Mapping Out Eth 2.0

In this week’s episode, CoinDesk’s Will Foxley and Consensys’ Ben Edgington meet up with Coogan Brennan to discuss solo staking on Ethereum 2.0.

Coogan Brennan’s passion for training is contagious as he equips new generations of developers with information.  Brennan says, “Education has been the North Star for a lot of the work I have done in Ethereum.”  He sees the world of crypto as “learner led” and feels that “it’s such a young industry that no-one can claim to be a senior educator or developer.”

Coogan is a prime example of the learner-led culture and he first heard about crypto while running a tailoring business.  After years of grappling with the many complexities related to Ethereum, he now works as a trainer at ConsenSys, which is a leading Ethereum development shop.

Join us as we discuss a series of in-depth articles that Coogan wrote about becoming a solo staker on the Ethereum 2.0 Beacon Chain.

This journey into staking required a shift of mindset. We are all familiar with images of the Proof-of-Work server farms. It’s easy to imagine that we would need a similar kind of kit to run an Eth2 staking rig.

We also take the chance to discuss the complexities of working at a company like ConsenSys. Brennan explains a bit more about his work when he says, “to be an employee of ConsenSys is to live with great contradictions”. He sees one of ConsenSys’ great survival strategies as “its ability to fund wild dreamers.”

Finally, we inevitably arrive at our favorite topic, Ethereum governance. Coogan describes Ethereum as a “dynamic, moving, evolving beast.” Does this make it ungovernable?

Coogan is “always urging people to go further and further down the wormhole.” Listen to the full podcast to catch his infectious desire for learning.

Coogan’s articles:

• My Journey to Becoming a Validator on Ethereum 2.0: Part 1, Part 2
• How to Monitor Your Eth2 Validator and Analyze Your P&L
• How To Safely Migrate Your Ethereum 2.0 Validator Client

Twitter handles:

• ConsenSys Academy: @ConsenSysAcad
• Coogan: @BEB_AND_SON
• Will: @wsfoxley
• Ben: @benjaminion_xyz

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In this week’s episode, CoinDesk’s Christine Kim and Will Foxley, along with Consensys’ Ben Edgington, discuss the importance of naming conventions around the Ethereum 2.0 upgrade and the impact of staking on the long-term market value of ETH. 

Did you know the first use of the term “Ethereum 2.0” was by founder of Ethereum Vitalik Buterin back in April 2014 when he first began exploring the benefits of proof-of-stake (PoS) blockchain protocols?

At the time, Ethereum 2.0 referenced one thing and one thing only: a version of the Ethereum blockchain protocol secured entirely through proof-of-stake validation, as opposed to proof-of-work mining. 

Over the years, Ethereum 2.0 as a term has evolved and grown to encompass other improvements to the network including optimizations for scalability, smart contract functionality and blockchain interoperability. 

Given recent discussion over proposals to speed up Ethereum’s transition to PoS, certain developers such as the Ethereum Foundation’s Danny Ryan are pushing back on using the loaded terminology of Eth 2.0. 

“It’s not just about naming things. It’s about how the Ethereum roadmap has kind of evolved over the years,” said Edgington, adding: “It’s not just about changing names for the sake of it. It’s about saying, ‘We’re not doing a new chain anymore. This is no longer the plan. We are upgrading the existing chain.’”

As plans for Ethereum’s future change, so, too, will conventional naming for its updated roadmap. Keeping up with constant iteration to Eth 2.0 and what this upgrade will actually entail, however, is a “moving target” that, according to Foxley, many mainstream financial analysts are in the dark and left wondering about. 

Some, as I point out, are also worrying about the impacts of an imminent PoS protocol on the long-term value of ether. Given that under PoS it will require less computational energy to create new coins on Ethereum, could the market value of ether be negatively impacted as a result? 

Listen to the full podcast to hear from Foxley, Edgington and Kim on what’s at stake for Eth 2.0. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   

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In this week’s episode, CoinDesk’s Christine Kim and Will Foxley, along with Consensys’ Ben Edgington, discuss the latest proposals fast-tracking Ethereum’s transition to a proof-of-stake (PoS) consensus protocol. 

The promises of Ethereum 2.0 are changing in important ways. 

On Thursday, March 11, Ethereum founder Vitalik Buterin published a blog post detailing how the network’s transition from a proof-of-work (PoW) consensus protocol to PoS could be executed far more quickly than developers had originally planned. 

“It would leave a lot of loose ends that we’d have to work on and tidy up later, but it’s looking like this [transition] could be months rather than years [away],” said Edgington. 

There are several reasons why a move to PoS in the near term, rather than long term, looks attractive in the eyes of Ethereum developers. First, it would mean the resistance from proponents of the Ethereum miner community towards reductions in block reward through Ethereum Improvement Proposal 1559 and changes to the network’s consensus algorithm would be short-lived. With a PoS upgrade, miners would effectively be forked from the Ethereum protocol entirely and replaced with other network stakeholders known as “validators.” 

Second, Edgington noted there’s been “a big backlash” about the environmental impact of Ethereum’s PoW algorithm securing the value of several high-profile non-fungible tokens (NFTs). As the value on Ethereum grows through decentralized applications (dapps) and tokens, there is greater pressure to reduce the energy consumption of the underlying protocol and reduce the network’s environmental footprint through a switch to PoS. 

At the same time, there are equally important reasons why a move to PoS in the near term could negatively impact Ethereum. 

First, the process for coming to an agreement about the development roadmap and timeline for Eth 2.0 has been restricted to a comparatively small group of developers and researchers. Moving forward with a transition to PoS now would mean all decisions are made with a much larger community of network stakeholders and through a more complicated process of governance. This is likely to slow research and development for other innovative aspects of Eth 2.0 – namely, the scalability promises of this multi-year upgrade. 

The second reason for resisting a move to PoS for Ethereum in the near future is that in order to do so, core features and functionalities initially envisioned for the protocol would need to be delayed. For example, sharding, which is the primary scaling solution for Ethereum on a protocol layer, would have to wait in order for an Eth 2.0 transition to happen posthaste. 

Are protocol developers giving up too much of the grand vision originally outlined for Eth 2.0 in favor of a quick fix solution to PoS? Listen to the full podcast to hear from Kim, Foxley and Edgington on what’s at stake for Eth 2.0. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   

Valid Points (https://www.coindesk.com/newsletter/valid-points)  

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington are joined by “Superphiz,” the pseudonymous moderator and lead organizer of the Reddit ETH Staker Community. 

/r/EthStaker is an online community of investors, traders, users and developers dedicated to the education and exploration of topics related to Ethereum’s live transformation into a proof-of-stake (PoS) protocol. 

Since the launch of Ethereum’s parallel PoS blockchain back on Dec. 1, 2020, Superphiz and his fellow ETH Staker community members have been busy working on a number of projects meant to encourage user participation in the new network. 

First and foremost, there is the StakeHouse project aimed at reducing the complexity of staking on Ethereum 2.0. According to Superphiz, the biggest “hurdle” preventing people from becoming validators on Eth 2.0 is the client software installation process. 

In order to stake on Eth 2.0 and earn rewards as a validator on the network, users must choose one of four software clients to run on a computer. The StakeHouse team is currently building “a graphical one-click installer” that will remove the minute intricacies of loading a particular Eth 2.0 client onto a user’s device. 

“You load up a graphical interface and it says, ‘Which client do you want to install?’ You choose one through four. Press the button and then select the location of your key. Thank you. You’re done. It should be that easy,” said Superphiz. 

Second, there is the Ethereum Due Diligence Committee. Members of the ETH Staker community have created a website to evaluate the trustworthiness of several Eth 2.0 staking pools and will soon be publishing formal rating schemes by which to grade each staking service. 

In doing so, the motivation is to help train users on recognizing healthy staking pools and hold staking pools accountable to a shared standard of security and usability. 

Finally, the ETH Staker community also supports knowledge sharing and increased awareness about the development roadmap of Eth 2.0 through its Eth 2.0 Studymaster Program. Listen to the full podcast to hear from Superphiz on what the program entails and how it is set up. 

Links mentioned in this podcast: 

• /r/EthStaker (https://www.reddit.com/r/ethstaker/) 
• ETHStaker YouTube channel (https://www.youtube.com/channel/UCeHmYPRYZddrM1tfJLfLVDA) 
• Ethereum Study Master Program (https://ethereumstudymaster.com/courses/)  

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In this week’s episode of “Mapping Out Eth 2.0,” CoinDesk’s Christine Kim and Will Foxley and Consensys’ Ben Edgington talk about the “sneak” update made to the Ethereum 2.0 protocol that will help enable trustless staking pools to emerge on the network. 

All Eth 2.0 validators after staking 32 ETH on the network are required to generate two cryptographic keys. One is used to sign off validator responsibilities such as attesting to blocks. The other, called the “withdrawal key,” is held until a validator exits the network and withdraws his or her staked ether. 

Up until mid-February, no user could be certain where funds would be deposited after a validator withdraws their stake. Developers have recently upgraded Eth 2.0 code so that withdrawals of validator funds can be linked to Ethereum accounts and wallets active on the original Ethereum blockchain. 

To be clear, the pathway for where validator funds would land has been specified in the Eth 2.0 protocol through this update, but withdrawals and ether transfers are still not enabled on the network. Clarity on where funds will go after validators can move their stake off the network is positive news for Eth 2.0 staking pools. 

The first code update of Eth 2.0 enables staking pools to set up trustless smart contracts on Ethereum to divide up earned rewards between participants. This, according to Edgington, is “a big deal” for decentralized staking services such as RocketPool that differentiate themselves from competitors by offering a transparent and distributed way to validate on Eth 2.0. 

The mechanism that allows validators funds to be withdrawn to existing Ethereum accounts also signals a change in the Eth 2.0 development timetable. 

“[The Eth1 and Eth2] merge has come forward in the timetable. Previously, it was envisaged at being quite distant after we’ve done sharding and after we’ve done some kind of execution environment technology. But now we are bringing the merge forward in the timetable and just putting Eth1 on top of the beacon chain,” said Edgington. 

The new plan is to “dock” Eth1 like a plane to Eth2. 

Listen to the full podcast episode to learn more about the docking plan for Ethereum. 

Links mentioned in this podcast: 

• What’s New In Eth2 (eth2.news)
• Valid Points (https://www.coindesk.com/newsletter/valid-points) 

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“There was a period [in early 2016] when all our sales teams … were coming back from client meetings saying that all our clients want to talk about something called blockchain. Can you find out what it is?”

That’s Ben Edgington, the lead product owner of the Ethereum 2.0 client Teku and the new co-host for the CoinDesk podcast series, “Mapping Out Eth 2.0.”  

He fell down the “Ethereum rabbit hole” in 2016 when his colleagues at Hitachi Europe, his employer at the time, recommended he look into the buzz about blockchain technology. 

His research compelled him to spend his weekends and evenings learning more about Ethereum. Then, in October 2017, Edgington made his passion his full-time job. 

“I joined ConsenSys in October 2017 initially to work on enterprise Ethereum topics but my passion was really on public network stuff. I just love to understand things from the bottom up. I like to understand the nuts and bolts of what makes things work,” said Edgington. 

This naturally led him to focus more of his time at ConsenSys on Ethereum 2.0 and developing its base layer technology through Teku. Written in the programming language Java, Teku is branded as the software client for institutions that want to stake their ether on Eth 2.0 and earn validator rewards. 

Speaking to the development process for Eth 2.0, Edgington admitted the open-source nature of the technology and protocol results in a “massive coordination problem” for developers. Without a single source of authority guiding research and development, the work to advance Eth 2.0 is often inefficient and difficult. 

That said, this entire process has its strengths. 

“I would much rather be doing things this way than in a [private] lab,” said Edgington, adding, “It ends up with a much better product at the end of the process.”

To hear more about Edgington’s work on Eth 2.0 and his career in blockchain, listen to the full podcast episode. 

Links mentioned in the podcast: 

Valid Points newsletter - https://www.coindesk.com/newsletter/valid-points 

What’s New in Eth2 newsletter - https://eth2.news

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In this episode, Christine Kim and Will Foxley discuss with the co-lead developer of Prysmatic Labs, Raul Jordan, the common reasons behind slashing events on Ethereum 2.0 and how they can be prevented. 

“Keep it simple.”

Jordan’s best advice to prevent validators who have staked 32 ETH (worth roughly $56,500 at time of writing) from being booted off the Eth 2.0 network for suspicious behaviour was to make operations as straightforward and uncomplicated as possible. 

“A lot of people try to get really clever at their staking setup. They’re like I need zero down time. I cannot afford having my software down for a second. … A lot of stakers at home try to go for these really complicated setups and I mean to be honest they’re fairly sophisticated. They know what they’re doing but there’s always room for something to go wrong,” Jordan said. 

Validators are the equivalent to miners on Ethereum’s new proof-of-stake blockchain dubbed Eth 2.0. These users earn rewards in the form of interest on their staked ether for running software that verifies and helps produce new blocks. 

Over-engineering validator setups can lead to what are called slashing events, according to Jordan, which are penalties exacted by the network to deter users from launching malicious attacks. However, it’s impossible for the software of Eth 2.0 to discern what is a premeditated network attack from an honest mistake by a sophisticated user simply trying to maximize his or her earnings as a validator. 

As a result, the best way to ensure a validator on Eth 2.0 isn’t slashed is to accept some downtime on the machine. Downtime means any period of time where validator operations aren’t actively running or connected to the internet and therefore not earning rewards. 

“If you’re online for only two-thirds of the year, you’re still profitable as a validator. So why do this? The risk is not worth it,” said Jordan. “If you get slashed you’re going to lose some funds. You’re going to get ejected [from the network] and then your ether is locked in there not earning anything until you can withdraw in the future.” 

Mining on Ethereum and other proof-of-work blockchains such as Bitcoin are notorious for being activities where feats of engineering and specialization actually increase the chances of earning rewards. Application-specific integrated circuits (ASICs) are prime examples of technologies built to maximize the profits of Ethereum and Bitcoin miners. 

However, the potential for slashing on Ethereum 2.0 is one of the main characteristics of the network that discourages similar types of innovation from profit-motivated validators.

If there’s any upside to slashing, it’s that it has encouraged Eth 2.0 developers like Jordan to work harder at building standards between all Eth 2.0 software clients to make the user experience as smooth and as seamless as possible. 

To learn more about these standardization efforts and how they’re helping educate users about running validator operations on Eth 2.0, listen to the full podcast episode with Christine Kim, Will Foxley and Raul Jordan. 

For more weekly insights on Eth 2.0 development, consider checking out Foxley and I’s weekly newsletter, Valid Points. 

Links mentioned in the podcast: 

Raul Jordan’s blog post - 

https://medium.com/prysmatic-labs/eth2-slashing-prevention-tips-f6faa5025f50 

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In this episode, Christine Kim and Will Foxley discuss with David Hoffman, the co-founder of Bankless, the market implications of a dual Ethereum blockchain and what new realities staking presents to the long-term value proposition of ether. 

According to Hoffman’s “Ether as a triple-point asset” thesis, Ethereum 2.0 bolsters ether’s value proposition as a capital asset. This is because Eth 2.0 enables staking on the protocol level. 

For all ether holders with a minimum balance of 32 ETH, they can earn an annual percentage return for locking in their crypto assets to the network and becoming a validator. This is a use case for ether on top of its existing functionalities as a form of payment for fees and as a store of value in decentralized finance applications. 

Eth 2.0 strengthens the diverse ways in which ether can be used. However, it also complicates the monetary policy of the Ethereum protocol. Instead of ether issuance being restricted to one blockchain network, the launch of Eth 2.0 has effectively created two parallel networks both issuing ether and driving up the crypto asset’s total supply. 

However, the dual issuance of ether is a temporary state that in the long run will make the Ethereum economy more “sustainable,” according to Hoffman. 

“Ethereum has committed to this early research and development phase in the beginnings of its genesis. That’s the whole entire effort behind Eth 2.0 and that’s why the monetary policy of ether is so jagged and unpredictable because the monetary policy of ether is a tool for Ethereum to reach its goals,” said Hoffman. 

And what are Ethereum’s goals exactly? Listen to the full episode to find out! 

For more weekly insights on Eth 2.0 development, be sure to check out and subscribe to Will Foxley and I’s weekly newsletter, Valid Points. 

Links mentioned in the podcast: 

EthHub Explainer on Ethereum Monetary Policy - 

https://docs.ethhub.io/ethereum-basics/monetary-policy/ 

Lyn Alden’s blog post - 

https://www.lynalden.com/ethereum-analysis/

Rocket Pool - 

https://www.rocketpool.net

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In this episode, Christine Kim and Will Foxley discuss with Ethereum Foundation researcher Danny Ryan the roll-out of the Ethereum 2.0 development roadmap, starting with the launch of phase 0 and the Beacon Chain. 

“Not a surprise but a relief.”

That’s how Ryan characterized how he felt about the successful activation of the Eth 2.0 network in early December. 

“We were confident going in but it’s been excellent to see it go so well,” Ryan said. “Compared to some of our testnet launches, they got better and better. But the mainnet launch was more successful than any of those.”

As of Jan. 27, the parallel Ethereum network dubbed “Ethereum 2.0” has accumulated over $3.6 billion in staked ether. There are over 72,000 active participants called “validators” securing network operations, with another 16,000 awaiting activation in a queue for entry into Eth 2.0. 

The absence of unexpected bugs, hacks and attacks has certainly been the source of much celebration for Ethereum developers. Ben Edgington, product owner for Eth 2.0 software client Teku, wrote in a weekly newsletter on Dec. 12, “It’s been a wonderfully dull [11] days since genesis: [A]pparently it all just works.”

It’s not all perfect, however. 

Ryan explained that there are a few fixes, tweaks and improvements he’d like to see made on Eth 2.0 over the next few months. First and foremost is “an iterative upgrade in the middle of this year which would clean up a couple of things in state management, more technical-side things and also add a nice feature which enables light clients as a first class citizen for the Beacon Chain.” (More information on Eth 2.0’s first planned upgrade here.)

Ryan mentioned he is optimistic the distribution of software clients being used by validators to connect to the network would diversify.

“It looks like 50% of nodes on the network are Prysm,” Ryan said. Nodes are computers that store and share blockchain data. “It’s not quite where we want it to be. I’ll say time and time again there are four fantastic clients out there. I don’t run Prysm in my own setup and I’m stable and happy.”

Find out more about what other developments and milestones Ryan expects the Eth 2.0 network to accomplish this year by listening to the full podcast episode. 

For weekly analysis and commentary about Ethereum 2.0, be sure to sign up for CoinDesk’s Valid Points newsletter. 

Links mentioned in the podcast: 

Danny Ryan’s blog post - 

https://blog.ethereum.org/2021/01/20/the-state-of-eth2-january-2021/ 

Etherscan’s breakdown of Eth 2.0 deposits - 

https://bi.etherscan.io/public/dashboards/KH9jbP687szqlAnHiNEfNictrwNhvdOEQl0PwB6m?org_slug=default 

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In this episode, Christine Kim and Will Foxley discuss with CoinDesk Director of Engineering Spencer Beggs how the idea of staking on Ethereum 2.0 came about and the early decisions that had to be made to get the project started.  

“I feel I have become paranoid doing this project.”

At the start of the new year, CoinDesk Director of Engineering Spencer Beggs began working on setting up an Ethereum 2.0 validator node. The process, he explained, was particularly interesting from “the security perspective.” 

“You really do think about security. Where are you storing your keys and your mnemonics? … You start thinking in a really paranoid manner,” said Beggs.

Ethereum 2.0 is a new parallel Ethereum blockchain that launched in December. Designed to ultimately replace Ethereum’s base layer technology and radically improve network scalability, the only actors on Eth 2.0 able to engage meaningfully with the new blockchain are so-called validators.

As unveiled in November, CoinDesk has embarked on a project to run validator operations in-house and glean direct, real-time data about Eth 2.0. The goal is to deepen CoinDesk’s editorial coverage of the network at its most untested and potentially vulnerable phases of development. 

At the same time, this project has also offered important lessons about the trade-offs and decisions the users who are considering joining the Eth 2.0 network will make. 

Outside of learning about security, CoinDesk tech reporter Will Foxley recounts wrestling with the decision of whether to use a staking-as-a-service provider or run a validator node independently during the early weeks of the Valid Points project. 

“We started looking around at staking-as-a-service providers, and there are a lot out there. There’s gotta be over 15 at this point, not including [cryptocurrency] exchanges that operate staking services like Coinbase or Kraken. We were looking at who can do this for us quickly so we can get up and start running … and who can provide data for us,” said Foxley. 

For the full breakdown of how CoinDesk is going about staking on Ethereum 2.0, the important decisions that were made along the way and the lessons learned, listen to the inaugural episode of “Mapping Out Eth 2.0.” 

Foxley and Kim also have a weekly newsletter tied to the Valid Points project where they dive deeper into Ethereum 2.0-related topics and the health of CoinDesk’s validator node. To get these updates straight to your inbox, sign-up for free here. 

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