Since 2020 Launchnodes has enabled protocols, businesses and individuals to become solo stakers, building and running validator nodes on infrastructure our clients own.
Part of this is about not taking a staking commission but charging a fixed flat fee for running and supporting execution layer and consensus layer nodes. This means our clients keep 100% of their execution and consensus layer returns. Individuals we serve also reap these benefits, while only needing to run validator nodes, avoiding the cost and resource demands of operating full Ethereum nodes.
In this article, we explain in detail what exactly validator nodes do to earn these execution and consensus layer returns – mainly because our customers may not necessarily be technical but do want to learn what’s under the hood.
How does the Proof of Stake (PoS) mechanism work
Time Structure: Time in Ethereum PoS is divided into slots (12 seconds each) and epochs (32 slots or 6.4 minutes). Validators are assigned to propose and attest to new blocks based on this structure.
Becoming a Validator: To participate as a validator, a user must deposit 32 ETH into the deposit contract and run three separate pieces of software: an execution client, a consensus client, and a validator client. Launchnodes’ approach to solo staking means that you run and own the validator node infrastructure, but Launchnodes provides the beacon node and execution layer node. This makes it more cost-effective to solo stake or be a Lido CSM node operator. Business customers can run their own beacon and execution layer nodes on infrastructure they own, control, and don’t share, so we provision and manage those Beacon and execution layer nodes as well.
After depositing their ETH, the user joins an activation queue and once a validator is activated, the validator’s responsibilities begin.
Once the validator is activated, how does it participate in PoS mechanism?
Each slot is randomly assigned to a committee and the validators are randomly assigned to these committees once per epoch. The validators are responsible to attest for the blocks that are proposed for their slot.
Block Proposal and Attestation: For every slot, one validator is randomly selected to be a “block proposer.” The block proposer validator is responsible for constructing a new block out of pending transactions. It then broadcasts it to other validators in the network, which vote on whether that block is valid.
The validators sign the attestation and broadcast it to the network. But passing this data around the network for every validator creates a lot of overhead. Therefore, each committee is again further subdivided into subnets.
The attestations from individual validator nodes are aggregated within subnets and is broadcasted to the broader network.
What does the attestation include?
The attestation contains the following components:
- aggregation_bits: a bitlist of validators where the position maps to the validator index in their committee; the value (0/1) indicates whether the validator signed the data (i.e. whether they are active and agree with the block proposer)
- data: details relating to the attestation, as defined below
- signature: a BLS signature that aggregates the signatures of individual validators
The data contains the following information:
- slot: The slot number that the attestation refers to
- index: A number that identifies which committee the validator belongs to in a given slot
- beacon_block_root: Root hash of the block the validator sees at the head of the chain (the result of applying the fork-choice algorithm)
- source: what the validators see as the most recent justified block
- target: what the validators see as the first block in the current epoch
As a result of these attestations, the blockchain comes to a consensus.
Sync committees: Apart from block proposals and attestations, validators are also responsible for participating in sync committees. A sync committee is a randomly selected group of validators that refresh every ~27 hours. Sync committees allow light clients to keep track of the head of the blockchain.
When do we determine that a block should be included in the chain? – Here comes the concept of FINALITY.
Finality
Every epoch has one checkpoint block (latest block at the start of that epoch).
If 2/3rd of the total staked ether votes in favour of that block, then it becomes “justified.”
When another block is justified on top of a justified block, it’s upgraded to “finalized.” To revert a finalized block, an attacker would commit to losing at least 1/3rd of the total supply of staked ETH (to prevent the attackers from tampering the blockchain network).
This is how blocks come to a consensus and reach finality.
Are there any incentives for the validators to reward good behavior and punish bad behavior? – YES
Validator Node Rewards
Validators receive rewards when they make votes that are consistent with the majority of other validators, when they propose blocks, and when they participate in sync committees.
Validator rewards are calculated based on 5 components. The weightage of the components are as follows:
Moreover, there is an additional weight based on how quickly a validator makes attestations after a block has been proposed, where the base reward gets divided by the “inclusion delay.”
Penalties and Slashing
In addition to the rewards, a validator node are also subjected to penalties and slashing to dissuade irresponsible or malicious validator activity.
Attestation Penalties – Validators are penalized for missing, late, or incorrect attestations.
Sync committee penalties – If Sync committee validators sign the wrong head or don’t participate, they’re penalized the same amount as they would have been rewarded if they were active and correct.
Slashing: Slashing is a more severe action that results in the forceful removal of a validator from the network and an associated loss of their staked ether.
There are three ways a validator can be slashed, all of which amount to the dishonest proposal or attestation of blocks:
- By proposing and signing two different blocks for the same slot
- By attesting to a block that “surrounds” another one (effectively changing history)
- By “double voting” by attesting to two candidates for the same block
Final Words
In short, the role of validators can be summarised as:
1. Block proposal (when selected to do so)
2. Block attestation (once per epoch)
3. Sync committee participation (when selected to be part of it)
Validators in the Proof of Stake (PoS) system are pivotal to the health and functionality of the blockchain network. Their responsibilities extend beyond merely proposing and validating blocks; they are integral to maintaining the security and consensus of the entire network. By running their own validator nodes, Launchnodes’ clients—whether businesses or individuals, can fully participate in the Ethereum network, reaping the benefits of staking without the burden of commissions. This approach empowers users with greater control over their staking rewards while also offering a deeper understanding of the underlying processes that drive blockchain consensus.
More on proposer timing games: https://ethresear.ch/t/on-attestations-block-propagation-and-timing-games/20272
