An Interview With SSV Network

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BitcoinWorld

An Interview With SSV Network

In an exclusive interview with BitcoinWorld, we got the chance to speak with Alon Muroch , Project Lead at SSV Network

For our audience who might be new to the intricacies of Ethereum staking, could you explain what SSV Network is and the core problem it solves within the Ethereum ecosystem?

Since going live in December 2023, SSV Network has emerged as Ethereum’s second-largest staking protocol, securing approximately 10% of all staked ETH. SSV Labs (core contributor to DAO-governed SSV Network) was founded by Alon Muroch. SSV started with distributed validator technology (DVT) to decentralize Ethereum validators by splitting them across multiple entities. Following launch, SSV experienced tremendous growth, integrated by leading LST/LRT protocols including Lido, Ether.fi, Renzo, Puffer, and many more, the protocol now secures over 100,000 validators representing billions in value.

SSV Network is built on industry-leading Distributed Validator Technology (DVT). Can you break down what DVT is and why it’s fundamental for creating a more secure, decentralized, and robust staking infrastructure for Ethereum?

DVT is the technological foundation of SSV and a critical infrastructure enabling Ethereum validators to operate in a distributed manner across multiple independent machines, instead of traditionally just one. The protocol synchronizes these machines using consensus mechanisms, allowing validators to function cohesively despite being distributed by software bugs, downtime, and even geographical disruptions.

This approach provides enhanced security, decentralization, and fault tolerance. If one machine/node operator fails or is compromised, the distributed validator (DV) continues functioning normally and avoids slashing penalties. By distributing validation responsibility, DVT makes Ethereum’s validator set more robust and resilient against attacks and failures on both large and small scales.

You recently highlighted SSV 2.0 and its role in providing infrastructure for “bApps”. Could you elaborate on what bApps are in this context and how SSV 2.0 enables secure, decentralized operations for these applications interacting directly with Ethereum’s validator network?

SSV 2.0 introduces “based applications” (bApps) – decentralized applications secured directly by the world’s most decentralized blockchain, Ethereum. These applications leverage existing validators to provide security and functionality to various services without requiring additional capital lock-up. In doing so, validators can earn extra rewards for providing security with zero risk to themselves or Ethereum itself.

Unlike traditional protocols that rebuild their entire tech stack for distributed operations, bApps offer standardized tooling and easy bootstrapping with Ethereum’s validator set. Developers can deploy multi-party distributed applications quickly, similar to how cloud services simplified deploying Web2 applications and led to mass adoption.

bApps can serve various purposes, from simple oracles for smart contracts to entire L1 blockchains. By extending validator functionality beyond securing Ethereum, bApps create additional revenue streams for solo stakers and staking protocols, while maintaining Ethereum-grade security for developers.

SSV Network is securing over $6.2 billion in TVL across more than 1,600 operators, making it the second-largest Ethereum staking pool. What have been the key factors in achieving this scale, and what responsibilities come with securing such a significant portion of staked ETH?

SSV’s growth in securing approximately 10% of staked ETH stems from several factors:

Aggressive promotion of DVT as a critical infrastructure for Ethereum

The SSV DAO’s incentivized program rewarding validators for adopting DVT

Elimination of cascading slashing risk that exists in traditional restaking and lock-ups

A novel security approach combining non-slashable and slashable capital sourced from the L1

This responsibility requires maintaining robust staking conditions, tooling for developers, and support for participants in the SSV ecosystem. As an offset, SSV2.0 addresses the decreasing APR as more validators join Ethereum for business opportunities. SSV tackles this challenge by creating additional revenue opportunities for validators through bApps. SSV2.0 plays an important role in bringing value back to the L1 in the current climate, where we see L2s capturing the lion’s share.

You’ve mentioned your focus is on keeping the Ethereum L1 healthy. How does the work being done at SSV Network directly contribute to the overall health, decentralization, and resilience of the core Ethereum protocol?

Alon views Ethereum’s validator set as one of its greatest assets. SSV contributes to Ethereum’s health by:

Making the validator set more robust and decentralized

Supporting solo stakers and small-time validators

Creating an economic layer atop staking that serves the broader community

Reducing cascading risks to Ethereum by using validators themselves as a non-slashable asset for security.

Capturing value back to ETH holders through innovative staking mechanisms

You’re passionate about the ‘based’ movement. Could you explain what this movement represents to you, particularly within the blockchain and Ethereum context, and how it aligns with the ethos of SSV Network?

The “based” movement refers to solutions that directly utilize L1 validators to enable faster transactions, reliability, and an overall better user experience on Ethereum, while not losing out on value generated on other layers. Based applications leverage validators directly for security – a novel “based” solution in the shared security industry (restaking). Making building services and applications more scalable and affordable for developers while eliminating cascading risks posed by restaking.

This approach creates a paradigm similar to cloud computing but for decentralized applications. Just as cloud services revolutionized Web2 application deployment, based applications aim to simplify deploying decentralized ones, aligning with Ethereum’s core values and expanding its utility.

What do you see as the biggest challenges currently facing decentralized Ethereum staking solutions like SSV Network, and how is the network positioned to address them?

Decentralized staking faces several challenges:

Declining APR as more ETH is staked, making validator operations increasingly marginal

Regulatory and operational hurdles for institutional participants like ETFs

Traditional restaking creates zero-sum games, which may hamper long term developer participation.

SSV addresses these challenges by building a coordination layer allowing validators to opt into various based applications, creating a marketplace where validators can diversify their strategies and earn additional rewards beyond basic staking. This approach makes bootstrapping any use case more affordable and hopefully leads to mass adoption of users and developers.

Looking ahead, what is your long-term vision for SSV Network and the evolution of staking infrastructure? How do you see technologies like DVT shaping the future accessibility and efficiency of participating in Ethereum’s consensus?

SSV’s roadmap includes:

Expanding to multi-blockchain capabilities, allowing applications to utilize validators from Ethereum, Solana, Cosmos, and other L1 blockchains for security

Launching public testnet followed by mainnet in the coming months

Utilize validators to create a new economic layer to boost participation and bring value back to the ETH holders

Evolving SSV token economics to better align incentives and value, including fee burning mechanisms

Enabling unprecedented cross-chain validator collaboration

This vision centers on creating infrastructure that is extremely scalable (by tapping into the largest validator sets globally) and affordable (90% lower cost than capital-based restaking), allowing for a new generation of secure, decentralized applications.

By reimagining how validator resources can be utilized across the blockchain ecosystem, SSV aims to create a new paradigm for decentralized application security while strengthening Ethereum’s position as the leading smart contract platform with the most robust validator network.