Vitalik Buterin (Ethereum Co-founder) – So you want to be a Casper validator (May 2018)

Chapters

Abstract

Ethereum’s Casper Validator: Navigating the New Era of Staking and Security

Ethereum’s transition to a proof-of-stake algorithm through Casper has redefined the landscape of cryptocurrency staking and security. This article delves into the critical aspects of being a Casper validator, including the staking process, reward and penalty mechanisms, and the innovative features like quadratic leak and partial slashing that ensure network integrity. It also highlights the implications of validator returns, staking pools, and the upcoming sharding system, reflecting insights from Vitalik Buterin’s comprehensive presentation on Ethereum 2.0. This exploration provides a clear understanding of how Ethereum’s staking model fosters decentralization and security, balancing validator participation with network resilience.

Expanding on the Main Ideas:

1. The Casper Validator Model:

– Staking ETH: Validators stake ETH in a smart contract and choose a validation code, crucial for maintaining Ethereum’s consensus.

– Voting and Finalizing Blocks: Validators must remain online, voting for checkpoints every epoch, with finalized blocks contributing to economic finality.

– Rewards and Penalties: Validators are rewarded for their active participation and penalized for misbehavior, with rewards estimated between 0% and 5% annually.

Overview of Casper Validators:

Casper validators are participants in the Ethereum proof-of-stake algorithm responsible for maintaining network security and earning rewards. They validate blocks, propose new blocks, and ensure network health.

Validation Code Selection:

Validation code is a generalization of public key cryptography. Validators specify a piece of EVM code to verify signatures. The code must be a pure function, ensuring accountability for votes. Various validation options are available, including elliptic curve verification, quantum-resistant signatures, multi-sigs, and threshold signatures.

Deposit Process:

Users deposit ETH into a smart contract to become validators. They choose a validation code and withdrawal address. Clients typically handle these processes automatically. Deposit transactions are included in the Ethereum blockchain.

Induction as a Validator:

After a 45-minute waiting period, users become active validators.

Voting and Staying Online:

Validators participate in consensus by sending votes every 20 minutes (one vote per epoch). Nodes automatically handle voting, and users must ensure their nodes stay online and connected.

– Quadratic Leak: A feature incentivizing validators to stay online, with deposits leaking quadratically if more than one-third go offline.

– Slashing Conditions: Validators are penalized for conflicting votes or actions contrary to protocol goals, with partial slashing encouraging independent security systems.

Incentive for Decentralization:

Partial slashing penalizes validators who get slashed simultaneously with other validators. It encourages validators to diversify their security measures and avoid using the same infrastructure, VPS, or operating systems as others. This mechanism incentivizes decentralization by increasing the risk of losing more money if validators fail in a correlated manner.

Penalties for Slashing:

Slashing involves being forcibly locked out of consensus participation and suffering collective penalties. Penalties include losing a minimum of 2% of the deposited Ether and an additional penalty based on the proportion of other validators slashed within four months. Penalties are designed to disincentivize malicious behavior and protect the network.

5. Exiting the Staking Process:

– Logging Out: Validators can exit staking voluntarily, with a specified logout process emphasizing their responsibility during network crises.

– Staking Minimums and Pools: The current 1500 ETH staking minimum is expected to decrease to 32 ETH with sharding, while staking pools offer participation avenues for those with smaller holdings.

Logging Out as a Validator:

To cease being a validator, a validator can initiate a logout procedure using their online or withdrawal key. The logout process takes 700 dynasties, which is approximately a week, to complete. After logging out, validators must wait an additional four months before they can recover their funds.

Exceptional Cases for Logging Out:

In cases where a large number of validators go offline or the chain is under attack, logging out may take longer than a week. This is to prevent validators from escaping their responsibility to protect the blockchain during attacks.

Minimum Staking Balance:

The current minimum staking balance for Casper is 1500 ETH, due to the limited scalability of the non-scalable version. With sharding, the minimum balance is expected to decrease to 32 ETH, as the blockchain and consensus become more scalable.

Staking Pools:

Validators with less than 1500 ETH can join staking pools, which offer varying levels of reliability, size, and security. Staking pools may have different withdrawal conditions, participation share arrangements, and centralization levels.

6. Future Prospects with Sharding:

– Enhanced Scalability: The experimental sharding system promises lower deposit minimums and improved scalability, crucial for Ethereum’s growth.

Experimental Sharding System:

In the experimental sharding system, deposit minimums are likely to be much lower, allowing more validators to participate.



Vitalik Buterin’s presentation underscores the evolution of Ethereum’s staking process in Ethereum 2.0, spotlighting the blend of decentralization and security. The advent of partial slashing and voluntary logout options offers a balanced approach to validator engagement. Meanwhile, staking pools present an accessible route for smaller ETH holders, and the anticipated sharding system foresees significant scalability advancements. This comprehensive overview of Ethereum’s Casper validator model is a testament to the innovative strides in cryptocurrency technology, setting a new standard for staking mechanisms in the blockchain world.

Notes by: MatrixKarma