Puffer Finance: Making a Splash in the LST Market
Why we’re here
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. The Ethereum validator set ultimately decides whether these rules are followed. Anyone with 32 ETH capital can participate as a validator, but the high capital requirement favors institutions. As a result, the validator set tends towards centralization.
Liquid staking tokens (LSTs) have recently accelerated this, resulting in a validator set composed of just a few entities with unprecedented control over Ethereum blockspace. Regardless of their intention, these entities may be compelled to censor transactions, threatening Ethereum’s value proposition as a credibly neutral platform. All ETH holders and, by extension, all LST holders bear this risk. It is essential to diversify the validator set to safeguard the value and values of Ethereum.
What we’re doing
Puffer aims to help stop this runaway train before it’s too late and keep Ethereum decentralized. We are building a trust-minimized and permissionless liquid staking protocol, competitive enough to compete against the monopolies forming today.
An Ethereum Foundation grant backs Puffer’s Secure-Signer technology, which is designed to increase validator security and reduce risk. Secure-Signer is a remote-signing tool that eliminates the risk of consensus client bugs or user errors leading to slashable offenses. By incorporating this novel technology into Puffer’s liquid staking protocol, Puffer has safely reduced the validator bond requirement from 32 ETH to just 2 ETH.
Ethereum is healthy when operated by a diverse set of individuals that believe in its mission — solo stakers. By allowing anyone to participate and by reducing the bond requirement to 2 ETH, we empower existing solo stakers with 16x the revenue opportunities and open the door for new stakers that were previously priced out, all while protecting them from slashing risks via Secure-Signer.
Our Values
Besides reducing the bond, Puffer’s liquid staking protocol is designed with decentralization in mind. One such way is through its approach to governance. Unlike other protocols, Puffer does not rely on DAO voting to onboard new and vetted validators. Instead, we eliminate the need for a centralized authority to determine who can participate as a node operator in the Puffer’s pool, promoting a more diverse and decentralized validator set. With this approach, Puffer is committed to preserving the values and principles of Ethereum as a decentralized platform.
Puffer has also taken steps to ensure that it is aligned with Ethereum’s long-term interest. From day one, Puffer is committing to self-capping its pool size to 22% of the validator set. This means that even if the pool grows significantly, it will never threaten Ethereum’s consensus thresholds.
What’s next
Puffer is taking many steps to mitigate the risks associated with DeFi protocols. This includes open-sourcing Secure-Signer and our smart contracts, performing multiple code audits, bug bounties, and maintaining an insurance fund via protocol fees.
Stay tuned! We will be launching on the Testnet soon.
About Puffer Finance:
Puffer is defining a new industry standard for secure validator operations with the primary objective of preserving decentralization. Puffer’s Anti-Slashing technologies are designed to minimize the chance of slashing events. Our Secure-Signer technology is released as a public good to help protect solo stakers and the wider staking industry from correlated slashing penalties. Our Secure-Aggregator technology provides the foundation to build a secure, scalable, and performant liquid staking protocol. Allowing permissionless and capital-efficient Node Operator participation allows anyone to join the PufferPool to help preserve Ethereum’s decentralization. Learn more: www.puffer.fi
