Validator Infrastructure

Decentralized set of approved enterprise-grade Node Operators reduces the risks of validator operations

Validator Infrastructure

The Ethereum protocol requires validators to operate according to a pre-defined set of rules, and Node Operators are economically incentivized to follow those rules.

• Under proper operational conditions, validators collect network rewards by proposing blocks and signing attestations

• Under improper operational conditions, validators can miss network rewards, get penalized, or in worst case scenarios, get slashed

Liquid Collective is designed to provide a secure and enterprise-grade liquid staking solution which necessitates sanctions checks on the protocol’s active validator set. Liquid Collective works only with security-focused Node Operators that institute best practices to generate network rewards, including operating multi-region and multi-client infrastructure, technical support teams, and security posturing (including double-sign protection).

To reduce the risk impact of validator operations, and to increase decentralization, Liquid Collective delegates tokens to multiple independent validator Node Operators. The staked tokens are distributed across Node Operators in a round-robin manner so that the Liquid Collective protocol is supported by a broad and dispersed active validator set. As a result, the risk is distributed, which should minimize staked ETH exposure.

Node Operators in Liquid Collective's active set also support the protocol's Slashing Coverage Program by providing coverage for deductibles, up to a cap, against slashing incidents and missed rewards incurred due to the fault of their infrastructure.

Validator Node Operations

The Operators Registry contract provides facilities for Node Operators to register and manage validator keys on the Liquid Collective protocol. River regularly delegates ETH to Node Operators by funding and depositing validator keys to the Consensus Layer.

Before submitting validator keys for the first time, a Node Operator must complete Liquid Collective's Node Operator approval to be approved on the Operators Registry contracts. This one-time approval enables the Node Operator to register validator keys.

Generate Validator Key

For each validator key to be submitted to the Operators Registry contract, a Node Operator is required to:

• Generate the corresponding DepositMessage and BLS12-381 signature as per the Ethereum 2.0 specifications

• Set the fee recipient to the EL Fee Recipient contract, responsible for collecting execution layer network rewards

The protocol sets the validator's withdrawal credentials to the Liquid Collective Withdrawal contract address when the protocol initiates a deposit transaction for the validator.

Operator Registry Check

Once generated, the Node Operator registers one or more validator keys on the Operator Registry. The Liquid Foundation conducts a sanity check on the keys for compliance with the above requirements, before increasing the operator limit to make validator keys eligible to receive ETH to stake from the Liquid Collective protocol.

Activating Validators

Once a validator has been registered as eligible to receive ETH, its validators keys can be funded at any time. The Liquid Collective protocol regularly programmatically selects eligible validator keys, funds them, and deposits them to the official Ethereum deposit contract. Once deposited, validator keys enter the activation queue as per the standard Ethereum staking procedure.

Node Operator CLI

The Node Operator Command Line Interface is part of the tooling Liquid Collective provides to Node Operators to facilitate protocol operations. The application provides various commands to facilitate Node Operators' management of their validator keys.

To see a step by step workflow for the Node Operator CLI, check out the Operate Validator Nodes guide.