Puffer Finance: Securing Ethereum Through Slash-Resistant and Decentralized Liquid Staking
Slashing Risks
We believe that attracting solo-stakers (non-professionals typically operating from home) is essential to decentralize Ethereum’s validator set and by extension preserve the network’s decentralization and censorship resistance. Ethereum PoS requires 32 Ether capital to operate a validator, a job that does not come without risk. All validators, whether solo or institutional, risk losing up to 100% of their staked Ether from slashing penalties due to software bugs or user errors. This disproportionally affects solo-stakers without access to large capital, leading to centralization pressure.
To alleviate this pressure, Puffer worked to define an industry standard for secure validator operations. We are proud to announce we’re open-sourcing our first public good, Secure-Signer, which has officially received support from an Ethereum Foundation grant.
What is Secure-Signer?
Secure-Signer is a remote-signing tool designed to prevent slashable offenses and can be considered akin to a hardware wallet for validator operations. The first implementation uses Intel SGX to provide stronger security guarantees for validator keys than storing them unprotected. Reducing access to validator keys decreases the chance of slashing due to user error. Additionally, Secure-Signer is programmed to sign only non-slashable messages, preventing slashable offenses that may originate from consensus client bugs.
How does it help?
Any validator can strictly increase security by running Secure-Signer alongside their existing consensus client. Solo-stakers can more confidently participate as a validator with reduced slashing risk. For institutional stakers running validator nodes on behalf of their customers, whether as a pool operator or a SaaS provider, using Secure-Signer can provide their customers with additional protection and confidence.
We hope that Secure-Signer will be a win for the wider staking industry because we see it as a positive-sum game. If more validators use it to protect themselves, the penalty each affected validator receives from a highly correlated slashing event will be reduced. In other words, validators that protect themselves will also help protect others.
What’s Puffer working on now?
Solo-staking does not fit the needs of all Ether holders. For those without technical expertise, infrastructure, or enough capital, liquid staking protocols (LSPs) became an extremely attractive alternative. LSPs benefit from economies of scale, adding additional centralization pressure to the validator set. Unfortunately, due to current constraints in Ethereum’s PoS protocol, the scales favor centralized LSPs, which can provide better capital efficiency than decentralized LSPs.
At Puffer, we have been developing a capital efficient and completely permissionless LSP designed to lower the barrier of entry for at-home-stakers and compete with centralized LSPs in terms of rewards. Our architecture utilizes our anti-slashing technology while providing a novel solution to the issue of inactivity penalties, allowing the bond requirement to be reduced to just a cumulative 2 Ether. This is the current stage in our mission to provide technical solutions to reduce the centralization pressures on Ethereum.
What’s next for Puffer?
We believe the future of Ethereum is headed towards mass adoption via ZK-rollups, catalyzed by emerging re-staking technology. As economic activity moves to layer-2s, the consequences of ZK-rollup bugs or exploits could reach billions of dollars, erode trust in the technology, and hinder mass adoption. Precautions must be taken to allow the ecosystem to safely and smoothly transition into the ZK-centric future. Puffer is taking the first steps by extending our anti-slashing technologies to implement ZK-2FA, a multi-proof system to enhance ZK-rollup security and aid during its nascent stages.
Re-staking will allow validators to earn additional revenue by operating infrastructure like ZK-rollups. Absent of competition, the centralized LSPs dominating the validator set today will dominate the sequencer set in the future. To help achieve a truly decentralized Ethereum ecosystem, we believe in supporting decentralized LSPs now to alleviate centralization pressure on layer-2s in the future. We hope to see a future where Puffer’s LSP nodes operate as part of the decentralized sequencer set.
Who’s working on Puffer?
The team includes a moon-math PhD dropout, a NASA alumni (who worked on actual moon-math), and a Metaverse pro with enough apes to fill a zoo. We have a record of collaboration with renowned Ethereum researchers, and are advised by industry, community, and research leaders. Reach out if you’re interested in joining other us on our mission!
Get Ready
Stay tuned for updates on our progress as we work towards a more decentralized and secure Ethereum ecosystem. Try out Secure-Signer on a Testnet and keep an eye out for our deep-dive article on everything Secure-Signer. Follow us on Twitter and check out our website to stay up-to-date on our latest developments. Don’t miss our upcoming Testnet launch and the opportunity to experience our liquid staking protocol firsthand.
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
