Introduction

This Bounty comes in two parts. I will first research about what Distributed Validator Technology (DSV) is. Secondly, I will examine how useful it is and why it is helpful for decentralization on Ethereum 2.0.

What is the Distributed Validator Technology?

DVT is a relatively new infrastructure primitive, which enables a validator key to be split between independently operating validator instances, enabling Active/Active redundancy across ETH 2.0 infrastructure deployments. The DVT primitive can be utilized by staking pools, DAO treasuries, financial institutions, large scale validator operators, and especially for at-home validators. DVT is a way to decentralize risk and reduce failures by combining individual DVT nodes into a robust network that can outperform any individual staking service in the areas of robustness, uptime, and security. Validators run portions of their validator key (KeyShares) across different staking setups (nodes) joined together by a consensus layer. Nodes on the network do not need to trust each other in order to operate, and a certain number of faulty nodes (up to the threshold) can be tolerated without affecting validator performance. In addition, no one node can recreate a validator key signature on its own or make unilateral decisions, which paves the way for trustless networks to be distributed across multiple stakers or staking services.

OBOL Network

Obol's aim is to make Ethereum more robust and decentralized. It plans to achieve this by removing the single point of failure in running a validator on Ethereum. The network utilizes different implementations of Distributed Validator Technology (DVT).

The Obol Network consists of four core public goods:

1. The DV Launchpad, a CLI tool and User Interface for bootstrapping Distributed Validators
2. Charon, a middleware client that enables validators to run in a fault-tolerant, distributed manner
3. Obol Managers, a set of solidity smart contracts for the formation of Distributed Validators in unique ways
4. Obol Testnets, a set of on-going public incentivized testnets that enable any sized operator to test their deployment before serving for the mainnet Obol Network.

Obol is best thought of as another layer in a typical Ethereum validator client stack that replaces an individual with a group, also referred to as collaborative staking [1]:

References

[1] Tackling the Staking Problem

[2] Obol Genesis Community Announcement

[3] What Ethereum 2.0 Looks Like As Vitalik Buterin Celebrates Its Birthday

How does DVT help decentralization on ETH 2.0 or other Proof-of-Stake chains?

Widespread adoption of SSV is not only great for individual stakers and staking providers, but also serves to strengthen the Ethereum protocol itself. Centralization of ETH staking is a real risk given the significant financial and technical burdens of running a validator. They both encourage the use of staking services, the majority of which are centralized.

The dangers of centralized staking for the health of Ethereum are two-fold:

1. Users entrust their stake with a single operator and risk severe slashing penalties given the protocol’s key aggregation rules.
2. The more validators a staking service manages, the larger the effect will be across the entire network if they fail as a group. The prospect of simultaneous downtime across large portions of the network can be an invitation for coordinated attacks that can lead to the chain not being able to finalize.

With DVT, the gates have opened for endless possibilities of complementary validator node configurations working together simultaneously [3]. Across the board, staking services, at-home validators, infrastructure providers, and groups of all three working together can reduce their individual risk and strengthen Ethereum by building customizable and unique DVT networks, including the OBOL network.

OBOL's Architecture, Reference [2]