Ethereum staking protocol Lido Finance has implemented a technology designed to increase the diversity and number of node operators on the Ethereum blockchain, The Defiant reported.
Six months after the Lido Decentralized Autonomous Organization (DAO) approved the Simple Distributed Validator Technology (DVT) module, the infrastructure has been built to welcome community members to participate in staking, including independent stakers.
The reason this is important is that DVT should alleviate concerns about too much concentration of staked ETH on Lido by diversifying node operators. According to Dune Analytics, Lido holds 29% of staked ETH.
This development allows the first cohorts of Obol Cohort 1 to start receiving Ethereum deposits. Obol Cohort 1 refers to the first group or batch of cohorts participating in the Obol Network. The Obol Network is part of the broader Ethereum staking ecosystem and utilizes DVT to increase the decentralization and security of Ethereum staking operations.
A “cluster” is a group of validator nodes that collectively perform Ethereum consensus duties in a decentralized and trust-minimized manner. A better way to understand DVT is to imagine that you and four friends decide to keep a treasure, DragonStake, a staking platform that acts as a service provider, explained in a blog post.
“Rather than trusting one person to keep the key, everyone holds a piece,” the article reads. “To open the treasure chest, the majority must act together. This is, in part, how DVT works.”
The post further explains the functionality of DVT, saying “DVT allows not just one, but multiple operators (our friends in the analogy) to manage a validator. This means that if one operator has a problem, others can keep transactions running, making the entire system more resilient and secure.”
The goal of Simple DVT is to make this advanced technology more understandable and simpler for more people.
Simple DVT simplifies the way verification responsibilities are distributed among various operators.
"By using DVT, the Lido Platform aims to spread the responsibility for validating transactions across a wider range of operators. This not only makes the process safer by reducing the risk of failure, but also makes the system more democratic and decentralized. Simple DVT is particularly exciting because it is a step towards greater scale use of this technology on Ethereum," the blog post added.
Lido Finance said that in the future the community can look forward to the release of an initial performance report for Obol Cluster 1, additional cluster integrations, and the launch of a DAO proposal to launch SSV network participants on the mainnet.