Participate with confidence based on Bison Trails’ experience and expertise with eth2. We were one of the early validators on the first eth2 client testnet and have been participating in various testnets for the past year.
Unlike other proof of stake protocols that are trying to start from nothing to build and scale a new protocol, Ethereum is already a protocol that has tokens in the hands of millions of people with tens of thousands of dApps. It’s starting from a very different place. This is important for the ecosystem as a whole as well.Joe Lallouz, CEO
Today, Ethereum is a Proof of Work blockchain that enables developers to build and deploy decentralized applications. With eth2, the protocol is transitioning to Proof of Stake and improving its scalability and decentralization without sacrificing security. The new protocol design allows Ethereum to remain accessible for regular users to run validators and secure the network. It is optimized for hundreds of thousands of validators with low startup costs and forgiving slashing and downtime penalties.
The eth2 research team has planned a non-sequential transition that will allow all current users to shift to the new consensus mechanism without interruption. During the early phases of the transition, Ethereum 1.x and eth2 chains will run in parallel, with their own state and inflation; eventually, Ethereum 1.x will be merged into eth2.
For more on the roll-out of the Ethereum 1.x <> eth2 merge, read our guide to eth2.
eth2 will have a Beacon Chain in Phase 0 and 64 shard chains in Phase 1. The Beacon Chain holds the shards together and enables consensus and cross-shard communication. It has a registry of validator addresses, the state and balance of each validator, attestations, and links to shards; it is the central controller of the eth2 system.
eth2 has 12-second-long slots and epochs of 32 slots / 6.4 minutes. A slot is a chance for a block to be added to the Beacon Chain and shards. A block is not required for every slot. In optimal conditions, for every slot one Beacon Chain block and 64 shard blocks will be created.
Every slot, a validator is pseudorandomly chosen by RANDAO (a random beacon) as a block proposer. At least one committee is also chosen as attesters.
A committee is a group of validators with a target size of 128 validators. As attestors, the validators review the proposed beacon blocks and shard blocks, and vote on them. These votes, called attestations, are recorded on the Beacon Chain and determine the chain head of the Beacon Chain and each shard.
This process ensures a block was made correctly. The more attestors involved, the more confident there is that the block is well made. The process also provides assurance that the next validator selected will produce a block on the right chain.
As the number of validators increases, more committees are assigned to a slot. The maximum number of committees per slot is 64. When shards are added, committees will not just attest to a specific slot, but will also crosslink to a particular shard to keep the protocol in sync.
The block in the first slot of an epoch is the checkpoint. This is how the chain periodically agrees on finality. It is finalized in two epochs (12.8 minutes).
While validators are the entities participating in consensus, validator clients are the nodes that hold the validators. The validator clients connect to public-facing beacon nodes to enable the validators to participate on the chain. Beacon nodes follow and read the full Beacon Chain, similar to an Ethereum GETH node does today.
Eth2 allows participation on the network for a broader set of token holders than most PoS chains. 32 ETH represents a relatively low staking requirement and low entry point for running a validator that earns rewards. Please note: there is no delegation or stake pooling at the protocol level.
Only 900 validators can be activated a day (4 per epoch) until 327,680 active validators are in the network. Once that goal is achieved, 1125 validators a day (5 per epoch) can be activated in an epoch.
The number of validators that can be activated every day increases by 225 (an additional 1 per epoch) with every additional 64k validators. The same pattern applies to validator exits. This could result in congestion—a wait of a few hours or days—if validators attempt to join or leave the network simultaneously.
Validators earn three types of rewards for participating in consensus.
The inflation rate on eth2 decreases as the staking rate increases. Because so much depends on how many people lock up ETH to support the transition to eth2, it is difficult to clearly identify a rate of inflation and reward rate. Given the risks and opportunities apparent with eth2, we assume that:
Rewards are designed to incentivize early validators starting at a 23% rate of reward at network launch. Anyone considering participating on eth2 benefits from running their validator as early as possible.
Rewards do not compound on eth2. They are earned based on the effective balance on the validator, which is capped at 32 BETH. As long as the validator is earning rewards and not being penalized, the true balance will start at 32 BETH and increase while the effective balance will remain consistent at 32 BETH. After Phase 2 is live, validators will be able to withdraw all their rewards, combine them, and run additional validators.
On eth2, validators can experience penalties and slashing. Penalties are significantly less severe than slashing.
Penalties act like negative rewards. If a well-performing validator can make a 10% reward rate in a year, a poorly-performing validator could lose 10% in the most extreme circumstances, such as being offline regularly or voting on blocks that do not get finalized. In most circumstances, the penalty for being offline is simply not earning rewards. If a validator is online greater than 53.6% of the time, assuming no inactivity leak, it will break even.
Slashing carries a heavy punishment for validators that commit a significant offense, burning a minimum 1 BETH and a maximum of the entire stake. The validator is automatically ejected from the Beacon Chain active set.
The two slashing conditions for validators are:
Emitting a slashable vote is uncommon for validators that correctly follow the protocol: forming a slashable message without malicious intent only occurs as a result of some bug or accident. Because these errors are bound to happen, eth2 minimizes the slashing amount by destroying stake in proportion to the number of validators slashed around the same time. However, if a large number of validators commit an offence at a similar time, a large amount of their stake is burnt (up to their full balance) because an attack is assumed. This is called correlated slashing. All slashed validators, whether due to a mistake or a malicious act, are forcibly exited from participating in the protocol and can not return until Phase 2.
For more on the risks associated with participating on eth2, read our guide.
To support eth2, Bison Trails will offer a suite of enterprise products including:
Because stake and rewards are locked up for several years on eth2, choosing an infrastructure provider you trust is an important consideration. It is risky to change providers because transfering a validator requires sharing the private key, risking slashing. Bison Trails has been running secure, reliable, and redundant Ethereum 1.X Geth nodes for 2 years. We were one of the early validators on the first eth2 client testnet and have been participating in various testnets for the past year.
Bison Trails runs participate clusters across multiple availability zones and cloud providers. Your nodes have near-infinite resiliency and unmatched availability. We designed an intuitive user experience that is surprisingly simple given the complexity of the underlying technology. Our platform’s automatic node management workflow reduces the challenges of manually managing active network participation, while keeping our customers in full control of their infrastructure. We provide 24/7 monitoring and support to keep your infrastructure safe with best-in-class security architecture for key management using CloudHSM and YubiHSM hardware.
eth2 update 015 We look at the EIP to upgrade consensus to PoS, the timing of the Altair upgrade, and the roadmap for the eth2 merge.
A guide to eth2 including how consensus, staking, rewards, exiting, and slashing work.
eth2 terminology: a non-exhaustive list of key terms to understand the eth2 protocol
eth2 insights: network performance The fourth post in our eth2 Insights Series discusses Medalla’s arc of development, the metrics to gauge overall network health, and shares perspective on eth2 Mainnet
eth2 insights: validator effectiveness The third post in our eth2 Insights Series discusses the parameters governing validator effectiveness in eth2 and how validators were distributed along those in Medalla
eth2 insights: slashings The second post in our eth2 Insights Series zooms into slashings in Medalla, examining their correlates and probable causes
eth2 insights: aggregation performance The first post in our eth2 Insights Series reveals important insights into the performance, and importance, of validator attestation aggregation in the eth2 network
eth2 Medalla Data Challenge: Q&A with Protocol Specialist Elias Simos A deep dive with Elias into the challenges faced during the eth2 Medalla Data Challenge and how data-informed research can help improve eth2 in the progression to a mainnet launch
Modern Consensus: Finally, Ethereum 2.0 launches
The Coin Republic: Bison Trails Added Support for Features of Ethereum 2.0
Modern Consensus: Bison Trails rolls out support for Ethereum 2.0
Europe World News: Bison Trails announced support for Ethereum 2.0 on its platform