Understand and Win the Ethereum Validator Rewards Game: Unlock Higher APYs and Increased Efficiency with the bloXroute Validator Gateway
As we navigate almost a year and a half into this new Proof-of-Stake era post-Merge, the fundamentals of staking have settled and we're ushering in a new phase where performance and optimization are paramount, underpinning the network's security, efficiency, and scalability. Efforts to optimize validator performance have catalyzed the development of numerous strategies and tools, among which timing games stand out as a hot topic. This complex landscape requires validators to navigate through intricacies with precision and strategic insight, making the pursuit of optimization a blend of technical expertise and competitive strategy.
To address these intricate challenges, bloXroute developed the Validator Gateway, an innovative tool designed to significantly improve APY and validator effectiveness. Comprising the Relay-Proxy and BDN Gateway, the Validator Gateway is engineered to reduce latency between the validator nodes and MEV relays by leveraging more efficient getHeader and getPayload mechanics in the block proposing process. These mechanics not only help prevent missed slots, but also grant validators enhanced controls over timing parameters that are crucial for maximizing rewards. Combining these efficiencies with bloXroute’s industry leading blockchain data acceleration infrastructure, the Blockchain Distribution Network (BDN), provides superior node synchronization through faster block and transaction propagation.
Initial usage data shows notable improvements, delivering an increase of 5% or more in APY rewards and 0.5% - 1.5% in validator effectiveness. For the 19K+ actively participating validators, more than half of their blocks are going through the Validator Gateway, resulting in an overall increase of 6% in blocks won by the Relay-Proxy. This development represents a vital advancement, offering validators, stakers, and infrastructure projects involved in the block creation process a strategic edge in the competitive and ever-evolving Ethereum ecosystem. The Validator Gateway is being embraced by key players across the blockchain ecosystem, demonstrating its broad appeal and utility. Early adoption partners such as HashKey Cloud and InfStones, alongside collaborations with Figment and Blockdaemon, showcase the product’s critical role in supporting the infrastructure needs of the Ethereum community.
Understanding Validator Performance
Ethereum validators are rewarded for playing their crucial role in the ecosystem based on three main activities: attestations, proposals, and sync committee signatures. Each of these activities is vital, as they collectively ensure the blockchain is accurate, up-to-date, and secure. However, the rewards from these activities are not distributed evenly, leading to what's known as reward variance. This variance arises because the opportunity to propose a block or be part of a sync committee is not guaranteed for every validator in every cycle, influenced by factors like the total number of active validators and the random selection process.
Effectiveness ratings, as tracked by platforms like rated.network, serve as a crucial benchmark for assessing validator performance, where even a small difference can signify a vast disparity in effectiveness. For instance, a rating of 94% might be deemed suboptimal, while 97% is considered excellent, highlighting the competitive nature of validator operations. However, achieving perfection in this domain is practically unattainable, as no validator consistently reaches a 100% effectiveness rating.
There are various reasons for this shortfall, ranging from missed slots due to latency issues to being too distant from relay points, or simply not being in sync with the network's current state. Validators often struggle with these aspects due to various factors such as inadequate latency management, suboptimal synchronization with relays, and inefficiencies in handling 'getHeader' and 'getPayload' requests. The Validator Gateway's design specifically targets these issues, ensuring low latency connections and optimal data flow between validators and bloXroute relays.
Key Components of the Validator Gateway
Navigating the complexities of reward variance and validator effectiveness requires innovative solutions that can streamline validators' performance and enhance their reward outcomes. This is where the Validator Gateway comes in, introducing two pivotal components: the Relay-Proxy and the BDN Gateway.
Relay-Proxy: The Relay-Proxy, utilizing a gRPC connection to bloXroute relays, streamlines tasks ranging from registration to 'getHeader' and 'getPayload' requests. This connection significantly diminishes the latency between validators and relays, optimizing the time validators have to access and select the most profitable headers streamed during slot proposals. Enhanced to work seamlessly with MEV-boost or vouch clients, the Relay-Proxy acts akin to adding an additional MEV relay.
Unlike the traditional process where a validator queries each connected MEV relay once per slot, receiving individual responses that may not always capture the highest reward opportunity, the Relay-Proxy significantly optimizes this approach. Positioned geographically close to the user's validator node, it utilizes a low latency gRPC connection to continuously stream headers from MEV relays. This ensures that validators receive the most profitable header available at any moment within the slot, as header rewards typically increase as the slot progresses, but the highest-reward header can arrive unpredictably. This advanced, low latency header delivery system, combined with the Relay-Proxy's custom slot timing feature, substantially boosts APY by enhancing block proposal performance. Validators and node operators are thus equipped to fully leverage their allotted proposal time, significantly reducing the risk of missing slots and optimizing reward opportunities. Designed for seamless integration, the Relay-Proxy serves as a crucial link to mev-boost or vouch clients, eliminating the need for modifications while fulfilling all essential network requests.
BDN Gateway: Complementing the Relay-Proxy is the BDN Gateway, which leverages bloXroute's Blockchain Distribution Network. The BDN has established itself as a pillar of efficiency and performance within the DeFi and MEV ecosystems, trusted by users for over five years. This network excels in accelerating the propagation of blockchain data across various networks, ensuring that validators remain in sync with the network’s state without the delays that can compromise performance and rewards.
The integration of the BDN Gateway within the Validator Gateway framework provides validators with a unique competitive advantage. It facilitates faster block propagation and enhanced synchronization, key factors that contribute to a validator's effectiveness and overall reward potential. By improving the speed at which blocks and attestations are propagated across the network, the BDN Gateway helps to mitigate the impact of reward variance, offering validators a more stable and predictable performance landscape.
The combined utilization of a gRPC connection for the Relay-Proxy and the application of the BDN for speeding up proposal times not only accelerates 'getPayload' times to avoid missed slots, but also ensures validators have timely access to profitable headers, thereby enhancing their chance to propose blocks successfully. By enhancing effectiveness ratings by 0.5% to 1.5%, the Validator Gateway provides a substantial boost that can significantly impact validators' rewards. This improvement is critical in a landscape where every fraction of a percentage point in effectiveness can translate into a meaningful increase in APY.
The Validator Gateway is positioned for a suite of upcoming improvements and new features aimed at further optimizing validator performance. Among these, a standout goal is to elevate the APY increase to a new standard of 10% or higher, a milestone that reflects our commitment to pushing the boundaries of what's possible in validator efficiency and rewards. Our push for higher APY will be driven by the introduction of a Self-Hosted Gateway option aimed at providing validators with further customizability to tailor the system to their specific needs. This addition, along with an array of upcoming new features, represents our dedication to accommodating a broader range of operational preferences and further underscores our commitment to innovation and continuous improvement in the blockchain ecosystem. The bloXroute team has also been working closely with Lido to streamline the process for validators and node operators with varying setups to integrate the Validator Gateway.
The process for configuring the Validator Gateway has been streamlined into just a few simple steps. After registering for a bloXroute account, the initial setup involves adding the Relay-Proxy as an additional relay to the mev-boost -relays argument. Once that is added, you’ll need to fill out this form so that our team can provide you the Peer ID required to connect the Validator Gateway to the Consensus Layer by adding it as a trusted peer. Please feel free to contact our team at email@example.com if you have any questions.
- What differentiates the Validator Gateway from other validator timing tools?
- The use of a gRPC connection in the Relay-Proxy significantly reduces latency and provides robust support even in lower performance regions.
- Access to the BDN offers validators an effectiveness rating boost by keeping them in sync with the world's fastest global block propagation network.
- Custom sleep and max_sleep parameters allow validators to fine-tune the timing of their operations, as detailed here.
- How will you address the delay controversy regarding centralization?
- A major concern in the validator community is that timing games can force colocation with major relays, requiring close proximity for optimal performance, resulting in centralization.
- The Validator Gateway is designed to not require colocation and actually promotes decentralization by making lower performing regions viable through the ultra-low latency gRPC connection to the Relay-Proxy for validator nodes located anywhere.
- With the adjustable sleep parameters, the timing delay is entirely in your control, we simply provide the tools for you to be able to modify it as you see best fit for your validator operations.
- What if I’m a Lido validator?
- We are working closely with the Lido team to determine the best path forward for Lido validators interested in implementing the Validator Gateway.
- If you are a Node Operator who utilizes the Lido protocol, please express your interest in the Validator Gateway in this forum.