After Shapella: Is Distributed Validator Technology (DVT) the Next Narrative for ETH?
Breaking down DVTs - the important trend you should be paying attention to
Introduction
Since Ethereum’s Merge, we have witnessed the Liquid Staking Derivative (LSD) narrative flourish. More recently, a significant milestone in Ethereum's development came with the Shanghai-Capella upgrade, which enabled the withdrawal of staked ETH, marking a critical juncture in its roadmap.
The rapid expansion of the liquid staking market, however, has led to concerns about concentration. For instance, Lido and Coinbase collectively control 90% of the ETH liquid staking market (Lido alone claims 75% of the market).
Liquid staking protocols have the power to allocate ETH to validators and manage the staking and withdrawal processes, which could have direct impacts on Ethereum's network security. This concentration of power raises concerns about the long-term implications for the Ethereum ecosystem. As the liquid staking market evolves, addressing these risks is crucial for maintaining the network's security and ensuring a healthy, decentralized future.
Following the success of The Merge and the ascent of liquid staking, the market is now eagerly seeking the next big narrative to unfold after the Shanghai upgrade.
One concept highlighted in Vitalik’s Ethereum roadmap is Distributed Validator Technology (DVT), which is a system that distributes the job of an Ethereum validator among a set of distributed nodes.
As the community anticipates the next breakthrough, could DVT emerge as an extension to the liquid staking narrative?
In this memo we seek to explore:
How do validators secure the Ethereum network?
What are the issues with current staking methods?
What is Distributed Validator Technology (DVT)?
Why do we need DVT and what is its purpose?
2 projects in the DVT space
Is DVT the next big narrative for Ethereum?