatever else uh so this is the the percentage of uh sensored blocks the the the green one and it is better it was much worse not long ago uh the green ones are not censored so so if you care about like the ethereum and the ecosystem then you probably also care that it is decentralized and it is open and that it is not censored that's the whole idea of the blockchain that this is not censored so my choice is to use MEF but to use only the MEF boosters that are not censored so that's my recommendation in

terms of MEF and then Randomness a really part of solo taking is Randomness do you embrace it and play the lottery will I get a big reward will I get a small reward will I get a block two months from now will I get a block maybe a year from now or maybe like in a month from now I will get four blocks unlikely but possible and then how high the rewards will be will it be 0.02 or will it be like two e um and there's a website lucky Staker which gives uh like current probability of getting a block so 0.82 is the probability of getting a

block proposal today so uh in uh yeah days to proposal on average is what is 122 days uh and the probability is going down because there are more and more validators so at at the beginning it was 35% was to uh to have a block mind that day but it it grew it diminished very rapidly now it's about 082 meaning you get a block every couple months which in reality is a little more because some of the validators are not active so so the randomness is a big factor and this is Randomness continued it's

especially important if you only have one validator because then you don't have that evening out Factor if you run like 10 validators uh you only have one validator and you either win or you lose uh so if it's fine with you if you like the lottery and you play the lottery every day like with this one Staker and it's part of that fun it's why why what you doing then that's cool if not then you can uh use something like I don't know rocket pool uh validator and then use the smoothing pools where everybody gets their eth into a pool and all the rewards are shared equally among each

other this means that you are removing the risk of not getting the blocks but you're also removing the chance that you will get a higher reward because if you get a higher reward it will be shared with everybody so you need to to answer to yourself if you want that or not so Randomness in my case was that in the last like like 22 or 30 days I got four block proposals which is much higher this is like 100 one and a half% chance of happening so I was winning the uh the lottery I was really happy about it but the bad part of of Randomness is that two times I was at a conference like like today and my

validator go went down and in those two time my validator only went down two times and in those two times I had a block proposal which I missed so and that had like 0.38% chance so I'm both Lucky and even more unlucky so if it's fine with you then it's fine if not you you might want to choose uh the smoothing pools where you are not nervous but also not Ultra happy uh when a block uh proposal happens uh wrapping up okay so wrapping up uh this is probably one of the last uh and then I just like rapid rapid fire with a few uh few slides taxes uh you need to think about taxes understand the

obligations varus by country uh a great tool for that is Rod key makes it 10% easier it it is a portfolio management but it also it works really really well with staking it it gives you a list of all the rewards and everything else so that you just export it and and give it to your accountant which you also need to have uh the one that needs to to know crypto and this is like one slide recommendation sumary recommend ation stake at home yes stake at home that's my recommendation for now 16 gigs uh probably 32 is is a good recommendation sorry that's a mistake and four terabytes and that that will keep you for probably a couple years at least if do dap now dup note Li for consensus

Bessel for or W for execution MEF yes uh Al fact no uh set up alert system so that you get the notification that's something is happening with your note don't ignore security Embrace Randomness either enjoy it or Smo it out uh and don't just do it for the money and also engage with community and now just resources for you to to just uh consider a few seconds per slide that's it uh resources so a great great community and resource eaker you will find everything there both on their website and also especially on subreddit is Staker you can ask any

questions there are many helpful people client diversity we saw that I'm doing my thing in terms of diversification uh I'm running with uh I'm running with uh this one this one 0% so I'm doing as much as possible for for diversification when merge gives you all the important uh info about upcoming uh next steps major next steps and upgrades to ethereum uh Beacon chain is like ether scan for Beacon chain with all the stats of all the validators rocket pool they have a great great like resource on how to set up the the note

not just for Rocket pool but any note lucky Staker is how often you can uh propose that taking calculator how much you can expect in terms of average uh Rewards portfolio management and a few as well which were already mentioned like mfat MF boost PS uh and uh Stak from home Gallery Twitter uh hasht St Stak from home if you want this presentation or this resources or have any questions DM me at velvet shark velvet shark on Twitter I can send it to you uh or answer any questions I'll probably put it somewhere on Twitter as well uh after this but it could be

tomorrow or the day after uh so that's it and we probably don't have time for Q&A no unfor okay okay yeah I expected that probably catch radic outside if you have thanks a lot