Here comes the Diva: Liquid Staking powered by Distributed Validators
Diva, a community-driven Liquid Staking protocol, has completed its seed round and will be launching on Ethereum mainnet soon
Wait what’s Diva
Diva is the first solution providing a Liquid Staking Derivative (divETH) that accrues staking rewards fully powered by Distributed Validation Technology (DVT).
Diva’s DVT introduces a series of innovations to provide truly decentralized staking, as opposed to today’s centralized delegated pools.
The $3.5M seed round has been led by A&T Capital and has counted on the support of Gnosis, Bankless, OKX Ventures, Metaweb, DCV Capital, Alphemy Capital, Very Early Ventures, staked.vc and angels from projects such as Metacartel, Aave, Staking Rewards, zkEVM, ZKValidator, EthGlobal, EigenLayer, Aragon, Stakely and many more.
The staking centralization problem
With the success of the Merge, the security of Ethereum is no longer determined by computing power (aka mining) but by capital (ETH).
While this represents multiple advantages (e.g., a 99% reduction in its carbon footprint), the 32 ETH economic cost makes it impossible for many Ethereans to take a lead role securing the network.
This lead to an increasingly centralized landscape, undoing many of our achievements as a community.
Today’s staking pools are operated in a highly centralized manner, with single actors owning the validator keys — meaning full control over block production, transaction censorship and MEV choices.
- CEXs like Coinbase, Kraken and Binance fully control the funds and validator keys of their clients.
- Lido gives full control of validator keys to a small group of whitelisted Node Operators (currently 30).
As these pools grow larger, single actors are growing stronger and eroding the decentralization values of Ethereum.
RocketPool also keeps validator keys with individual node operators, who are incentivized to act faithfully by posting 16 ETH bonds (and potentially 8 ETH in the future), being today’s best alternative to solo staking.
More decentralized solutions are needed. In an ideal world, more people would operate their own 32 ETH validators — but this is impractical for several reasons:
- The cost (32 ETH) is prohibitive, especially in lower-income regions.
- Not everybody has the technical skills to run a validator.
- Staking funds are locked without liquidity, forcing stakers to join liquid staking pools instead.
- Pools are statistically more profitable than individual validators, due to smoothing effects, safety mechanisms, and insurances.
The full network is secured by only ~5.000 beacon chain nodes, many of which are concentrated in jurisdictions with high regulatory risk.
Diva stands for “Distributed Validation.” We believe that the most viable alternative to Ethereum’s 32 ETH requirement is to create a distributed peer-to-peer network of nodes that run validators collaboratively.
Diva consists of:
A Liquid Staking Pool (for Stakers):
- No minimum ETH required to stake.
- Stakers receive divETH, which accrues staking rewards daily and can be redeemed for ETH 1:1.
- divETH can be freely traded or used in Defi for additional yield (e.g. using it as collateral, for lending, etc).
A DVT network of Node Operators. Per our current research, we expect that:
- Diva Operators will only require 1 ETH to set up and run a validator node — much more accessible than Ethereum’s 32 ETH requirement!
- A zero-configuration P2P validator client with simplified key management, enabling anyone to quickly set up a validator.
Diva aims to build the most resilient liquid staking protocol. Other key features include:
- A decentralized architecture where no single party holds validation keys, making it collusion-resistant.
- A trust-minimized P2P network where individual signers can go offline without impacting performance.
- Every Diva node is a full Ethereum node, potentially contributing thousands of new execution & beacon chain nodes to the network.
Diva does for the Consensus Layer what Layer 2s did for transactions: provide more flexible incentives for Stakers and Operators in its decentralized layer.
How does Diva work
When a Staker deposits 1 ETH in Diva, they obtain 1 divETH (1:1), which is liquid and freely tradable. Stakers will see the divETH balance in their wallets increase daily as it accrues staking rewards. For instance, if Ethereum’s staking yield is 5% per year, the staker will have 1.05 divETH in their wallet after 1 year. This is fully automated, with no user action needed. (A non-rebasing wdivETH token is available for the Defi apps that require it).
After Ethereum’s Capella update (ETA Mar ‘23), divETH can be unstaked at any time to redeem it for ETH 1:1. What you see is what you get.
When ETH is deposited into Diva it is combined with other deposits to satisfy the Ethereum Validators 32 ETH requirement. These validators are managed by the Node Operators, using Diva’s P2P consensus layer.
Diva is tolerant to censorship, downtime and malicious attacks — thanks to the cryptographic nature of the MPC DKG threshold signatures and to Diva’s built-in economic mechanisms.
divETH is a standard ERC20 token designed to be compatible with existing Liquid Staking Derivatives (LSD), allowing users to easily tap into current liquidity pools.
How is Diva different
Liquid Staking and DVT solutions already exist, so why build Diva?
The main issue is that these designs haven’t been integrated yet:
- Liquid staking protocols are highly centralized, with node operators having full control of validator keys — risky!
- DVT solutions are designed as middleware for existing staking setups, with no economic mechanisms linking stakers and DVT operators to each other’s success in a trustless and permissionless manner.
Diva’ solves these challenges by providing an economic model that aligns interests with reward distributions, fines, and operator collateral.
Diva is a fully integrated model that just works. divETH is a primitive set to gradually replace centralized staking tokens and eventually, become the best way to own ETH.
Meet the Divas
Diva is a community project pioneered by a group of cryptographers, node operators, and hardcore decentralizers.
We have recently raised a $3.5M Seed round lead by A&T Capital, Metaweb, and Gnosis, in addition to Bankless, OKX Ventures, DCV, Alphemy Capital, Very Early Ventures, staked.vc, and angels from Metacartel, Aave, Staking Rewards, zkEVM, ZKValidators, EthGlobal, EigenLayer, Aragon, Stakely, and many more.
We aim to establish Diva as the #1 staking solution in Ethereum, removing barriers to entry for both stakers and operators to enable the decentralization ideals we all strive for.
The golden age of staking
As of today only 14% of the total ETH supply is staked. This is significantly lower than the typical ~60% stake rate for PoS networks, so there is a lot of potential for growth!
The Shanghai Ethereum upgrade will reduce the risk associated with staking by allowing users to withdraw their staked ETH. This is expected to result in a significant increase in the amount of ETH staked in the months following its implementation date of March-April 2023, and also in users switching to staking providers to new options like Diva.
We have recently released a private testnet and will open it to the general public during Jan ’23 — yes, this month!
We’ll be making a progressive release with an initial version of Diva being audited as of now and expecting its mainnet release in the following months.
Stay tuned as we’ll share more details in a series of posts!! Next topics will cover tokenomics, DVT, client diversity, security, MEV and much more.
How to get involved
Glad you asked! There are three main ways:
- Run a Diva Node to help secure Ethereum. Join our Discord to start playing with our Testnet client!
- Support the network by being an early ETH staking partner
- Become a contributor or BUIDL for the Diva ecosystem. Jump into the community Discord and find ways to help!
And if you’re coming to EthDenver, let’s meet there! We’ll run an event for the Ethereum Staking community — BUIDLers, stakers, and node operators.
Follow us on Twitter: @divalabs and turn on notifications ;)