Incentivized Testnet v2 Initial Draft

The goal of this draft is to present the design of our next incentivized testnet - a deeper dive into the testnet mechanics will be shared in a separate proposal.

Introduction
The previous incentivized testnet(Primus), which ended this month, allowed us to significantly scale our testnet - over 15K validators and 3K (!) operators, it helped us introduce major improvements to the protocol and prepare for the next phase.

The next testnet will be a brand new testnet, which will serve as a testing environment for protocol development and for teams building on top of ssv.network.

ssv.network is a decentralized infrastructure for ETH staking applications. Other than the R&D, the biggest challenge the network is facing is building a flourishing developer ecosystem. The ultimate goal is empowering developers to take full advantage of our technology and build next-gen staking services on top of the SSV protocol.

As such, the SSV community focus henceforth should be on tools, grants and a robust testing environment for projects and developers.

The core team is heavily invested in finding the right partners in the space, introducing a large-scale grant program and designing the next incentivized testnet.

“Partnering up”
With this in mind, we wanted to incorporate developer focus initiatives into our next incentivized testnet. by including in the testnet other communities/project which are highly correlated to the future success of the network.

Including other communities is a bottom-up approach for promoting awareness to the technology and the wide array of possibilities SSV opens for the Ethereum ecosystem. ssv.network will help unlock the next billion ETH stakers, the first step in that journey is harnessing existing stakers, communities, builders. Testnet V2 is our starting point. Buckle up!


Design

  • The program will run for a whole year, with monthly rewards distributions (12 rounds).
  • Validators reward eligibility will require a participant(address) to holds at least X amount of SSV tokens or Partner Community tokens (for example: stETH (Lido), rETH (Rocket Pool), etc.)
  • Partner Community tokens inclusion in the testnet will be determined by the DAO through a ‘listing’ process.
  • Validator rewards will not be correlated to their “staked” balance - which basically means that any amount over the required amount will not contribute to your reward allocation(each round, all eligible validators will earn the same).
  • Validators will be eligible only for the distribution period (round) they were created within - in contrast to the previous “set it and forget it” approach where received passive income, in V2 participants must stay active (by creating new validators) in order to continue earning rewards.

In addition to the above, while working on the design we wanted to apply learnings from the previous incentivized testnet by addressing the following lessons:

  • Abuse - many GoETH faucets were abused. We took that to heart, V2 GoETH distribution will be carefully planned and executed.
  • Reward distribution was too concentrated (predominantly ssv stakers allocation).
  • Complexity - reward allocation and eligibility was too complex and many participants were confused and frustrated.

Suggested revisions:

  • To mitigate abuse, we suggest to:
    • Utilize a “staked” balance requirement for validator eligibility (as outlined above). Now that participants must have some “skin” in the game in order to be rewarded.
  • Reward allocation made simple:
    • Validators and stakers reward allocation is one of the same. As stated above, only staking validators are eligible to receive rewards.
    • Verified Operators and non-verified operators reward allocation will be similar. All operators share the same reward pool. The pool will be divided according to the number of validators manage by each operator. Verified Operators will have the added benefit of DAO recognition. That alone should be a major advantaged when competing for GoETH deposits and ultimately generating rewards.
  • To mitigate the concentration of reward distributions, we suggest to:
    • Utilize a tiered reward pool which will increase as more eligible validators participate in the testnet - this will (1) ensure that rewards are tied to engagement and (2) ensure spam does not dilute rewards of existing users.

Rewards Distribution Example

Eligible Validators Rewards Max / Validator Min / Validator
0 - 1,000 1,750 SSV 1,750 1.75
1,000 - 2,000 3,250 SSV 3.24 1.62
2,000 - 3,000 4,250 SSV 2.12 1.41
3,000 - 4,000 4,750 SSV 1.58 1.18
4,000 - 5,000 5,000 SSV 1.24 1
>5,000 5,000 SSV <1 >0

*The DAO will distribute between 1,750 SSV to 5,000 SSV every month depending on the amount of new eligible validators joining during the month


Allocations
This program will include a new allocation for another important network participant that is now relevant due to the incorporation of the SSV token as the payment layer of the network - liquidators: actors that work behind the scenes and keep the system solvent by signaling users that have insufficient balances to carry their expenses, and liquidate their account.

Allocation Percentage
Validators 40%
Operators 50%
Liquidators 10%

Next steps
We would appreciate your feedback, comments and ideas. We will continue to share the detailed mechanics of the proposal.


  • I support
  • I’m against

0 voters

6 Likes

Extraordinary.

But there are a few question marks.

1- What about previous validators? Will they reset?
will each operator start from scratch? not in terms of status. number of validators

2 - Each validator will need to keep some ssv in their wallet.
So what exactly is the case for validators added to the same wallet? As far as I can tell, the amount doesn’t matter. that is, those who have 1 ssv in their wallet will be able to add more than one validator to the same wallet. is this true?

3- Will the deposit bot requirement continue? Or will users be able to deposit 32 eth as they wish? Or will it be necessary to both use the bot and keep the ssv?

4- How will the monthly reward distribution be? Will there be requests similar to V1 from the site every month? Or will it be automatically sent to wallets?

I was told the bounty amount will be more than v1.
Now if we calculate with the maximum number of participants for more than 5 thousand validators. 5k ssv prize will be distributed. 60 thousand in 12 months I think the amount of reward should be increased.

It will be more transparent if the amount of the prize is explained with an example.
For example, if the network has 5,000 validators and an operator has 200 validators, what is the average reward? Will it be enough to cover the server fees?

I think reward rates should be clarified with examples to encourage participation.

Apart from all this, a beautiful journey begins. I wish everyone good luck and success.

4 Likes

In addition
The install and forget system is a thing of the past. This is a good thing.
The number of validators added each month will be reset.

another point to be transparent

Let’s say an operator ran 500 validators in the first month. and the second month will not receive these 500 validator rewards. however, the operator will continue to operate them. is this true?

In this case I guess the rule that operators are chosen by a maximum of 2000 validators will be removed?

Or will the operators reset every month?

Another point is about the deposit bot and rewards.

If a deposit bot will be used for the eligible validator and will make a total of 200 deposits morning and evening as in v1. In this case, 6000 validators per month will be guaranteed to register.

Depositbot has not experienced any shortcomings since the day it worked. fully used every day.

Also, the reward decreases every time 1000 users join the network. I think the reward should increase steadily to encourage more participants.

not like this:

0-1000 1750ssv
1000-2000 3250ssv
2000-3000 4250ssv
3000-4000 4750ssv
4000-5000 5000ssv
5000+ 5000ssv

Like this:

0-1000 1750ssv
1000-2000 2750ssv
2000-3000 3750ssv
3000-4000 4750ssv
4000-5000 5750ssv
5000+ 6000ssv

In this way, I think the participants will be more active.

Testnet v2 running for 1 year? So will v2 exist at the same time as the mainnet? Or does the mainnet wait until the end of v2?

2 Likes

Thank you for sharing the plan of incentivized testnet V2. And I agree with the idea of attracting current ETH stakers to join our testnet. This is a stepping stone for us to communicate with other DAOs or Ethereum Staking providers which will expand the adoption of the SSV network.

And I have 5 questions.

1.Do we have stress testing of V2?
As we mentioned over 15K validators took part in the Primus testnet which helped us finish a stress testing. And according to the reward distribution of V2, I predict that the number of validators will be substantially less than V1. So what is our anticipation of validator scale during the testnet V2?

2.Will every validator have to activate every month? It is an simple activation or I have to interact with deposit bot every month?

3.I’m fully agree with @Ahbaay 's opinion that the more validators join our program, the more rewards every validator should receive.

4.The period of distribution of reward.
The proposal shows rewards will be calculated every month and I wonder whether the distribution will be sent monthly or quarterly.

5.Any anticipation of mainnet? As we could see the incentivized program will run for a whole year. Are we stick with the original plan that the mainnet will be launched at the later of this year?

Great to see new testnet news.
The proposal to run the v2 incentivized testnet plan for a year is unexpected, most community members feel that a year is too long, can you elaborate on what the team members are based on to make such a plan?

@luguokankan @hzariki @yunpeng The testnet is expected to continue long past the mainnet launch because there needs to be a testnet for developers to use to build upon SSV. Don’t interpret this as mainnet taking more than a year. I don’t think the schedule has changed.

5 Likes

Extraordinary.

But there are a few question marks.

we are talking about a new testnet, so everything resets.

only 1 validator will be eligible per address (as long as it holds the required amount of tokens to qualify), regardless of how many validators you have.

as the goal here is to discuss the direction, we have not yet finalized the specific mechanics, but most likely the deposit bot will be continue to be utilized.

same as this program, claimable rewards through a merkle distributor (will not be sent automatically to your wallets).

as stated above, specific and final numbers are not yet released. but couple of things to remember:

  1. when last program was announced, SSV was lower in USD terms, so this is in fact more rewarding.
  2. this program intends to last for a year, while the other one lasted for 2.5 months. so even if we take the example above, 5K validator allocation * 12 months is 60K (validator reward pool for the entire last program was 32K) and this only amounts to 40% of the program rewards.
  3. this is not a get rich quick program.
1 Like

operators will still be rewarded for managing validators from past rounds.

2000 restriction was not applied due to rewards - it was because of technical performance reasons for maintaining this amount of validators through a single node.
this might be increased as we scale, but regardless of any limit, operators could just spin up an maintain an additional node (like some operators did in the previous testnet).

logically you are correct, but as observed through last program:

  1. not all deposits were registered.
  2. not all registered validators were eligible.
    meaning the potential is 6k (if we do make 200/day), but in reality it would be less.

please check your numbers, this scheme is unfavorable for most of the tiers in comparison to the presented example.

what makes you think v2 will have less validators than v1? assuming the bot deposits 200/day, and all are eligible, then the network should have 15k validators within 2.5 months (same as duration of v1 program), while enjoying a runway of an additional 9.5 months.

you would have to create a new validator, you do not reactive an existing one.

monthly.

Isn’t that a bit bad?
Can 1 wallet hold a maximum of 1 validator?

So 5000 wallets are required for 5000 validators.
and reward 5000ssv

They will get 40% reward.

If participation is maximum,
The maximum amount a wallet running a validator will earn is 0.4ssv per month. Is this true?

I think they should at have the right to add 1 time per day like in V1.

In this case, 1 wallet will have a chance to add a maximum of 31 validators.

if this happens, 1 wallet will be able to receive a maximum of 12SSV if there is a maximum participation in round.

I think this is much fairer.

This calculation is wrong.
Total prize pool of validators in v2

5000/100x40= 2000 SSV. (40% + Maximum participation + monthly)
2000x12=24000SSV

In v1, 64k ssv were distributed in total, not 32k.
and 15% for validators.
ie 9600SSV in total (2.5 months)

so they got 3840SSV per month.

If v1 has worked for 12 months, the reward they will receive will be 46,080 SSV.

Additionally, these validators received more rewards if they hodl the ssv.

So actually v2 is in bad shape for validators. They will receive at least 2 times less reward than v1.

and I intend to continue as an operator.
But I would appreciate it if you could explain how many awards I can get with an example.
I want to join v2 if it will cover the server costs.

if 5000 validators registered per month,
How much reward does an operator running 100 validators get?

  1. You misunderstood, the 5k accounts for the 40%, it’s not 40% out of 5k - the example in this thread referred only to the validator allocation.
  2. I think you are looking at this incentivization program from “how does it benefit me” instead of “how does it benefit the protocol”.

the testnet purpose is to serve as a testing environment for protocol development and for teams building on top of ssv.network.

for this we need to maximize the unique numbers of operators and validators in the testnet.

the goal of the incentivization program is to incentivize this participation at scale.

trust me that the core team has no problem to spin up all the required validators for the testnet on our own, but if the direction is to reach out many other communities and their users in the process, then creating the ground for a few users to do it instead does not help create the diversity needed (hence the restriction).

as i said above, the goal here is to discuss the design direction and not the specific mechanics, like how much exactly an operator running 100 validators would get, but you can be assured that the finalized number will obviously take into account the required operational costs.

1 Like

Explain, please. With tokens on my wallet, can I create only one validator per month?

You can

In terms of eligibility, yes.

  1. There are people asking about V2 testnet running for 1 year, so is there any new estimation on mainnet launch timing?

  2. And will the depositbot still operate in a way that is inconvenient for layman to request?

I think this testnet proposal is much better than the v1 testnet proposals, but I do have some questions.

Liquidators: how do you get that role; is it chosen by SSV, the DAO, or opt in? And since this is a testnet, will there be intentional “users” that get a low balance or the like, to test the liquidator system? Just curious about those

Verified vs. Non-Verified operators: If the reward allocation is similar, the only thing going for verified is a checkmark status? Just curious as to how operators will be incentivized to become verified since people can still pick well performing operators that are not verified. I guess the verified operators will somehow be promoted on the selection menu, be at the top or have a checkmark or the like? Will operators be rewarded for all validators that chose them, or only those from the bot (I’d suggest someway to compensate for all, since even those non-eligible validators are still demanding operator resources)?

Partner tokens: I like, and I understand the DAO will get to vote on what’s included. Will that include token derivatives being used for defi, like the Eth-rEth pool, etc? I’d rather be able to use a token in my wallet for something rather than hodling it. And I have nothing against staking tokens, but what about folks who solo stake and don’t have any of those tokens (I know they are hard to include but don’t want them left out).

GoETH distribution and monthly validators: Alright, sounds good. Hopefully the bot or however the distribution works will be better, because getting into the random short windows of bot availability was almost impossible for most folks, in my opinion. If I could suggest having folks go through the staking process and upload a deposit.json for 1 validator to SSV to get in the queue, or some other process where people can apply/get in line to get activated as a validator, some sort of application process (I know combating bots is hard, maybe the depositing wallet has to hold a POAP acquired through a bot resistance way, idk, just ideas). Also, maybe keep validators active/eligible through the whole time, but only one new eligible validator can be added per month: the validator staked at the beginning is eligible the whole time, in case someone can’t get into the GoETH distribution bot/queue, and an address can have up to max 12 eligible validators per the whole testnet. That’ll allow folks to get involved throughout and maintain a large growing amount of validators on the testnet throughout. I’m fine with the current proposed validator reward structure since creating and maintaining a validator is extremely simple and requires very little time or effort compared to the operators

testnet will continue to run even after the mainnet launch.

Deposit bot will continue to be utilized in order to mitigate abuse.

This will be described in detail when we share the comprehensive mechanics of the program, but - liquidator role is not assigned by the DAO and anyone can be a liquidator by liquidating accounts that are liquidatable by making calls to our contracts (we will share documentation to our contract near the v2 release) - we will also supply a liquidation cli that anyone could use to run and participate.

among natural accounts that will be liquidatable due to lack of maintenance, eligible liquidations will be intentional accounts that we create each round. how would you know which accounts were created by us? you wont, and this mechanism will ensures liquidators would have to compete over all liquidations, as in a real life scenario.

verified operators will benefit from the attached social status of being verified, which should make them more attractive to stakers to choose them as their operator.
they will earn only by eligible validators they manage (same as v1), otherwise it could be easily abused.

this will be further elaborated when the listing process is outlined, but basically it will be up to the DAO to decide.
keep in mind that the required amounts will be relatively low and are required to have “skin” in the game.
regarding solo stakers without any tokens - will not be eligible.

having a queue for the queue will just move the abuse up the funnel.

we understand the struggle of the deposit bot cycles and we are trying to learn from the previous program and improve this. we hope that the barrier to hold some tokens (meaning no more “free” money for users without skin in the game) will reduce the incentivization for abuse drastically. but as you said, fighting bots is extremely difficult.

A few comments/questions in no particular order:

  • Validator Rewards: I think this is fine. It will decrease my rewards, but should increase wallets holding SSV (as well as partner tokens) as well as decrease the stupidity around competing for deposits on a daily basis. My only advice would be nail down exactly what you mean by 1 validator per wallet per month. Are you trying for 1 validator per human? or per discord user? or really just per wallet? Month in what time zone? Be very clear and precise with what you intend on allowing. Whatever you do not specify people will assume is fair game. If you need to bring in some distributed lawyering, do it.
  • Operators: Until there is a way for validators to change operators, there is no real market dynamic created between validators and operators, which is the primary vendor::customer relationship in staking. This needs to be a priority. It also has knock-on effects on how operators will behave within a rewards system, how they respond to bad performance, etc. I think operator communication and marketing are also poor, specifically because there is no real competitive market.
  • Liquidators: I don’t understand this part at all. Is there a better write up of this role/feature of the network?
  • Marketing: How does distributed marketing fit into this? I haven’t seen anything on the marketing side from the (extended) team. I assume it would integrate partner participation or marketing.

it’s 1 validator per wallet. but the deposit bot limitations are in place to “try” to enforce that humans can only use a single wallet by restricting any wallet address to a single discord user & phone number.

v2 will come out with a way to change your operator and other management capabilities for both validators and operators.

liquidations are not something unique to our protocol and are greatly utilized in many other defi protocols such as money markets (e.g. aave, compound, maker etc…), it’s a tool used to keep the network solvent.

a detailed explanation will be shared when we release the v2 technical specifications (should expect it in the near future).

For now please see - SSV Token Explainer Series — Part 3 | by Blox Staking Team | Mar, 2022 | ssv.network

3 Likes