Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Dappnode: Plug-n-Play Decentralization - Eduardo Antuña, Pol Lanski

Episode Date: October 28, 2024

In a world where everyone chases every basis point of marginal return, core values are often overlooked. The emergence of liquid staking protocols made stake delegation a norm rather than an exception. The hassles of running their own node and dealing with slashing risks were often too much of a burden for regular users. Dappnode offers both hardware and open-source software solutions for home stakers which are as facile to implement as a plug-n-play device. Their newly released Dappnode Smooth aims to offer the advantages of staking pools (via smart contracts), without centralisation risks.Topics covered in this episode:Eduardo’s and Pol’s backgroundsFounding DappnodeDappnode userbaseSupported networksDappnode’s tech stackSetting up DappnodeDappstoreUpdating nodesDappnode hardware usage percentageDappnode SmoothSolo staking vs. liquid stakingDistributed validator technology (DVT)RestakingETH issuanceFuture roadmap for DappnodeEpisode links:Eduardo Antuna on TwitterPol Lanski on TwitterDappnode on TwitterSponsors:Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.ioChorus One: Chorus One is one of the largest node operators worldwide, supporting more than 100,000 delegators, across 45 networks. The recently launched OPUS allows staking up to 8,000 ETH in a single transaction. Enjoy the highest yields and institutional grade security at - chorus.oneThis episode is hosted by Friederike Ernst.

Like, scalability isn't important until it suddenly is. Decentralization isn't important until it suddenly is. And privacy isn't important until it suddenly is. The solo staker is a very particular animal. It is somebody that understands the value of decentralization. If you're a big pool that has thousands of validators and you're constantly producing blocks, you are bound to get some lot of,

some of these big payout, big MEV blocks, which are also known as lottery blocks. The inverse scenario is like a solo staker that has one validator and proposes around two to three blocks per year. The chance of this validator getting a lottery block is tiny, very small. So if we agree that home stakers are more valuable in terms of the centralization and resilience for the network, why are we paying them less? If you're looking to stake your crypto with confidence, look no further than Corse 1. More than 150,000 delegators, including institutions like BitGo, Pintera Capital and Ledger trust

Corus 1 with their assets. They support over 50 blockchains and are leaders in governance or networks like Cosmos, ensuring your stake, is responsibly managed. Thanks to their advanced MEV research, you can also enjoy the highest staking rewards. You can stake directly from your preferred wallet, set up a white label note, restake your assets on eigeneyer or symbionable. or use their SDK for multi-chain staking in your app. Learn more at chorus.1 and start staking today.

This episode is proudly brought to by NOSIS, a collective dedicated to advancing a decentralized future. NOSIS leads innovation with circles, NOSIS pay and Metri, reshaping, open banking, and money. With Hashi and NOSIS VPN, they're building a more resilient privacy-focused internet. If you're looking for an L1 to launch your project,

Nosis chain offers the same development environment as Ethereum with lower transaction fees. It's supported by over 200,000 validators, making NOSIS chain a reliable and credibly neutral foundation for your applications. NOSISDAO drives NOSIS governance where every voice matters. Join the NOSIS community in the NOSISDAO forum today. Deploy on the EVM-compatible NOSIS chain or secure the network with just one GNO. and affordable hardware. Start your decentralization journey today at nosus.io. Welcome to Epicenter, the show which talks about the technologies, projects, and people

driving decentralization and the blockchain revolution. I'm Frederica Ernst, and today I'm speaking with Edu Antunia and Polanski, founder and project lead of a DAPNode, and DatNote is a solo-staking hardware and software provider. Edou and Paul, it's a pleasure to have you on. It's a pleasure is entirely mine. Totally. So we've known each other for a very long time, but it's the first time we're actually talking about DaBNO on this show.

You've actually been on one of the DabCon episodes, I think. But I don't think we've actually ever really covered DaBnode, have we? Well, we talked some time ago when the merch happened. Yes. I've been in the center and it was great. But yeah, I think it's important to cover also. So that's here, I guess. Absolutely.

Before we dive right in, tell me a bit about yourselves and your backgrounds. Maybe we'll start with you, Edu. Okay, great. Well, I've been around since 2017. It has been a long trip to be here today. A lot of things in the middle. I started working with Jordi,

making some audits like Maker Thao. and during this audit, the idea of Dubnot comes to my mind and Jordan is one, and we started to make this happen. And yeah, the product has evolved a lot, and we have tried to adapt to the market during these years. So yeah, really interesting travel to be here today and a lot of things to share with you. You cut out for just a little bit, but kind of you said that kind of, Joddy was this was also Joddy's idea Yeah

yeah the founders of Danor are Jordi violin Griffin and myself and yeah mainly the idea that

comes to my man and Jordi's one and Griff is about decentralization we realized that at that moment we were creating decentralized technology but without having

decentralized hardware and we started to make this happen absolutely And I mean, both of them are now involved with other projects primarily, but kind of they've also been on the show before. So Judy actually several times for MS and Polygon and kind of the ZK stack that he's building, ZKVM and so on.

And Griff has been on some of the community shows. What about you, Paul? Well, first of all, it's a pleasure to be here. Thank you for inviting us. and I think I started in crypto mining Dogecoin in 2014. The reason why I decided to mine Dogecoin is because I was late to Bitcoin, but I realized that it was the same code. So if I learned how to mine Dogecoin, I would just need to scale up my hardware,

and it would basically be a very similar experience. Then, like I sort of went. went on to the corporate route. I did my MBA. I worked in corporate for a while. And in 2016, I met Griff Green, with whom I collaborated in Gibeth. And then in 2019, when I was ready to quit corporate, he introduced me to Edu. And I think in the first five minutes of having a chat with I knew that the next day I was going to resign from my job. I think it was everything that didn't exist in the corporate environment where I was. So I, since then, since 19, I've been working with Dapnode.

And when all the founders took a step back and went to other projects, I decided to take over and try to bring it to where we are now. What were the things that you've had Idwa and DapNode offered that were lacking in your legacy job? Yeah. So I think at that point it was like you could go straight to the point. You could go straight to what we're discussing without endless layers of politics, of thinking which department would that fall into, whose responsibility was this. It was just about doing something that was for a greater cause.

And Edou was just so patient with me. Like, I pretended. I was on a job interview mode, and I pretended I knew a lot. And Edu was super down to earth and super didactic and tried to educate me a lot in a super humble way, as he is. So I was humbled. and I was like, yeah, this straight to the point smart is with whom I want to be working with. I feel yeah. I feel yeah. I think that's generally virtue in the ecosystem. So it's also what I really enjoy.

Edud, tell us about the founding story behind DabNode. So kind of like it was you, Jardy and Griff, and kind of there was the maker audit. So what kind of drove you to say, look, we should. make, we should make hardware for people who want a Soto steak. Yeah, well, that's, it's a really good question. And yeah, it has been an evolution to be honest. So the first idea was just to create software, not hardware. And our decision was to create a kind of project, not to make a business with, but to

make it so sustainable. Just with the idea to provide a public good to people, people, allow people to have decentralized technology. It was not just sticking at that moment because at that moment, sticking was kind of an idea only, but it was about to have privacy, to be able to connect to decentralized network in a really decentralized manner. So yeah, we started the project just myself and later on we started to ask for some grants to maintain the project.

We got grants from NOSIS, we got grants from NOSIS. We got grants from Ethereum Foundation, Aragon, mainly these three actors were the first one to support us. And it has been a small project from the beginning, only four people at most during the first three years, mainly. Because, yeah, the idea was just to try to evolve and maintain the project and survive. I mean, we have survived, I think, three bear markets. I don't know, the number now.

But for that you need to be very careful and just continue building. So yeah, we started this initial idea of having this open source software for anyone, but then we realized that we need something more because people at the end of the day want to have a kind of auto-the-box solution makes their life simple. Because at the end, the idea behind download, it doesn't make easy for anyone to run decentralized networks. That was the initial idea.

So that is why it was important to combine the software with a hardware solution. Obviously running a hardware company is not easy at all. It's a pain for us. But I think it's needed and I think is providing value to the user. That is the full goal of the project to provide value to final users to make them access to this kind of technology that without this facility would be impossible. So yeah, mainly some years working on this,

then something that changed everything. It was the, well, the proof of stake and the merch obviously because it's when people start to using download for something more than privacy. And at that moment we start to solve more hardware for people that want to run solo sticking at home. And yeah, really, really proof of the success that we achieve with this,

the awareness. So who are your users? Because kind of like the privacy, I mean, I totally understand the privacy point that you were making. So kind of like whenever you kind of connect to, say, and at that time it was mostly metamask. So kind of like that would go to infura.

So kind of like infior would kind of like have all your data. And even if in principle kind of like you had been super careful about kind of like where the funds on your address for gas, and so on came from, if you might be able to kind of infer who you are and kind of, and so on. So I totally understand the value proposition then principle. In practice,

kind of very few people are actually willing to kind of pay for privacy, A, in funds, and B in time and upkeep and so on. So kind of who were your users then and has this changed? Yeah, sure. I think at the beginning it was a lot of enthusiasts, a lot of people who really believed in Ethereum, really believed in the centralized technologies, IPFS, and they wanted to contribute to the network. It was more a contribution to the network than to like take, really use it. Of course, there's always been like a fair share of developers who, prefer to have their own node because then you have like unlimited, unlimited querying and

you don't need to pay an API or being rate limited, et cetera. But at the beginning, it was mostly people who really believed in Ethereum. And the shift really came with the first test nets for what was then known as Ethereum 2. The Medallia test nets, all these test nets that came out, people started realizing that proof of stake was going to become a reality. And especially those who were not particularly technical, they figured out that with DapNode, it could be an amazing solution to just one-click deploy and be running those test nets. So I think, like, in the matter of like the three months from the first test net going out, like, we, like, six or ten X our, the people in our riot channel.

We were using Matrix and Riot back then. So it was wild. It was when we decided that, yeah, that was probably a good pivot to focus on staking above anything else. Yeah, and I mean, what maybe just as background, so kind of before proof of stake, obviously we had proof of work. And there you kind of, you needed very specialized hardware, right?

So kind of it wasn't something that kind of you would run on your, on your regular machine at home. So kind of like people build and board specialized hardware. So kind of offering that out of the box kind of for people to kind of just install on kind of like the machines they never turn off in their homes. That wasn't kind of an option. So kind of it was literally just running a full node, kind of getting the complete state. And then kind of after the transition to proof of stake or kind of like even the lead-up

of that transition kind of people were actually validators on the network properly. So I hear that kind of you had a lot of idealists. Saking is also, can also be a profitable business. Has kind of this crowd shifted somewhat from kind of like the people who just wanted to be part of the network? Yeah, absolutely. I think the solo staker is a very particular animal. It is somebody that understands the value of decentralization.

And of course, in general, it searches for the yield that Ethereum provides, but it's looking for something more. It's looking for a higher level of contribution and a higher level of exposure. To get access to the yield of Ethereum, it's very easy to just buy into any liquid-staking protocol, and then you'll have access to that yield. So definitely, like, if you need to invest in hardware or you need to invest in something else, is because you want a higher degree of control. And here, like, there's multiple personalities or multiple overlaps.

There's the developer that wants to run their own node, and again, query. and at the same time manages to use it for validation. There's the OG that has massive amounts of ETH from the early days. And maybe they were even stockpiling 1,500 ETH. It was supposed to be the first staking specs. And then all of a sudden they found out that they could run a lot of validators with that. So yeah, mostly it's somebody that definitely wants access to that yield and wants the economic interest. but that also believes that their work on validating at home is valuable for the ecosystem as well.

Is that also how you determine which networks to support? Because kind of like you support networks beyond the theorem. So I know for a fact you support NOS because I validate for NOS. I also know you support IPFS and Hopper and a couple of others. So kind of like how do you determine which networks to support? That's a really good question to be honest. Obviously, we are trying, I mean, as I mentioned at the beginning, we are a small team. So our health man down in several networks, several packages is hard for us.

So we need to be very careful choosing them. Especially we take a look at the value that provide to the users and also if they are aligned with our values. That I think is the most important thing. At the end of the day, that DapD is kind of a general purpose machine, right? So we would like to have as much as possible. But then obviously, these are the metrics kind of, right, that they are providing value to the final user, that is decentralized, that is offering, yeah, several things.

And going back to the previous question or linking to it to it, is weird how people are not getting too much about privacy, but also privacy is related to censorship resistant, that was also one of the initial values. It's sad, but people only realize about the importance of this when they are in trouble, when government starts to censorship you, and that is when you realize that you need this technology. Otherwise, it's like people forget about it.

And from day to time, this happened around the world. And it's a big push for us, probably. But it's important to keep in mind that we are building the centralized networks. Nozis, I don't know, the number right now. Paul maybe knows how many validator solar stickers are in NOSIS, but I think it's 30% or something like that. Yeah, just in excess of 30%. Yeah, it's amazing to see how this network decentralized, right?

and how we are in our side helping to make that happen. And at the other day, we are creating a decentralized network for this reason, not because it's more efficient. I mean, if you go to centralized sequences, you are going to get much better performance, right. But then why we are building decentralized technology just to have these properties. I think if I may add to this,

one very smart design choice that Edou and Jory Dio, at the very beginning, was to really think about Dubnote as an ecosystem and to create the SDK. So actually, anybody can create any sort of apps or any sort of Dapnote packages or DabNode or DAPs, as we call decentralized apps, right? So it's not so much who do we try to support, but also who is able to be part of the ecosystem. And the answer is anybody. all of the networks can like if you can dockerize your node

it can be deployed on DapNode through a DapNode app through the SDK and then of course like the ones that we have supported since the beginning are the ones that as Edo said are completely aligned with our values right those are the ones that we've been pushing through and maintaining ourselves when the teams the client implementer teams were too busy or something

then we've been putting our own efforts into making it available on DapNode I want to come back to kind of like the saking philosophy and outlook later, but before that, can we maybe kind of quickly cover the tech aspects of DapNode? So kind of like if you look at the tech stack that powers DapNode, what are the major components and how do they work together? Okay, I can do this one. So yeah, from the very beginning, we ambition this project like a totally decentralized platform. So that is why the first thing that we did it was to deploy the other smart contract, the APM, just to be able to distribute versions of the Pacts in a decentralized manner.

So we link this smart contract to IPFS plus ENS and this allow us to make a kind of a package manager distribution in a decentralized pure decentralized manner. So that means that if someone publish a package, no one can block you. No one can remove that package from the network because it's completely centralized. And that was one of the core values of the technology. And then, yes, the other part of this is what we want to distribute, and then is Docker. So we create a platform of dockers that are distributed in this system, and that makes quite easy to develop an application for that, as Paul mentioned.

because the process is just to take the DandDK, just to create a Docker image, upload it to IPFS, and then link to a small contract, and with that, everyone in the world can install it. And I think that that's great. But also, I mean, we have been talking a lot about blockchain, but that is not just that. At the end of the day, something that we are trying to do

is to bring home back the computers, because it's like people are just not having this kind of computer at home. They are using laptops and other things, and we are trained to force them back to have this. And at the moment that you have a computer at your home, you can do more things like a time machine. You can have your own cloud for photos. You can have not just blockchain.

And mainly that is the idea. And having a decentralized distributor system for this. I think there's a Naval tweet that I really like. I think it goes something like this. Like scalability isn't important until it suddenly is. The centralization isn't important until it suddenly is. And privacy isn't important until it suddenly is. So I think Dubnode is ready to make this happen at any single point

and for any platform to be ready for either. needs for scalability, the centralization privacy. So walk me through this. So I'm a vanilla user. So kind of I say I want to use, I want to say SIG on Nosis and Ethereum. I have a DAP node. I kind of plug it in. I kind of connected to the internet. What do I need to do then? Once you connect your Dap nodes, we've tried to design the whole flow to be extremely easy and to not have to use command line at any point. So basically, when you plug the machine to your router and you turn it on, it will start emitting a Wi-Fi hotspot and you will connect with this with your device.

We need your phone or your laptop or whatever you connect to that hotspot. And then you have to visit my.dapnote, which is being served by the daubnote itself. So basically, you use your dabnote from your browser. And from this browser, you can go through the configuration flow, and then you can change the password of that initial Wi-Fi. You can configure access through VPN, and this is important to have access to your Dubnode from wherever you are in the world, not when you're next to it and in range of this initial Wi-Fi thing. And then after this initial configuration and configuring the way you want to access it, then you can start installing packages, right? and installing apps. And for this, there are two modes.

There's the DAP store. And in the DAP store, you can find all of the packages that people can create through the SDK and that we have published as well. And then there's the Stakers UI. And the Stakers UI is a very specific flow for Ethereum-based blockchains. Right now, we have three of them.

We have Ethereum, Nosis Chain, and Luxo. And basically, in the flow, it guides you through configuring your execution client, your consensus clients. Then you are forced to install a Web3 signer. That's where the key stores of your validators will live. And then you can choose whether you want MV boost or not. So this is monkey proof, basically. Like, you cannot go to the next step unless you have chosen one of it.

and then you click apply and Dubnode then installs all the clients and configures all the connection among them, et cetera, et cetera, et cetera. So yeah, that's sort of like the flow that you would do to start validating. Then you would need to create these keys, this validation keys somewhere else and then upload them onto your Dubnote. And you'll basically start validating a proof of stake chain. This is always kind of like, when you hear this from Techie, it's kind of like monkey proof. It's usually not monkey proof. And I don't think it's monkey proof, but I can attest to the fact. So, I mean, I'm attacking myself, but I know plenty of people who are not devs who actually run dat nodes.

So kind of like within Noses, we actually encourage everyone to kind of run nodes. And a lot of the large parts of the non-dev team actually successfully run nodes at home. so this is very much attainable for interested non-deves for sure so tell us about the DAP store

so kind of is it fully permissionless so could I could I kind of upload some sort of malicious Docker there yeah this is a really good question we have

two repositories in Dubnot. One is the Dubnod repository that is the one that we control. It's the one that we take care of and we are 100% sure that everything is fine and nothing can be breaking because of the repository that we are publishing then. And then we have a completely permissionless repository that is the public Dubnoddnod.E. So yeah, the idea is anyone can publish on the public. And then, then obviously this is the jungle. You need to be really careful what you are installing, but I mean, there are really interesting things also in the public like, I don't know, Optimizing packets or community-mantin packages

that are trusted. So yeah, at the end we try to combine these little things, one more trustful and one more trustless, and with the idea of creating an ecosystem because at the end of the day it's like regular repository is like the app store that you have in your mobile phone in Android. So you can install an application that you found everywhere around the internet or you can just use the official one. So it's hard because at the end of the day people are restoring value on this hardware. So that is why we need to try to balance and protect users of not installing the thing that are

not correct. what's the process of updating your notes like for user because kind of like as we all know kind of like these updates happen regularly and they are often somewhat manual so how do you how do you kind of balance security and usability in these scenarios I think the key here is that once you install a package, this package is signed by the key of the developer. So somebody trying to spoof an update or something like this, it wouldn't pass the validation checks for like the DAPNo does. And first of all, they couldn't even publish into the same. same repository, into the same smart contract because the permissions wouldn't allow it. But there is this trusted developer key system that sort of helps you manage which developers

do you want to trust? And this also works for the public Dab Store as well, right? Like if in the public Dab store you have decided to trust some developer there because you trust them and you've met them and there are some people who have reputation in the space and they have published packages, then you will not be alerted or you will be able, you'll be allowed to download these packages and update them, et cetera, et cetera. If a package is updated by an address, a wallet, or signed by a wallet that you do not trust, you will be alerted so you can, you can make sure that this is a person that you trust or like an update that you trust. Now, when it comes to the updates themselves, because DapNode is already online 24-7 and it scans

this repository, the smart contract, this Aragon package manager, we were talking about, whenever the developer publishes a new version of it, the user will be alerted. So the DAPNode will read the smart contract, we'll read the event, and we'll say, hey, there's a new version available. And you can even set up automatic updates, so it will automatically update to the newest version, the newest version of the DapNode package, which is really handy because basically it takes the maintenance

to only looking at your DapNode when something goes wrong. You can, of course, opt in or opt out of those auto-updates, and you can check and manually update the, the packages yourself. So how often do things actually go wrong? So say I set it to auto-update, how often would you expect I kind of have to check in and manually do something by the people on the DapNode disk would and so on?

That's a good question. It kind of like, the things that go wrong are usually not related to DapNode. The things that go wrong are usually related to like the power, failing at home and then disconnecting the machine and then the database of the execution layer client gets corrupted and you have to re-sync again or the internet goes down or they change your IP and order something with the router and then you lose access through VPN. So DabNor itself is so if everything goes well you rarely have to look at it and that's actually a bit of a problem because people are missing out on on new cool features and new things because they

just don't have to look at their Dapnote ever again after setting it up. But if like if you live in an area where the light is constantly going on and off, like you can expect that at some point you will have to rethink your execution client because the database will be corrupted. Okay, fair. What proportion of DapNodes run on DapNode hardware? Ooh, that's an excellent question, probably my favorite. And the answer is we have no idea.

Greaty. The reason why we have no idea is because we do not capture any telemetry by default. And we know the DabNodes that we have sold, of course, but we have no idea if you installed the free open source software into your own machine. So we could only tell you about the dapp nodes that we have sold, but not about the proportion that these represent over the total amount of dab notes that we have. So, and this is by design,

because as Azeda was saying, privacy was one of like the core principle. But you know how many dab notes there are in total, right? No, no, we don't. I mean, we know the ones that we have. But you don't know how many people actually run DapNode packages for kind of validations? No. The only things that we can measure are proxy metrics, which basically is, by default, if you're using Dapnote to validate,

the default graffiti will say validating from DapNote. So then we can go and look at the validators that have, this graffiti and safely assume that they're probably running Dapnode. We still don't know in which hardware, like if it's hardware that we have sold them or not. So we can have an idea of how many validators, but again, there's a decoupling of validator to hardware, and we don't know if two validators are running on the same hardware either. So it's very, very, very hard for us to know or to even, estimate the amount of dappnotes that are that that exist out there.

This is what you think. So kind of like the graffiti there being a good indicator. Do you remember like 15 years ago or so when people started sending emails from their iPhones and kind of it would say send from my iPhone. But then kind of everyone would kind of copy that kind of like on their Huawei is and kind of put like send from my iPhone below because kind of just this is what you did. right? Okay, yeah, yeah, joking aside. So you don't know how many people are running DAP nodes, but how many DAP nodes have you sold? We have sold around 2,000

DAP nodes. Okay, okay. If you could go back to the very start of DabNode, is anything you would do different, DEDU? Well, this is a really good question. Other things are to be I mean, we build this with very strong principles. We keep that from the very beginning and I'm really proud of being maintaining that. Maybe, I don't know, at some point, maybe try to find a small business model to sustain this project. Could be interesting, maybe. Because, for instance, as we have been talking, we don't know how many people are running down for valid Eniith or analysis. we have this shell reported graffiti but at some point we were running around 1% of the

serial network and this is a lot and we were not taking anything from that just surviving with brands and and both the selling of hardware but yeah probably probably just to get a little more for for making this bigger because obviously when you don't have this business model business models for this kind of software. It's really, really hard to maintain it, especially at the very beginning. So maybe try to find something in the middle, although if I need to choose, I prefer the path that I took in the past. But yeah, obviously make our life easier to build this.

It would be great at some point. You had a pretty large upgrade recently, Deb note smooth. Talk about that and kind of how that. that fits into the broader DapNode ecosystem. So I think we realized the importance of smooth when we realized that we are paying less to solo stakers overall than to big centralized players. And you'll go like, wait, what do you mean we're paying less?

these people. And the reason why I say this is because we have taken this MEP path on on on on Ethereum and we have decided to to to manage the the block building on this like proto PBS that that the MAB boost enables and what what these does is basically mb is follows a power law which means that very, very few blocks will have huge MIV rewards, and the great majority of blocks will have, you know, not so great MIVY rewards. What that makes is that if you're a big pool that has thousands of validators and you're constantly producing blocks, you are bound to get some lot, some of these big payout, big MEP blocks, which are also known as lottery blocks.

So if you get one of these lottery blocks, what these big pools do is they do not keep that to a particular validator, right? Because the validators within a pool are fungible. So basically they distribute this huge reward among all of the validators of the same pool. And that brings the execution reward higher for all of the blogs in that pool. The inverse scenario is like a solo staker that has one validator and proposes around two to three blocks per year. The chance of this validator getting a lottery block is tiny, very small.

So most likely, the most likely scenario is that in a year, one validator that is a solo validator will not have exposure to a lottery block and will have a small reward. Whereas one validator that is part of a big pool will have a higher return. because they will have exposure to the lottery blocks that have fallen into this pool. So if we agree that homestakers are more valuable than one marginal validator in a data center because they give more resilience, more geographical decentralization, more geopolitical protection, more censorship resistance. So if we agree that homesdakers are more valuable in terms of decentralization and resilience for the network, why are we paying

them less. But is it really the expected value? So kind of like if, I mean, if I kind of, it in the infinite margin, so kind of like I run a solo validator forever, kind of I will hit upon a lottery block and I won't have to share with anyone. I will get to keep it all for myself. So doesn't that kind of make up? Yes, exactly. But at, like, in an infinite timeline, you are bound to get a lower block, but you might get it in 200 years, or in 80 years, or who knows if Ethereum will exist.

So in a five years timeline, you are much better off joining a smoothing pool because in five years, you would produce 10 blocks, for example, 10 to 15 blocks. And that's still very, very, very little. And that is if we continue at our, current level of validators, which it seems that it has stabilized a little bit lately. Okay, so after we realized that the solo stakers were sort of like being shortchanged on their

execution rewards, we decided to build a pool for their execution rewards. And that's literally what it is. Like the solution to this is basically we all pool together our execution rewards into the same smart contract, which then distribute these rewards among all of the participants of the pool. Therefore, if one of us gets a lottery block, everybody else gets their share of this lottery block. So yes, if you get a lottery block when you're in the pool, you will have to share this

lottery block with everybody else. But the thing is, you cannot possibly know in advance that it is going to be you who will earn this lottery block. So that's the trade-off. you either decide to have higher than expected execution rewards by joining the pool or decide to play the lottery and have overalls or most likely a scenario where you have less rewards than if you had joined the pool, but you get exposure to this huge lottery block that you might get.

So it's kind of like insurance, inverse insurance. So I get a payout every month. but kind of if I become very sick, kind of, I also kind of the insurance pays that for me, right? Yeah, yeah, exactly. Tell me about kind of DapNode, Smooth and the business model. It also changes things on your end, right? Yes, yes, certainly. I think so we've decided to charge a fee for Smooth because it basically, so what happens,

what the numbers, the actual numbers of joining smooth, is that you're expected to double your execution rewards. So basically you, if you consider execution and consensus rewards, you basically maybe like a, you increase your total rewards of a validator via 20, 25%, something like that. If you were participating in these and you can double your rewards, we've decided to take a 7% fee of all of the rewards that go into the pool. And that sort of like changes what Edo was saying before, right? Like up until now, we didn't have any business model built into TapNode. And that's because TapNode makes it extremely easy to run validators and stuff.

But we didn't quite develop any client implementations. And basically what you're doing with TapNode is you're basically running other people's software, right? So charging for this, I mean, could have been an option, but we decided not to go for it. But here, it is something that we have created. It's something that actually gives you value, gives actual value to the user. It gives double the expected execution rewards. So we decided to charge a fee here. And that brings in or starts bringing in this business model that can make DapNotes sustainable.

Are there technical challenges to kind of develop and implement DapNotes moves? Because from the face of it, it sounds like a pretty straightforward pooling contract, no? Yeah, maybe the most challenging thing here is the oracle, because at the end, as most of you know, there is a disconnection between the things that are happening on the execution layer and the thing that are happening on the consensus layer. So it's not possible to correlate this data. So that is why we needed to build an oracle. Obviously, well, we have been talking here, we are not too much aligned with oracles, probably, but having great a system of different oracles providing the same value.

And obviously, we envision a future in which we can replace this article for certain knowledge proof of the result. But the most complex part of this smoothie pool has been the article, because it's the one that takes cares of the results of the things that are happening on the consciousness layer and posting this data on chain. But yeah, following the culture of Dubnot, we obviously did everything open source and anyone can run its own Oracle to double check, but everything is fine. So just trying to be aligned with our spirit. I mean, we have a mantra in Dubnot is decentralized until inherits,

centralization it works and we try to follow that from the very beginning because at some point there are something that you can centralize. I'm just thinking about for instance

you mentioned about automatic updates well we have a connection to Telegram so if you use a bot in Telegram you can get notifications

in Telegram but obviously this is a thing and there is no way to send a decentralized notification to our user so at some point you need to find this one

and writing the, yeah, a balance between decentralization or centralization to make the things works. So what's been the feedback like from the community for DevNode Smooth? Yeah, that's a very good one. People who have joined, they absolutely love it. Some people were saying, like, hey, I haven't even proposed a block, but I'm already accumulating rewards. And I don't know what the reward of my next, my first block is going to be.

But I know that I know exactly, it gives me this predictability on exactly how much, how much am I going to get, right? I think most of the bad feedback has been, like, not really understanding the difference between the expected rewards, which are around the median, and the rewards that you can, or how smooth gets your rewards closer to the average. People have some trouble understanding the difference. And I have a, I've come up with a, with quite an easy way of explaining it. How the median and the average are different.

So imagine that there's like, there's a company. And we are all part of this company. And the owner is very fair. The owner pays 1,000 euros to each employee, including himself. So every month, everybody gets the same. So the median salary, the median is defined by if you put all of the numbers or the salaries in order from the biggest to the smaller, the one that's right in the middle is the median, right?

And it's clear to see that if we're 10 employees, the median will be like 1,000. And the average, which is defined as adding up all of the numbers and dividing by the number of instances of salaries, so adding up the 1,000 dividing by 10, that's also a thousand. Okay? So that's, these in Ethereum are the consensus rewards. They're equal for everyone. Now, imagine that the end of the year comes and me as the owner decide to pay myself dividends and I pay myself, like, I pay myself like 90K of dividends. It's a huge payoff, not 1,000, but like 90K. So basically, at this point, on that particular month, everybody will have their salary

of 1,000, including myself, but I will have a massive bonus of 90K. So let's look at the median for that month. the median for that month is going to be take all of the salaries, put them one after the other, and the median is still 1,000. But if you take the average, you add up all of the rewards that you've been given, that's going to be 10K, or so like 100K. So if you make the average, the average of, to add the 100k divided by the number of employees divided by 10, it's 10K.

But this number is meaningless to you as an employee. If you hear, oh, the average salary or the average compensation in that company is 10K, well, for you that is not the owner, that that means nothing. And what you're interested or what you're going to get is 1,000, not 10K, right? So something like this happens, except that we don't have owners in Ethereum or like not in the traditional sense, not in the same sense. But what we have is people who are lucky in. enough to have one of these lottery blocks. And if somebody gets a lottery block, it pushes the

average up. But that doesn't mean that it means anything to you who most likely are never going to get one of these lottery blocks. So if you sort of like trust your probability or like look at the probability of you having one of these lottery blocks and on a, as you very well said before, in a time span of five years, how many blocks I'm going to propose, how many of those have a chance of being a lottery block, what you're going to end up is that you're really, reward is going to be closer to the median. What you can expect is closer to the median. Now, what Smooth does is really pooling this 90K of bonus that I gave, pulling it and making it and giving it to everybody. It's like instead of being a company, it's a cooperative,

and we all divide all of the benefits amongst everybody, which really does bring the total compensation to 10K instead of... For everybody, yeah. So what proportion of DabNode users have opted into Smooth? Well, that would be an amazing question to answer if we knew how many DabNode users we have. I think it's important to mention that DabNood Smooth Imple is not only for DabNNusers. It's for a solution. Okay.

And right now we have almost 2,000 validators on it. And yeah, we're getting considerably considerable smoothing effects already. Like we are hitting some lottery blocks. I think the biggest one that we got was around 13, 14th, something like that. Wow. Let's talk about kind of like staking kind of from a bad side perspective, right? So kind of solo staking as admirable. and virtuous as it is, it's kind of economically, it's often not the best way of kind of like

using your eth, right? So kind of like if I use a liquid staking protocol, I can kind of earn rewards on my eth and at the same time kind of use it as cholesterol somewhere else because kind of it becomes fungible, right? So I don't have the opportunity cost that I can of have when I stake. How do you see that? Yeah, I mean, this is a really good question. So the thing that we are seeing, or at least from my goodness view, is that at some point we are putting incentives in the ground place.

I mean, as Paul mentioned before, we should need to buy more the solar staking. But the thing that is happening is the pursuit. I mean, the people that are not doing solar staking are having more benefits, having less or more facilities to make this happen, and especially with the liquid sticking, as you mentioned now. What I expect in the future is to have these liquid sticking solutions combines with DVD, because right now one of the big issues for Dabnot and for solar staking is that 32 is a lot of money,

and not all the people can afford that, obviously. So if we are able to combine these DVD solutions and liquid testing and make anyone to be part of this decentralized network validation in a way that makes easy for them and also provide this value of liquidate taking, I think is the feature that we need to spend or the thing that we are trying to achieve because otherwise we are going to end up in the same situation and the past like in Bitcoin. where most of the miners are controlled by the same people. And from the very beginning of the Ethereum, the centralisation was always one or third. And that is why today we are able to run validators on a consumer hardware, because it was always one of the principles of the Ethereum. So I hope that in the future we can start to go this direction

of being able to take the same benefit or even more for solar stake, and not benefit the one that are the same benefit, fit to the one that are going in the centralized direction, centralized path. You just mentioned DVT. Can you maybe explain that? Yeah, sure. I mean, the thing is currently the keys to make a signature of a editor has, they have a lot of power and they can sign a message.

They can slash you. So you have an issue. You cannot decentralize this key or give this key of validation to anyone. because they can esters you, they can do bad things with this key. So the dynamic hand of DVD, of the DVD technology, is to create a way in which no one has the control of this key, and with the signature of three or five or N of N members of this committee, they can make this in a natural of the validation.

This allows us to give this power of validation without exposing and to be spoken to the race of exposing the key. So the other hand of this is just to create small groups of people sharing a key, but not having the control of this key, allowing to anyone to trash on this decentralized manner of signing things. And if you put this together with liquid sticking, you can take ether from people, give a liquid derivative of this ether, and put this ether to validate on a decentralized system of people running this new technology. So that's distributed validating. right? So kind of like you need less than 32 eat

and you can kind of pull those together and kind of you can do it in a trustless manner. Is that more or less it? Yeah, yeah. Much rather than my inspiration for sure. No, no, I'm yeah. And yeah, so kind of why would that kind of eliminate the opportunity cost that people currently face when they solo steak? Yeah, the thing is that currently do you go kind of run 32, I mean, one validator, 32Eath.

I mean, obviously with NOSCU, it's just one year, so it's much easier talking about the difficulties. Mainly that is why we have more validators in NOSIS rather than NADU probably, because it's more affordable, it's more accessible for users to be part of the network. But in the case of the city, you can only run 32Eth, 64, so it's a lot of money.

Probably if you have a hardware, you were willing to run, I don't know, 100, 1,000 validators in the same hardware, right? But you are not having access to this big amount of either, or maybe some people, but not the regular people. So the thing is to find, I mean, it's like we have a pool of people having and maintaining hardware, willing to run validators for other ones. And in the other side, we have people with ease, willing to decentralize this.

So at the moment that you are able to dress on this decentralized hardware layer of people validating, maybe you're at home and run only a solo staker. I mean, you can run your validator this 30 width plus valetors from other people from this pool, allowing you to get more benefits and reduce your operational costs because you are just running your valetor plus the valetors of other ones and getting to the word of doing this job for them. So, yeah, many diseases data. But you can't use the steak as collateral as you can kind of do when you have liquid staking, right? Kind of like when I liquid steak, I get a liquid token back that I can use as collateral elsewhere to kind of take out more eth or whatever, right?

And kind of unheeled on that as well. So kind of I can leverage up. Yeah, as a user, I think I would say it's even better what you can do, which is you can put, you can be. you're running and operating a validator without a bond. And so as Zedu was saying, there's these people who have the ETH and they need to be running like the pools or centralized exchanges or liquid staking pools. They have the ETH. And there's no reason why before DBT they would, they would entrust random users on the internet to run their validators, to run validators for them because they owe it to the people who have surrendered their liquidity, their actual ETH for staking, they owe it to offer them a proper yield.

And if, like, they need to ensure that the operations of these validators are okay. Now with DVT, what they can do is they can give it to groups of random people on the internet that they've gathered together. They've created a DVT cluster. And now they can present themselves as credible node operators because if one of them goes down, as it would be perfectly normal on a home setup, the rest of the cluster picked up the slack. And what they can do, so as an operator, now let's look at it, like, as an operator, you don't even need to actually be a staker to benefit from the, like, the rewards of operating.

So you will get paid as an infrastructure provider, not as a staker anymore. So you're basically, you don't even have to put up any capital. So right now, there's only one program that that does this, or I think maybe two programs that do this, that they require no bond. There's EtherFi with the operation Solo Staker, and they manage their DVT clusters, and they give from the EtherFi protocol for them to run validators on.

And then there's the simple DVT module of LIDO. So in order to participate in either of those, you don't really need to put up any bond. So there's literally no cost of opportunity. You just need to run the hardware. Okay, and I understand that kind of if you're the person kind of running the hardware, but if you're the person with the ETH, aren't you still better off kind of doing this in a way where kind of you get a fungible token back that you can use in things?

Because kind of like when you kind of stake in a TVT setup, you get no fungible token back that you can still utilize, right? Yeah, that is correct. you don't, if you have the eth and you want to have a liquid representation for it, you're obviously better off. Like, DVD is not useful for that. Then you have, like, other things.

Like, you can create, like, a vault on stakewise, and that will create a liquid presentation of the eth staked in that vault. And then what you're introducing is you're introducing a layer of smart contract complexity in here. But if you're okay with this, then you can transform the eth of your vault into OSeth, which then you can use on defy. So you can totally do that as well, not necessarily by using DVT,

but by using other solutions like Stakewise Volts. Okay, yeah, I understand. The other thing that kind of gets discussed very critically is restaking. What's your take? I hear that. Yeah, maybe just very quickly in a nutshell, kind of restaking is the idea that you can use the same collateral twice to kind of stake four different things. So kind of like if you already have eth staked on ethereum, you could also use it to validate on seven other protocols and kind of be slashed on the same eth, which kind of allows you to kind of multiply the yield you can generate on that eth. It also possibly overloads the security consensus.

So, yeah, what's your take? Yeah, so I think it is a great idea in practice. Having all of this eth sitting there is, and not being slashed, could be seen by some people as like a waste, right? Like all of this eth that only serves to validate Ethereum. And it could be reused for other protocols. But mostly I think it's given way to green. and the ability to or the willingness to get more rewards out of the same ETH.

And this basically endangers Ethereum as a whole. Like in the case of a mass slashing event on the restaking protocol, like ETH could see like this, let's bear in mind that this is actually not it's not staked at the same level as the consensus layer, so it's not burned, but it will be sold and it will basically dump the price. So a massive re-slashing event, restaking slashing event would be very, very negative for Ethereum. And I think it's something that has to be, like, it is okay to be tried slowly. But I think it's been overblown and sort of incentivized with all these points protocols.

And it increases risk and complexity in a way that we stop being in control of the financial products that are built on top of stakes of the security of the consensus of Ethereum. and it exposes the consensus of Ethereum to a lot of complexity in the same way as the repackaged mortgages exposed the financial system to a lot of risk in a way that we could not possibly understand what was what was going on behind the financial products that were created in 2008, for example. Do you agree? Yeah, I mean, I totally agree with Paul. I mean, is this feeling that we are putting leverage,

leverage on the ether? And I mean, when the things are in the right direction, everything looks good. But the moment that you are increasing, this leverage, and if some signals run, it can be completely surfer. So at the end of the day,

I think it's also important how much, I mean, how this growth, this risk-taking. I mean, at the low level, I think we can be, more or less safe, but if this becomes massive, I think the result we are taking it's like putting leverage on Ethereum itself. So I think we need to take this set-of-gone because, yeah, I am I in this chain effects that can happen. You have linked everything, so if something happening in one chain, it can be a massive situation for the other ones and be a wave that

destroy everything. Yeah, this is feeling that in principle is a really great idea. I mean, but when you start to think about all the consequences that is coming into the ecosystem, well, the feeling is that it's really risky. That's my point. The other larger topic that's currently very much under debate is issuance. So kind of the idea that kind of if you already have a million validators, having another validators of very limited marginal value,

whereas kind of if you only have, say, 10 validators, having an 11th is of much bigger value. So where do you stand on that debate? So kind of how do you measure the value added by each additional validator? Yeah. The issue is probably also a topic. I have heard voice in different directions about this. How to measure the success of a network?

From my point of view is how much you are able to make it decentralized. Other people is missing other things. For me, if you are increasing the issue of the network, you are getting probably more rewards, so that means that more people are going to get into the ecosystem. But the thing is, since the current network is incentivizing more decentralized way to do the things because this natural flows to centralize providers probably the thing that you are going to see is just more people with more money or that they may feel it so at the end even I prefer

the opposite just to have people that really believe on the on the core values and not being here only for the rewards so probably are in the direction of of in the usual, it's not increasing the issue at all all. But yeah, I mean, at the end of it depends also, I mean, if you are able to create a more decentralized network, that's my point and

that's my feeling. I think it all stems from the impossibility to know what is a decentralized validator that actually adds more value. Like if we had a proper way of

measuring this, then And it would be very easy, like, okay, we keep the centralized or we have some sort of like asymptotic rewards curve on how many validators you can have. So the first validators increase your reward quite a bit. And the, like after like you reach a certain plateau of validators, then your issuance or like the if that you mint on your validators, your consensus rewards lowers or tapers down. Of course, this is an extremely naive approach, and it would, being at the completely decentralized platform, what this would do is like it would give raise to like a lot of civil attacks and people would pretend to have low validators. So that's not something that's on the cards right now. And like if we, like, I honestly don't think reducing issuance is a good idea. because there is a, like, we see it in our community.

A lot of people in DaBNode, even though they are, like we said that they are ideologically motivated, at least in part, they do also want rewards, and it's not that they hate money, you know? Like, they do like their rewards and they want to maximize them. And if the rewards go down above, like below a certain threshold, they will. stop validating. But other big institutions or people who are less hands-on or people that have less cost of opportunity for running their own validators, those they might be okay unless the issuance is negative. So with a non-negative or non-zero issuance or reward, they would be okay

on keeping this. So I see reducing issuance in a naive way, just reducing it. I see it also as a negative for the decentralization of the network. Now, there are some things that I think could be done. So right now we have correlation penalties for slashing events. And it is suggested that we could have correlation penalties for missed attestations as well, for being offline. And I think it would be really funny if there would be. would be a way of reward. So there's this thing. There's the Unicorn Chaos Day. I think it's the

status theme that implemented it. Unicorn Chaos Day is a day where people try to hack their own, the things that they are building themselves. It's just a day for testing security. I think it would be amazing to implement something like this in Ethereum, something where if you can prove that you are making an entire group of validators go down at the same time and miss attestations, if you can prove it was you, you get part of these correlated attestation penalties. You get them for yourself. So you're still like only playing, it's a safe game because you're still only playing with like missed attestations. You're not, you're not slashing the principles, so to, sort of speak. And it could be targeted at like players that have, or like, yeah, like more, more than

1,000 validators, for example. So if you manage and you can prove that it's you who, like, destroyed a data center, not destroyed, sorry, like, went, like effectively attacked a group of validators that are an easy target because they're all together, then you get part of the reward. And that would be an interesting case where people would be like actively watchtowering the, be watched towers for these centralized actors, right? And that would mean that it's less profitable to run validators in a centralized spot because you're risking yourself to being attacked. And if you have to decentralize them in different spots, that will also increase your costs. So it will be less, you'll be able to give less profit to the liquid staking representation.

So at the same time, solo stakers do not, are not affected because they usually run less than 1,000 validators. So they wouldn't be a target for this sort of people. So effectively what this does is it increases the costs of securing their own infrastructure operations for big players. and it has no impact on solo stakers. I'd like to see something like that as implemented. So what do you guys have in store over the next, you know, months or years with that node? Yeah. I think the, so we've been talking a lot about staking and the issue in right now is quite low,

and we're not seeing that much influx on staking, right? So a lot of what's happening internally in DapNode is looking at ways to leverage these hardware already existing in people's homes, to give them access to privacy-preserving technologies or self-sovereign technologies in a way that they're using that hardware that's giving them some sort of return in order to provide more value out of it. And here what we're talking about is we're talking about running local models, for example. We have a proof of concept where we have local models running on a DabNote, and you can communicate with them through a telegram bot the same way as you speak on a chat interface with chat GPD. But instead of chat GPD and giving away all of your data to open AI, you're talking to your own local model, right? I think the future of open source and local AI is really brilliant because, There are certain things that we are not going to, we are not, so basically, AIs are this sort of like exocortexes, like this third party brains that we pay to access, right?

And before some things like work, we're going to be using stuff that is, that is the maximum, the foundational model, that's the maximum performance. but at some point we will want something that is ours, some agent that is not tamperable, some agent that really works for us and is controlled by us and maybe decides whether we can ask a foundational model or we can have our own, or we will use our own data to do something like this. So that note, I think, is perfectly positioned to provide those services.

And that's sort of like what we're looking into right now. Super interesting. Yeah, my benefit of this is just to think about a lot of applications that in which privacy and EA matters. Like, for instance, imagine that you can connect your local model to your Google Drive and you can make index queries on the data and ask for, I don't know, anything in your documents or in your photos or in your back accounts or imagine to connect AI to your email.

emails and make summaries of all your emails or your telegram conversation or just to remember in there. I mean, I see a lot of applications in which I can help you a lot, but it's so sensible. The information that you want to take a look is so sensible that you are not going to never connect to a centralized provider. You are not going to be able to make a contest. And this point, and also because it's also part of our core values, mixing the privacy with this technology that provides a lot of value. I see a lot of potential applications that makes totally sense and can bring a new paradigm

on these new applications. Cool. Fantastic. Guys, where can people learn more about DabNode, download the software by hardware even? And how can they be in touch with you guys? Right.

So dabnode.com is our website, the APPP, node, N-O-D-E, Dapnode.com. That's our website and all of our socials are also listed there. And we have a super great Discord community that really helps both with the installations of the open source software and also with support and also providing feedback for the hardware, et cetera,

and with guides on how to do things on Dabnot. So we have an amazing community. our Discord is probably the best way of interacting with this community and see if DaVNote is for you. From the website as well, you can download the software to your own machine or you can access the shop and buy a plug-and-play hardware that will bring DaBnote to your home without any technical knowledge. Perfect. Thank you both for coming on.

Thank you for having us. Thanks again for inviting us here. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts. And if you have a Google Home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast. Go to epicenter.tv slash subscribe for a full list of places where you can watch and listen. And while you're there, be sure to sign up for the newsletter, so you get new episodes in your inbox as they're released. If you want to interact with us, guests, or other podcast listeners, you can follow us.

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