Create a Vault where people deposit their ETH which would be staked in the ETH 2.0 contract to earn staking rewards.
Abstract:
ETH 2.0 contract is launched. Success of the launch will help their entire ETH ecosystem including Yearn. Lot of people may want to support it but may not have 32 Eth or the technical expertise to run validator and get the yield. This will solve both these problems
Specification:
After ETh deposited in the vault, it would be deposited in the deposit contact in lots of 32 ETH. This can’t be withdrawn till the ETH is finally unbounded. This is fine has yearn has already launched a vault where people cant not withdraw forever ( Backscratcher). The yBETH can be traded like any Yearn deposit token giving people a way to earn yield or exit if they want to. People would be confident that yearn can run validators without any challenges. @Banteg has already deposited for 10 validators so the team would be running them anyways - this will just be on a bigger scale.
This is not possible to do in a trustless way. Whichever software process running as a validator on behalf of the vault must be in control of the private keys signing the attestations. Technically we could have the multisig control them … but it’s a lot of opsec overhead to be worth it especially that there are now a garden variety of staking avenues.
Ahh I was just going to post this! It’s an excellent, excellent idea and I strongly support it. Yearn has a history of benefiting the ethereum ecosystem (e.g. see last gitcoin grants round) and this would be in line with its ethos to continue boosting decentralization.
Some additional thoughts:
This should be a direct competitor to other staking service providers
There should only be an asset management fee for this vault and no performance fee
Similar to the yETH vault, a deposit of ETH should receive a yETH token back (or similar name) which allows for liquidity to depositors
Thanks for the response and clarification. I dont have idea about opsec and will go with you if this doesn’t make sense for yearn. I looked up the link you have provided but just dont feel comfortable in put my ETH with any one of them - i have confidence/ trust in Yearn that’s why i was comfortable.
Merely depositing into the ETH2 contract doesn’t get you yield, the vault must be actively validating blocks when it gets assigned by the beacon chain to a certain committee. But the vault can’t do that, it’s just a dormant contract on ETH1. What does the validation is an offchain software connected to the ETH2 P2P network … i.e. a client like Prysm or Lighthouse.
And in order for, say, the yEarn core team to run those clients, they must custody the vault’s ETH…it must be them that does the depositing to the ETH2 contract from an address whose private key they control … such that they can prove ownership of the ETHs to the beacon chain => their attestations (“this block is valid”) are accepted => they collect validation rewards. Then when ETH Phase 2 is launched, the core team is trusted to return ETH deposits plus the accumulated rewards to the yEarn vault depositors.
Each client instance controls a private key which owns a 32 ETHs batch. That means the core teams is responsible for securing those private keys, not only from being compromised but also from e.g. going offline and getting slashed or being eclipsed by a targeted attack that tries to isolate them from the whole ETH2 network.
Is it possible to partner with another third party pool provider or mimic a provider that provides non-custodial staking services? Possibly DappNode in some cases could be used.
I think lido and others are tackling eth 2 staking and our dev time is better spent elsewhere. The yearn team would have to run their own staking nodes or outsource them and both seem more complex than coding up smart contracts which is yearn speciality.
I think the treasury could run a few validators with its own funds. But just as a way of supporting the ecosystem, alongside gitcoin grants, open source code, tooling and etc that the yearn team provides.
Running validators is a different entity than running some kind of vault for ETH 2.0. If you’d like to further develop that idea, feel free to start another thread, but I’ll be closing this one for now, as there is no realistic way for Yearn to have an ETH 2.0 vault (at least based on the ideas presented here).