Vladislav Kurenkov

Ethereum Product Manager at P2P.org

5 posts
Unlock 10% more block rewards with MEV Maximizer feature

<p>Having all MEV relays connected to the validator is already a widespread industry practice. Every operator utilizes it to collect more bids and extract more MEV rewards. But is it maximum?</p><p>The team at <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> constantly explores new opportunities and technologies to increase staking yield. We are thrilled to announce that we have made a step forward to MEV maximization, <strong>allowing our clients to extract an additional 10% more from block rewards*.</strong></p><p>Let’s dive into how our team has been able to achieve this as one of the first staking validators in the industry.</p><div class="kg-card kg-button-card kg-align-center"><a href="https://p2p.org/start?utm_source=blog&utm_medium=article_mev&utm_campaign=brewards" class="kg-btn kg-btn-accent">Get special offer for ETH staking!</a></div><h3 id="exploring-opportunities">Exploring opportunities</h3><p>The validator has four seconds from the beginning of its slot to create, sign, and propagate the block to the network. By default at 0.0 sec validator requests bids from connected MEV relays, waiting some time for response, chooses the most profitable one and sign it. </p><p>But what if some builder finds a new MEV opportunity with a higher bid a little later than the start of the slot? Likely, validator will lose this opportunity.</p><p>We observe numerous examples when bids increased drastically during the first seconds of the slot. There are cases when the bid has risen from 0.05 to 300 ETH. Charts below demonstrate it.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/11/Untitled-9.png" class="kg-image" alt loading="lazy" width="1658" height="720" srcset="https://p2p.org/economy/content/images/size/w600/2023/11/Untitled-9.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/11/Untitled-9.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/11/Untitled-9.png 1600w, https://p2p.org/economy/content/images/2023/11/Untitled-9.png 1658w" sizes="(min-width: 720px) 720px"></figure><div class="kg-card kg-callout-card kg-callout-card-red"><div class="kg-callout-emoji">🧐</div><div class="kg-callout-text">Every 4th block, reward increases more than 10% during the 1st second</div></div><h3 id="why-do-builders-increase-their-bids-over-time">Why do builders increase their bids over time?</h3><p>Let's delve a bit deeper to understand why builders increase their bids over time. The general reasons are as follows:</p><ul><li>Builders strive for inclusion and need to raise their stakes to outperform competitors in a dynamic block auction occurring on relays.</li><li>The market landscape updates more frequently than the Ethereum block time, causing the potential extracted value to fluctuate as time passes and more information/order flow becomes available.</li></ul><p>Several examples illustrate these points:</p><ul><li>A new DEX swap in the mempool creates a new MEV opportunity.</li><li>Changes in the USDC/ETH price on some centralized exchanges (CEX) just after the slot starts can lead to arbitrage opportunities on decentralized exchanges (DEX) before they disappear in the next slot.</li></ul><h3 id="looking-for-the-golden-mean-in-delaying-mev-request">Looking for the golden mean in delaying MEV request</h3><p>Historical data shows that waiting more time before requesting MEV may increase block rewards up to 15% on average. </p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/11/Untitled--1-.png" class="kg-image" alt loading="lazy" width="1868" height="998" srcset="https://p2p.org/economy/content/images/size/w600/2023/11/Untitled--1-.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/11/Untitled--1-.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/11/Untitled--1-.png 1600w, https://p2p.org/economy/content/images/2023/11/Untitled--1-.png 1868w" sizes="(min-width: 720px) 720px"></figure><p>However we can’t delay the MEV request too much for two reasons:</p><ol><li>The validator has 4 seconds to request/receive bids, sign the block, and send it to the MEV relay, leaving enough time for block propagation within the network. High delay in MEV request shifts block propagation and can lead to block misses.</li><li>Late blocks due to high delay will lead to an increased number of forks and reorgs since some nodes won’t receive new blocks timely.</li></ol><p>Speaking about the second point, the plot below shows that 95% of blocks utilize bids submitted before 1.1 sec. Having that, we have about <a href="https://reorg.pics/?ref=p2p.org">0.1% reorgs currently</a>. Increasing MEV requesting delay too much may increase the number of reorgs drastically.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/11/Untitled--2-.png" class="kg-image" alt loading="lazy" width="1968" height="994" srcset="https://p2p.org/economy/content/images/size/w600/2023/11/Untitled--2-.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/11/Untitled--2-.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/11/Untitled--2-.png 1600w, https://p2p.org/economy/content/images/2023/11/Untitled--2-.png 1968w" sizes="(min-width: 720px) 720px"></figure><p>P2P.org team has conducted enhanced experiments and infra optimisations to find a golden mean between maximizing block rewards and staying healthy for the network (not producing missed or late blocks). </p><p>This allowed us to roll out the MEV Maximizer feature for our clients, the first of its kind in the industry.</p><h3 id="maximizing-rewards">Maximizing rewards</h3><p>MEV Maximizer feature allows validators to catch larger MEV rewards. Chart below demonstrates a few examples of the block rewards increase for the particular slots:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/11/image-11.png" class="kg-image" alt loading="lazy" width="1942" height="978" srcset="https://p2p.org/economy/content/images/size/w600/2023/11/image-11.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/11/image-11.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/11/image-11.png 1600w, https://p2p.org/economy/content/images/2023/11/image-11.png 1942w" sizes="(min-width: 720px) 720px"></figure><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/11/image-9.png" class="kg-image" alt loading="lazy" width="1960" height="1020" srcset="https://p2p.org/economy/content/images/size/w600/2023/11/image-9.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/11/image-9.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/11/image-9.png 1600w, https://p2p.org/economy/content/images/2023/11/image-9.png 1960w" sizes="(min-width: 720px) 720px"></figure><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/11/image-10.png" class="kg-image" alt loading="lazy" width="1960" height="1020" srcset="https://p2p.org/economy/content/images/size/w600/2023/11/image-10.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/11/image-10.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/11/image-10.png 1600w, https://p2p.org/economy/content/images/2023/11/image-10.png 1960w" sizes="(min-width: 720px) 720px"></figure><div class="kg-card kg-callout-card kg-callout-card-red"><div class="kg-callout-emoji">🔥</div><div class="kg-callout-text"><strong>10% more block rewards</strong> - that is what our clients already get*</div></div><p>It's fair to mention that not every block shows such a significant increase in rewards, and the 10% block rewards increase was gotten for randomized sample of 4000 blocks comparing value of maximum bids change over time for discovered slots and initial bids at 0.0 slot time. A client with only a few validators due to a low number of proposed blocks may be unlucky and receive zero increase, or conversely, they may receive an extra-large MEV of 10 ETH or more.</p><p>Speaking about yield, block rewards (or execution rewards) account for 30% of total rewards, increasing APR by <code>10% x 30% = 3%</code>  from 4.20% to 4.33% currently. So, if you have 250 validators, you can expect to receive an additional ±10 ETH in rewards per year, the calculations are the following <code>250 validators x 32 ETH x 0.13 % extra APR</code> .</p><p>Stake with <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> to get early access to the newest technologies &amp; unique perks, increasing your revenue.</p><div class="kg-card kg-button-card kg-align-center"><a href="https://eth.p2p.org/auth?utm_source=blog&utm_medium=article_mev&utm_campaign=hrewards" class="kg-btn kg-btn-accent">Stake ETH with P2P.org in 1 click</a></div><h3 id="other-exclusive-p2porg-perks">Other exclusive P2P.org perks</h3><ol><li><a href="https://p2p.org/economy/eigen-layer-restaking-with-p2p-org-guide/">Restaking with Eigen Layer</a>. 0.5%-5pp. APR increase expected after Eigen Layer rewardslaunch in Q3 2024. Stake with Eigen Layer now to book this opportunity <code>already available</code></li><li><a href="https://p2p.org/networks/ethereum?ref=p2p.org">Opt-in MEV relays</a>. Configure your validator to remain regulatory-compliant or support decentralization <code>already available</code></li><li><a href="https://p2p.org/economy/a-step-by-step-guide-using-the-p2p-org-eth-staking-app-on-safe/">Stake ETH with Safe</a>. The first-of-its-kind app on the Safe Apps Ecosystem allows users to quickly and easily direct stake ETH with just a few clicks while maintaining full custody of their assets. <code>already available</code></li><li>Distributed validator staking powered by SSV. Don’t trust <a href="http://p2p.org/?ref=p2p.org">P2P.org</a>, set up in 1 click a decentralized validator backed by the best operators: Allnodes, Stakely, Huobi and <a href="http://p2p.org/?ref=p2p.org">P2P.org</a>.  <code>coming soon</code></li></ol><p>*The calculation is based solely on the methods shown above. Results calculated using other methods may differ, including on the low side. IN ANY CASE THERE ARE NO GUARANTEED EARNINGS.</p>

Vladislav Kurenkov

from p2p validator

Beyond Boundaries, Large-Scale ETH Staking for Institutions

<p></p><p>As part of our ongoing effort to support Institutional demand and the needs of large ETH stakers, P2P.org has developed a new smart contract that allows true large scale stake of up to 12,800 ETH in a single transaction. (you can find the audit report by @MixBytes <a href="https://p2p.org/networks/ethereum/staking/audit.pdf?ref=p2p.org">here</a>).</p><div class="kg-card kg-callout-card kg-callout-card-blue"><div class="kg-callout-text">smart contract address: <a href="https://etherscan.io/address/0x8e76a33f1aFf7EB15DE832810506814aF4789536?ref=p2p.org">0x8e76a33f1aFf7EB15DE832810506814aF4789536</a></div></div><p>This groundbreaking technology is just one of the many pillars supporting our innovative non-custodial staking platform. It allows users to have set fees agreed upon before you stake via MetaMask, Ledger &amp; Safe. <strong>This new feature allows true institutional staking without boundaries. </strong></p><p><strong>Breaking the industry norms which currently only allows a user to stake up to 3,200 ETH from a wallet in a single transaction.</strong><br><br>We received tens of questions about the purpose of the 3200 $ETH limitation. At that moment, we realized how inconvenient that standard was. It needed to be fixed. The service is meant to be simple and user-friendly!<br>Imagine: You want to stake 12 thousand ETH and you used to have to make 3 transactions. You pay for gas. Plus, it is especially inconvenient if you have multisig.  Less transactions - better. It's easy to make mistakes and lose money when you're signing the fifth transaction in a row<br><br>We have solved these problems. Now we have truly institutional stake feature. 12k ETH per one transaction. One click staking. It should be as simple as that.<br><br>But truly institutional staking means something else. It’s big. True. But it’s <strong>SIMPLE AND FAIR</strong>, too!</p><p>Unlike others, we won't overcharge you as your Ethereum rewards grow. Our fee is precisely agreed upon, on-chain. You won't be overpaying and it allows you to stake confidently with all the clarity.</p><p>Context: There are two revenue streams in Ethereum, consensus rewards for performing validators duties like attestations and execution rewards for proposing blocks (the last one part includes MEV as well).  And popular approach nowadays is to place proxy smart contract witch accumulates executions layer rewards (EL) and charge some % - like 25-35% from EL rewards. It's simple one.</p><p>BUT proportion between CL / EL rewards isn't stable. Our research shows that while you paying 30% from EL it quals 8% from total rewards in average. BUT since you may be lucky and get more blocks to create / large MEV you are at risk to be overcharged and pay up to 10-11% fee from total rewards. </p><p>That's not fair! It's difficult to choose the staking option while you don't know which exact conditions you are agree on. 8% or 11%? </p><p>So we created the oracle that knows how many CL rewards you got and calculate how many $eth we should charge you from El rewards in order to get exact % from total rewards. With P2P you will pay exact percent we agreed on. No less, no more.</p><p>You need this type of convenience and safety when staking large amounts of $ETH!</p><p><strong>We've reimagined large-scale ETH staking, simplifying the process and offering considerable savings in both time and money. </strong><br><br>Where others might vary their fees or give complex conditions, we stick to clarity and transparency. Our smart contract ensures that the exact % agreed upon is charged from your rewards. No hidden fees. No ambiguity. Only absolute transparency.</p><p><strong>How P2P.org is simplifying Institutional staking</strong></p><p>For our users, you can now manage and stake upto 12,800 ETH within one single session, providing a seamless user experience. You'll also notice enhanced functionalities, accommodating the 12.8k ETH deposit smart contract, ensuring a smoother user experience.</p><p>Additionally, our personalized dashboard is crafted with the user in mind, centralizing all vital data in an intuitive interface, making asset management truly effortless. Moreover, our comprehensive reporting capabilities let you delve deep into your staking history. Track rewards, assess strategies, and glean insights using a multitude of data points, ensuring you're always in the driver's seat of your digital journey.</p><p>At P2P.org, we remain committed to ensuring true ownership of a user's digital assets and providing users with a genuine decentralized non-custodial staking experience. With this in mind, we always aim to be ahead of the curve, bringing innovative solutions and products to our ever-growing platform. With the introduction of our new smart contract, we've taken a significant step in ensuring that institutional staking is efficient and user-friendly. </p><p><strong>Key Takeaways:</strong></p><ul><li>Efficiency: Reduce operational overheads by cutting down the number of transactions needed.</li><li>Transparency: No more ambiguous fees. You're charged the exact agreed-upon percentage, ensuring clarity and trust.</li><li>Flexibility: Available on the most trusted and popular non-custodial staking wallets, MetaMask, Ledger &amp; Safe Wallet.</li><li>Forward-Thinking: Designed with future smart contract upgrades in mind, ensuring longevity and adaptability.<br>Ready to elevate your staking game? <strong><em><a href="https://p2p.org/networks/ethereum?ref=p2p.org">Stake now or Book Call</a></em></strong></li></ul>

Vladislav Kurenkov

from p2p validator

Ethereum, restaking, EigenLayer A Step-by-Step Guide: Eigen Layer Restaking

<h3 id="eigen-layer-restaking-is-now-live"><br>Eigen Layer restaking is now live!</h3><p>EigenLayer has <a href="https://twitter.com/eigenlayer/status/1669065156427681792?s=20&ref=p2p.org">successfully launched</a> Stage 1 of their Mainnet. This is a significant milestone, and <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> is happy to be a part of this historical moment as one of the EigenLayer <a href="https://www.blog.eigenlayer.xyz/eigenlayer-stage-1-mainnet-launch/?ref=p2p.org#:~:text=Dimitry%20Ukhanov%20%2D%20P2P">community multisig members</a>!</p><p>Restaking doesn't generate any rewards right now since the launch of Actively Validated Services (AVS) generating these rewards is planned for a later stage.</p><p>However, EigenLayer <a href="https://www.blog.eigenlayer.xyz/eigenlayer-mainnet-launch-benefits-of-early-restaking-2/?ref=p2p.org">highlights</a> that restaking early provides the earliest possible access to AVS rewards, as some services may cap their initial restake amounts.</p><p>EigenLayer was launched with initial usage limits of 3200 for stETH, rETH, cbETH, and 9600 ETH for native staking. The stETH cap of 3200 ETH was reached <a href="https://twitter.com/eigenlayer/status/1669085279020527616?ref=p2p.org">within the first hour</a>, with rETH and cbETH following shortly afterward! The team promises to increase limits progressively over the coming weeks and months.</p><p>Although all liquid staking token (LST) options have already reached <a href="https://restaking.nethermind.io/?ref=p2p.org">their caps</a>, native stakers still have time to become a part of early adopters.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/06/Untitled--2-.png" class="kg-image" alt loading="lazy" width="2000" height="464" srcset="https://p2p.org/economy/content/images/size/w600/2023/06/Untitled--2-.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/06/Untitled--2-.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/06/Untitled--2-.png 1600w, https://p2p.org/economy/content/images/2023/06/Untitled--2-.png 2378w" sizes="(min-width: 720px) 720px"></figure><h3 id="restaking-with-p2porg">Restaking with P2P.org</h3><p>You can restake your ETH on the EigenLayer network using the <a href="http://p2p.org/?ref=p2p.org" rel="noopener noreferrer">P2P.org</a> staking dApp. Our dApp, which is non-custodial, supports the option to customize validator withdrawal addresses—a fundamental necessity for directly restaking to an EigenPod. Suppose you don't already have an EigenPod address. In that case, we are excited to announce a new feature where users can generate their own EigenPod address directly within the staking process in our dApp!<br><br><strong>Below, we have prepared a step-by-step guide on how to do this.</strong> However, before restaking, please take note:</p><div class="kg-card kg-callout-card kg-callout-card-yellow"><div class="kg-callout-emoji">⚠️</div><div class="kg-callout-text">The withdrawal address is used to get your ETH deposit back. It's specified once, and nobody can change it after the staking deposit is sent because the network cements the association of a particular validator and withdrawal address. When you decide to put your EigenPod Address as a withdrawal address, you accept EigenLayer smart contract risk and understand that <a href="https://p2p.org/?ref=p2p.org" rel="noopener noreferrer">P2P.org</a> can't change this address.</div></div><p>How to restake if you don't already have an Eigenpod address:<br><br>1. First, visit our Ethereum staking dApp at <a href="https://eth.p2p.org/?ref=p2p.org">eth.p2p.org</a> and connect a Web3 wallet.</p><p>2. After connecting to the Web3 wallet, enter in the field the amount of ETH you want to stake, for example, 32 ETH. Under the field, you will see option Eigenlayer restaking with the checkbox:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/Untitled-35.png" class="kg-image" alt loading="lazy" width="978" height="832" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/Untitled-35.png 600w, https://p2p.org/economy/content/images/2024/02/Untitled-35.png 978w" sizes="(min-width: 720px) 720px"></figure><p><br>3. Activate the checkbox (blue = activated). After you activate the checkbox, note that the button "Continue" below the screen switched to "Create Eigenpod address":</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/Untitled-36.png" class="kg-image" alt loading="lazy" width="984" height="842" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/Untitled-36.png 600w, https://p2p.org/economy/content/images/2024/02/Untitled-36.png 984w" sizes="(min-width: 720px) 720px"></figure><p>4. Now, we need to create an Eigenpod address by pressing the following button. The creation of an Eigenpod address happens by calling the Eigenlayer smart contract. As the user requests the calling of a smart contract in the Ethereum network, you must pay Gas for the Eigenpod transaction and sign it in your wallet.</p><p>5. After the user has signed the transaction, the Eigenpod address will be created, and its withdrawal credentials will be automatically filled in the 'Withdrawal address' field in 'Advanced settings.' Pressing the Continue button to continue the process:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/Untitled-37.png" class="kg-image" alt loading="lazy" width="976" height="1330" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/Untitled-37.png 600w, https://p2p.org/economy/content/images/2024/02/Untitled-37.png 976w" sizes="(min-width: 720px) 720px"></figure><div class="kg-card kg-callout-card kg-callout-card-grey"><div class="kg-callout-emoji">⚠️</div><div class="kg-callout-text">Based on the Eigenlayer system design, you will receive CL rewards on the created EigenPod address, while your EL rewards will be sent to Eigenpod’s owner address (the wallet you used to create Eigenpod). Since you are using our flow, your Eigenpod owner’s address is the one you are connected to our dApp during this staking process.</div></div><p>6. The system will start the staking process and will show you the final staking details. Review details, and press the 'Stake' button.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/Untitled-38.png" class="kg-image" alt loading="lazy" width="974" height="1310" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/Untitled-38.png 600w, https://p2p.org/economy/content/images/2024/02/Untitled-38.png 974w" sizes="(min-width: 720px) 720px"></figure><p>7. The dApp will ask you to sign the transaction with your Web3 wallet. After signing and the transaction pending, the system will confirm that your stake is done successfully!</p><h2 id="how-to-restake-with-a-new-or-existing-eigenpod-address">How to restake with a new or existing EigenPod address:</h2><p>To restake, you first need to set up an EigenPod address that will be connected to your wallet. This EigenPod address will be the withdrawal address in the P2P.org staking dApp. To do this:</p><p>1. Go to <a href="https://app.eigenlayer.xyz/?ref=p2p.org" rel="noopener noreferrer">https://app.eigenlayer.xyz/</a> and connect a wallet:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/image-2.png" class="kg-image" alt loading="lazy" width="2000" height="1225" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/image-2.png 600w, https://p2p.org/economy/content/images/size/w1000/2024/02/image-2.png 1000w, https://p2p.org/economy/content/images/size/w1600/2024/02/image-2.png 1600w, https://p2p.org/economy/content/images/2024/02/image-2.png 2000w" sizes="(min-width: 720px) 720px"></figure><p>2. Click "Create EigenPod" and confirm this transaction in your wallet:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/image-3.png" class="kg-image" alt loading="lazy" width="2000" height="1180" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/image-3.png 600w, https://p2p.org/economy/content/images/size/w1000/2024/02/image-3.png 1000w, https://p2p.org/economy/content/images/size/w1600/2024/02/image-3.png 1600w, https://p2p.org/economy/content/images/2024/02/image-3.png 2000w" sizes="(min-width: 720px) 720px"></figure><p>3. A confirmation message will confirm your EigenPod was created successfully:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/image-4.png" class="kg-image" alt loading="lazy" width="2000" height="1130" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/image-4.png 600w, https://p2p.org/economy/content/images/size/w1000/2024/02/image-4.png 1000w, https://p2p.org/economy/content/images/size/w1600/2024/02/image-4.png 1600w, https://p2p.org/economy/content/images/2024/02/image-4.png 2000w" sizes="(min-width: 720px) 720px"></figure><p>4. Click "Pod Details" and copy your EignePod address:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/image-5.png" class="kg-image" alt loading="lazy" width="2000" height="1276" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/image-5.png 600w, https://p2p.org/economy/content/images/size/w1000/2024/02/image-5.png 1000w, https://p2p.org/economy/content/images/size/w1600/2024/02/image-5.png 1600w, https://p2p.org/economy/content/images/2024/02/image-5.png 2000w" sizes="(min-width: 720px) 720px"></figure><p>5. Visit <a href="https://eth.p2p.org/?ref=p2p.org" rel="noopener noreferrer">eth.p2p.org</a> to complete the next step in the process: Staking your ETH to an Ethereum validator. This step takes around two minutes and does not require registration or completing KYC. The below image shows how to complete this simple process:  <strong>You need to turn on the checkbox Eigenlayer restaking and set your EigenPod address as the validator Withdrawal address in Advanced settings:</strong></p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/02/Untitled-39.png" class="kg-image" alt loading="lazy" width="980" height="1330" srcset="https://p2p.org/economy/content/images/size/w600/2024/02/Untitled-39.png 600w, https://p2p.org/economy/content/images/2024/02/Untitled-39.png 980w" sizes="(min-width: 720px) 720px"></figure><div class="kg-card kg-callout-card kg-callout-card-grey"><div class="kg-callout-emoji">🔒</div><div class="kg-callout-text"><em><a href="http://p2p.org/?ref=p2p.org">P2P.org</a>'s unique feature enables MEV rewards for stakers with an EigenPod address. What's crucial is that, by default, EigenPod does not accept MEV rewards. Check the next paragraph for further details</em>.<br><em>Validators propose new blocks and receive rewards, which include MEV, to their execution rewards address. Technically, the withdrawal address and the execution rewards address can be different. However, to simplify the staking process, most operators set the withdrawal address as the execution rewards address by default. However, this poses an issue for restaking: EigenPod doesn't accept direct transactions from MEV bots, which means it can't receive most MEV rewards either.</em><br><em>We resolve this issue by automatically checking if you have put EigenPod as your withdrawal address. In such cases, we extract your EigenPod owner's wallet and use it as the execution rewards recipient address. This ensures that your MEV rewards are completely secure.</em></div></div><p><br>6. After staking completion, your validators will enter the validator entry queue, and by the time you're live, your EigenPod balance, will immediately reflect the stake. You can check the current activation time in our <a href="https://p2p.org/networks/ethereum/queue?ref=p2p.org" rel="noopener noreferrer">Ethereum queue dashboard</a>.</p><h2 id="qa">Q&amp;A:</h2><p><strong>How can I do restaking for EigenLayer?</strong></p><p>We have a simple guide for restaking; check it out here: <a href="https://p2p.org/economy/eigen-layer-restaking-with-p2p-org-guide/">https://p2p.org/economy/eigen-layer-restaking-with-p2p-org-guide/</a></p><p><strong>What are the Restaking points?</strong></p><p>Rewards and how they are distributed are still a work in progress. The Eigen Layer team plans to share more details in 2024Q2. For now, extra rewards are distributed by Eigenlayer in Restaking points. Restaking points measure your contribution to the shared security of the EigenLayer ecosystem, the temporary proof of your participation in the EigenLayer network. You will receive Restaking points in your Eigenpod during the restaking process.</p><p><strong>How many Restaking points will I get for restaking?</strong></p><p>Restaking points are a measure of staking participation equal to the time-integrated amount staked in units of ETH*hours. You can read here more about how this share is measured in Eigenlayer documentation about Restaking points: <a href="https://docs.eigenlayer.xyz/eigenlayer/restaking-guides/restaking-user-guide/restaked-points?ref=p2p.org">https://docs.eigenlayer.xyz/eigenlayer/restaking-guides/restaking-user-guide/restaked-points</a></p><p><strong>What risks are involved with restaking?</strong></p><p>Restaking, while offering additional rewards, also brings with it inherent risks. Validators participating in restaking face potential penalties from Ethereum and EigenLayer if they violate network consensus rules.</p><p>Moreover, validators' withdrawal credentials are tied to EigenLayer's upgradeable Eigenpod smart contracts, introducing further elements of complexity and risk.</p><p>A comprehensive risks <a href="https://docs.eigenlayer.xyz/eigenlayer/risk/risk-faq?ref=p2p.org">FAQ by Eigen Layer</a> covers all risks;</p><p><strong>What about Eigenlayer slashing risks?</strong></p><p>There is no slashing until the protocol upgrade in the second half of 2024, giving new protocols and operators enough time to develop a robust risk mitigation framework.</p><p>In the future, validators participating in restaking face potential penalties from Ethereum and EigenLayer if they violate network consensus rules. So operators should carefully setup infrastructure and choose AVSes to run. Regarding native vs. LST, native restaking is a much safer option than restaking LST tokens, since your withdrawal credentials are associated with smart contracts under your management.</p><p><strong>How Eigenlayer addresses restaking risks?</strong></p><ol><li>Smart contracts are audited, and a <a href="https://docs.eigenlayer.xyz/eigenlayer/security/bug-bounty?ref=p2p.org">$2 million bug bounty program</a> has been initiated since December 2023, underscoring its commitment to ongoing security enhancements.</li><li>There is a community multisig (<a href="http://p2p.org/?ref=p2p.org">P2P.org</a> is one of 13 members). In extraordinary circumstances, the Community Multisig can perform emergency actions, including immediately executing time-critical upgrades or replacing the Operations Multisig in the event of private key compromise. <a href="https://docs.eigenlayer.xyz/eigenlayer/security/multisig-governance?ref=p2p.org">https://docs.eigenlayer.xyz/eigenlayer/security/multisig-governance</a></li><li>There is no slashing until the protocol upgrade in the second half of 2024, giving new protocols and operators enough time to develop a robust risk mitigation framework.</li><li>Regarding unintentional slashing due to protocol/AVS mistakes, EigenLayer establishes a "slashing council." This council will oversee and adjudicate any slashing incidents, ensuring fairness and accuracy in administering penalties while the slashing mechanism evolves. The slashing event doesn't burn ETH; it only freezes it on the EigenPod address. This freeze can be removed by slashing the council. That will secure early restakers from slashing losses due to AVS/protocol mistakes.</li></ol><p><strong>How to exit from Eigenlayer?</strong></p><p>After validators are exited from the Ethereum network, your ETH transfers to the EigenPod address, and after a 7-day lock period, you can withdraw them from EigenPod.</p><h2 id="contact-us">Contact Us:</h2><p><em><em><em><em>Do not hesitate to ask questions in our <a href="https://t.me/P2Pstaking?ref=p2p.org">Telegram chat</a> </em></em></em></em><br><em><em><em><em>We are always open for communication.</em></em></em></em><br><br>We encourage you to check our website and start our staking journey together!</p><div class="kg-card kg-button-card kg-align-center"><a href="https://p2p.org/ethereum?ref=p2p.org" class="kg-btn kg-btn-accent">Stake with us!</a></div><hr><p><strong><strong><strong><strong>Web:</strong></strong></strong></strong> <a href="https://p2p.org/?ref=p2p.org">https://p2p.org</a><br><strong>Blog:</strong> <a href="https://p2p.org/economy/">https://p2p.org/economy</a><br><strong><strong><strong><strong>Twitter:</strong></strong></strong></strong> <a href="https://twitter.com/p2pvalidator?ref=p2p.org">@p2pvalidator</a><br><strong><strong><strong><strong>Telegram:</strong></strong></strong></strong> <a href="https://t.me/P2Pstaking?ref=p2p.org">https://t.me/P2Pstaking</a></p>

Vladislav Kurenkov

from p2p validator

Ethereum March 2023 Ethereum staking overview

<h1 id="introduction"><strong>Introduction</strong></h1><p>In this post, we will take a deep dive into the Ethereum network during the month of March 2023. Our goal is to provide a comprehensive analysis of the network and its various components. Here are the topics we explore:</p><ul><li><a href="https://p2p.org/economy/ethereum-staking/#:~:text=Ethereum%20staking%20ecosystem.-,Network%20Overview,-As%20of%20March">Network Overview</a></li><li><a href="https://p2p.org/economy/ethereum-staking/#:~:text=Staking%20review%20by%20segment">Review by staking segments</a></li><li><a href="https://p2p.org/economy/ethereum-staking/#:~:text=validators%20is%20public.-,Lido%20operators,-When%20staking%20involves">Lido operators performance</a></li><li><a href="https://p2p.org/economy/ethereum-staking/#:~:text=block%2016867030.-,P2P.org%20overview,-The%20top%203">P2P.org overview</a></li><li><a href="https://p2p.org/economy/ethereum-staking/#:~:text=Tweets%20and%20articles%20of%20the%20month">Best tweets and articles</a></li></ul><p>All the data was sourced from our own validators, <a href="http://beaconcha.in/?ref=p2p.org">beaconcha.in</a> and <a href="https://www.rated.network/?ref=p2p.org">rated.network</a>. We considered only staking providers whose information is publicly available, meaning this list isn’t a complete picture of the Ethereum staking ecosystem.</p><h1 id="network-overview">Network Overview</h1><p>As of March 2023, the total amount of Ethereum staked has reached <strong>17,963,528 ETH</strong>, which is <strong>5.26%</strong> higher than the previous month's total stake. This is a significant increase, demonstrating the growing interest in Ethereum staking. The amount staked now represents approximately <strong>15.04%</strong> of the total circulating supply of Ethereum, which is a strong indication of the confidence that investors have in the platform. It is worth noting that this is a considerable increase from just a few months ago, demonstrating the rapid growth of the Ethereum ecosystem.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/01-Network-Overview-1.png" class="kg-image" alt loading="lazy" width="1996" height="1199" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/01-Network-Overview-1.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/01-Network-Overview-1.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/01-Network-Overview-1.png 1600w, https://p2p.org/economy/content/images/2023/04/01-Network-Overview-1.png 1996w" sizes="(min-width: 720px) 720px"></figure><p>Despite the increase in the total amount of Ethereum staked, the current network-wide average annual percentage rate (APR) for Ethereum staking is around 4.1**%**, which is a 0.0738 percentage point increase from the previous month. The consensus rewards have increased by 0.2518 points, but the execution rewards have decreased by 0.178 points due to the increase in the number of validators in the network. The table below shows the top 5 block MEV rewards.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/02-Network-Overview-2.png" class="kg-image" alt loading="lazy" width="1978" height="669" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/02-Network-Overview-2.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/02-Network-Overview-2.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/02-Network-Overview-2.png 1600w, https://p2p.org/economy/content/images/2023/04/02-Network-Overview-2.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>For investors interested in Ethereum staking, it is important to be aware and understand the risks involved. Additionally, during March, 4 <strong>validators</strong> from the network were slashed, one of which belongs to Rocket Pool</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/03-Network-Overview-3.png" class="kg-image" alt loading="lazy" width="1978" height="584" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/03-Network-Overview-3.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/03-Network-Overview-3.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/03-Network-Overview-3.png 1600w, https://p2p.org/economy/content/images/2023/04/03-Network-Overview-3.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>This highlights the risks involved in Ethereum staking and the importance of carefully selecting validators to stake with.</p><h1 id="staking-review-by-segment">Staking review by segment</h1><p>The upcoming Shanghai update for Ethereum, scheduled for April 12, has holders of liquid staking tokens eagerly anticipating how the event will impact their holdings. Prior to the update, any ETH deposits into these protocols could not be withdrawn from Ethereum's deposit-only Proof-of-Stake (PoS) system. After the Shanghai event, users will be able to unstake their ETH, sell their stakes, or migrate to a different staking service.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/04-Staking-review-by-segment-1.png" class="kg-image" alt loading="lazy" width="1978" height="912" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/04-Staking-review-by-segment-1.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/04-Staking-review-by-segment-1.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/04-Staking-review-by-segment-1.png 1600w, https://p2p.org/economy/content/images/2023/04/04-Staking-review-by-segment-1.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>For the current period, liquid staking increased to a total of 33.33%. This value is 2.38 points higher than at the beginning of the year. Conversely, CEX stacking has decreased to 27.27%, which is 2.31 points lower than at the beginning of the year. Staking pools and unidentified validators have remained almost unchanged, at 16.97% and 22.43% respectively. As we can see, at the end of February there was a big amount of ETH deposited, one of them is the largest single daily inflow ever on the Lido platform in the amount of 150,000 ETH.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/05-Staking-review-by-segment-2.png" class="kg-image" alt loading="lazy" width="1978" height="1048" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/05-Staking-review-by-segment-2.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/05-Staking-review-by-segment-2.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/05-Staking-review-by-segment-2.png 1600w, https://p2p.org/economy/content/images/2023/04/05-Staking-review-by-segment-2.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>Lido is the largest liquid staking platform, which currently has over 31% of all staked ETH. Lido's popularity can be attributed to its ease of use and its ability to provide users with a flexible and secure way to stake their ETH. It is challenging to de-anonymize all validators, including their owners and whether they belong to centralized exchanges, staking pools or e.t.c. However, with Lido, all the information about the validators is public.</p><h2 id="lido-operators">Lido operators</h2><p>When it comes to ETH staking we should not only consider the APR as an important metric but also take into account validator effectiveness, which can be an even more accurate metric. Validator effectiveness indicates how much of your validator balance is being used for attestations, and is calculated as the effective balance as a fraction of the total balance. <a href="https://p2p.org/?ref=p2p.org">P2P.org</a> published an article explaining why validator effectiveness is a better metric than APR, and providing tips on how to choose the best staking operator.</p><p>In this regard, two of the highest-performing validators in the market are Allnodes and Attestant. These validators have an effectiveness rating of 97.25%, which means they are highly efficient in terms of attestation.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/06-Lido-operators.png" class="kg-image" alt loading="lazy" width="1978" height="1044" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/06-Lido-operators.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/06-Lido-operators.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/06-Lido-operators.png 1600w, https://p2p.org/economy/content/images/2023/04/06-Lido-operators.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>The top 3 by validator effectiveness is <strong><a href="https://p2p.org/?ref=p2p.org">P2P.org</a></strong> with the highest APR in the top 5 effectiveness rating over the last 30 days. We will explore this in more detail in the next section.</p><p>We would also like to note that Staking Facilities and Everstake had the highest APR in March. Staking Facilities has an APR of 9.96%, with an execution APR of 6.07%. This value is approximately 50% higher than their average APR, due to a very large MEV block reward of around 692 ETH for block <a href="https://beaconcha.in/block/16867030?ref=p2p.org">16867030</a>.</p><h1 id="p2porg-overview">P2P.org overview</h1><p>The top 3 by validator effectiveness is <strong><a href="https://p2p.org/?ref=p2p.org">P2P.org</a></strong> with the highest APR in the top 5 effectiveness rating over the last 30 days.</p><h2 id="rewards">Rewards</h2><p>For March, all active validators on the network generated a mean rewards rate of 0.1345 ETH. The average reward of P2P’s validators was 0.1386 ETH, around 3% higher than the mean performance of all the active validators on the network</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/07-AVG-validator-rewards.png" class="kg-image" alt loading="lazy" width="1978" height="649" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/07-AVG-validator-rewards.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/07-AVG-validator-rewards.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/07-AVG-validator-rewards.png 1600w, https://p2p.org/economy/content/images/2023/04/07-AVG-validator-rewards.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>This is mostly due to P2P's enterprise-grade infrastructure, which maximizes node uptime and rewards, while also utilizing MEV-Boost to extract additional value during block production.</p><h2 id="consensus-performance">Consensus performance</h2><p>The primary metric commonly used when choosing a staking provider is APR. However, due to Ethereum’s complex rewards structure, it’s better to compare staking providers by their validator’s effectiveness rather than APR. We conducted extensive research on the topic, and you can read about it <a href="https://www.stakingrewards.com/journal/choosing-the-best-using-metrics-and-data-to-choose-the-right-ethereum-validator/?ref=p2p.org">here.</a></p><h3 id="earned">Earned</h3><p>Validators may receive fewer consensus rewards due to missed attestations and errors that result in penalties. Here, we compare the average share of rewards of the network and <a href="https://p2p.org/?ref=p2p.org">P2P.org</a>.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/08Earned.png" class="kg-image" alt loading="lazy" width="1978" height="1225" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/08Earned.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/08Earned.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/08Earned.png 1600w, https://p2p.org/economy/content/images/2023/04/08Earned.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>The network average share of consensus layer rewards was 98.29%, while that of <a href="https://p2p.org/?ref=p2p.org">P2P.org</a> is 99.18%, which is 0.89 percentage points above the network average</p><h3 id="attestation-rate-correctness">Attestation rate &amp; correctness</h3><p>The attestation rate measures how often a validator successfully attests new proposed blocks to the rest of the network. If a validator is down or cannot attest blocks for other reasons, its attestation rate and, therefore, rewards will decrease. Attestation correctness is another essential metric to consider, as it measures the accuracy of a validator's attestation. Validators must attest to the correct block or face penalties, including potential slashing. Accurate attestations are crucial for maintaining the integrity and security of the Ethereum network, making attestation correctness an essential metric to consider.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/09-Attestation-rate.png" class="kg-image" alt loading="lazy" width="1978" height="1074" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/09-Attestation-rate.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/09-Attestation-rate.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/09-Attestation-rate.png 1600w, https://p2p.org/economy/content/images/2023/04/09-Attestation-rate.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>In March, the network's average attestation rate was approximately 99.6%, while P2P's attestation rate was 99.98%, which is 0.38% higher than the network average. The network's average attestation correctness was approximately 98.91%. Meanwhile, P2P's attestation rate was 99.36%, which is 0.45% higher than the network average.</p><h2 id="execution-performance">Execution performance</h2><p>The execution layer is the layer on the Ethereum blockchain that provides the environment for applications and smart contracts to operate and process transactions within and between applications. In general, there are two types of execution layer rewards: transaction priority tips and MEV tips.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/10-Execution-performance.png" class="kg-image" alt loading="lazy" width="1978" height="457" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/10-Execution-performance.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/10-Execution-performance.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/10-Execution-performance.png 1600w, https://p2p.org/economy/content/images/2023/04/10-Execution-performance.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>There is a high risk of missing a block when the MEV relay proposes it for an extended period of time. Therefore, we create the block ourselves, which is why we haven't achieved 100% success rate. In March 2023, <a href="https://p2p.org/?ref=p2p.org">P2P.org</a> had 96.4% of the MEV blocks, with 3052 proposed blocks and a proposal rate of 99.97%. Here are the top 5 blocks with the highest MEV rewards:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/11-to-5-mev.png" class="kg-image" alt loading="lazy" width="1978" height="657" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/11-to-5-mev.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/11-to-5-mev.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/11-to-5-mev.png 1600w, https://p2p.org/economy/content/images/2023/04/11-to-5-mev.png 1978w" sizes="(min-width: 720px) 720px"></figure><h3 id="slashing">Slashing</h3><p>A slashing event occurs when a validator misbehaves on the network. This is the most severe penalty a validator can suffer, and it results in the loss of a portion of their staked tokens.</p><p>During March, P2P had no slashing occurrences. We are proud to maintain a flawless record of zero slashing events throughout our time running Ethereum validators.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/12-Execution-performance--1-.png" class="kg-image" alt loading="lazy" width="1978" height="509" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/12-Execution-performance--1-.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/12-Execution-performance--1-.png 1000w, https://p2p.org/economy/content/images/size/w1600/2023/04/12-Execution-performance--1-.png 1600w, https://p2p.org/economy/content/images/2023/04/12-Execution-performance--1-.png 1978w" sizes="(min-width: 720px) 720px"></figure><p>P2P operates validator infrastructure securely, to minimize the risk of being slashed, and provides coverage to mitigate any losses in the event of a slashing incident.</p><h1 id="tweets-and-articles-of-the-month">Tweets and articles of the month</h1><p><br>Check out P2P.org best tweets and articles for March 2023</p><ol><li> <strong>A deep dive into withdrawals</strong>. What will the post-Shapella market look like? We researched the market landscape and withdrawal documentation comprehensively to highlight the pitfalls and insights about the upcoming changes. <a href="https://twitter.com/P2Pvalidator/status/1643974124145102849?ref=p2p.org">Read the Twitter thread and check the full post here</a></li><li><strong>Choosing the best validator</strong>. Dive into our ultimate guide on choosing the best Ethereum validator for the Shanghai update Metrics, slashing insurance, SLA &amp; more. <a href="https://www.stakingrewards.com/journal/choosing-the-best-using-metrics-and-data-to-choose-the-right-ethereum-validator/?ref=p2p.org">Read article</a></li><li><strong>Calculate possible APR</strong>. Ethereum APR is highly influenced by random factors like the number of blocks created or MEV. But how do you know if your APR is good or not? We've developed an advanced APR simulator, that calculates the average expected APR and possible deviations. <a href="https://p2p.org/networks/ethereum/apr-simulator?ref=p2p.org">Try it out</a></li></ol>

Vladislav Kurenkov

from p2p validator

The Shapella Upgrade: A Deep Dive into Withdrawals

<h3 id="what%E2%80%99s-this-article-about">What’s this article about?</h3><p>The Shapella upgrade brings significant changes to the Ethereum network, introducing new withdrawal options for validators in the form of full withdrawals and partial withdrawals. This article delves into the details of withdrawal eligibility, the step-by-step process for withdrawals, and what to expect in the immediate, mid-term, and long-term future. We also explore the potential impact on the activation queue, withdrawal queue, and APR dynamics, as well as the various factors that may influence these aspects of the Ethereum ecosystem.</p><h3 id="table-of-contents">Table of contents</h3><ul><li><a href="https://p2p.org/economy/the-shapella-upgrade-a-deep-dive-into-withdrawals/#T2:~:text=Influence%20Your%20Return-,Uncovering%20Withdrawals%3A%20Key%20Information%20You%20Should%20Know,-The%20Shapella%20upgrade">Uncovering Withdrawals: Key Information You Should Know</a></li><li><a href="https://p2p.org/economy/the-shapella-upgrade-a-deep-dive-into-withdrawals/#T2:~:text=the%20exit%20queue.-,The%20Withdrawal%20Process%20Step%2Dby%2DStep,-Active%20validators%20can">The Withdrawal Process Step-by-Step</a></li><li><a href="https://p2p.org/economy/the-shapella-upgrade-a-deep-dive-into-withdrawals/#T2:~:text=More%20about%20the%20withdrawal%20eligibility">Is Your Validator Ready for Withdrawals? </a></li><li><a href="https://p2p.org/economy/the-shapella-upgrade-a-deep-dive-into-withdrawals/#T2:~:text=eligible%20for%20withdrawals.-,Navigating%20the%20Post%2DShapella%20Market,-Immediately%20(first%20days">Navigating the Post-Shapella Market: A Comprehensive Overview</a></li><li><a href="https://p2p.org/economy/the-shapella-upgrade-a-deep-dive-into-withdrawals/#T2:~:text=after%20the%20Shapella.-,Anticipating%20the%20Withdrawal%20Queue%3A%20What%20to%20Expect,-Various%20factors%20affect">Anticipating the Withdrawal Queue: What to Expect</a></li><li><a href="https://p2p.org/economy/the-shapella-upgrade-a-deep-dive-into-withdrawals/#T2:~:text=end%20of%20July.-,Forecasting%20the%20Activation%20Queue%3A%20Preparing%20for%20the%20Future,-The%20current%20percentage">Forecasting the Activation Queue: Preparing for the Future</a></li><li><a href="https://p2p.org/economy/the-shapella-upgrade-a-deep-dive-into-withdrawals/#T2:~:text=beginning%20of%20July.-,Post%2DShapella%20APR%3A%20Factors%20That%20Will%20Influence%20Your%20Return,-Since%20the%20activation">Post-Shapella APR: Factors That Will Influence Your Return</a></li></ul><h3 id="uncovering-withdrawals-key-information-you-should-know">Uncovering Withdrawals: Key Information You Should Know</h3><p>The Shapella upgrade introduces two types of withdrawals: full withdrawals (also known as exits) and partial withdrawals (staking reward collection).</p><p>Core withdrawal concepts</p><ol><li>Withdrawal eligibility. Not every validator can withdraw immediately after the Shapella upgrade, as only validators with 0x01 format withdrawal addresses are eligible. Validators with old 0x00 format addresses (58% of the total) need to switch to the new format, a process that will take approximately three days. So if you have 0x01 format, you have an advantage over other validators to exit with a minimal queue.</li><li>Full withdrawals involve validators withdrawing their entire stake after passing through an exit queue (dependent on the number of validators wishing to exit) and a withdrawal period (1-5 days). This process prevents sudden changes in validator numbers, ensuring network security.</li><li>Partial withdrawals automatically withdraw accumulated staking rewards (balances over 32 ETH) if validators possess the required withdrawal credentials. Right after the Shapella update, this process will take around 2 days since some validators are not eligible for withdrawals. But this is temporary, and in the near future partial withdrawals should be expected every 5 days.</li><li>You will continue to earn staking rewards while you wait in the exit queue.</li></ol><h3 id="the-withdrawal-process-step-by-step">The Withdrawal Process Step-by-Step</h3><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/01.png" class="kg-image" alt loading="lazy" width="1578" height="988" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/01.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/01.png 1000w, https://p2p.org/economy/content/images/2023/04/01.png 1578w" sizes="(min-width: 720px) 720px"></figure><ol><li>Active validators can earn rewards and perform partial withdrawals.</li><li>To perform a full withdrawal, validators initiate a voluntary exit and enter the exit queue. The exit queue works on a first-in, first-out (FIFO) basis and limits the number of validators that can withdraw every epoch to a dynamic churn limit. The minimum churn limit is set to four. Currently, for 560k validators, it’s 8 validators per epoch (or 1800 validators / 57.6k ETH daily)</li><li>Validators enter a waiting period to ensure no malicious activity. This is approximately 27 hours if not slashed, and 36 days if slashed. After the waiting period, the stake becomes withdrawable.</li><li>All withdrawals, both full and partial, are processed sequentially at a rate of 16 validator addresses per block, amounting to 115k validators daily. Each validator has a designated position in this withdrawal queue. The queue operates in a loop, starting from the beginning after each cycle. It takes 5 days to complete one rotation. Consequently, the maximum waiting time for this withdrawal step is 5 days, while the minimum waiting time can be just a few minutes if the validator completes step 3 (waiting 27 hours) right before their turn for withdrawal.</li></ol><div class="kg-card kg-callout-card kg-callout-card-green"><div class="kg-callout-text">P2P.org is fully prepared for the Shapella update, and once it occurs, the platform will enable you to initiate a full withdrawal with just two clicks.</div></div><h3 id="more-about-the-withdrawal-eligibility">More about the withdrawal eligibility</h3><p>Validators must use withdrawal credentials with the 0x01 format, introduced in March 2021, to be eligible for withdrawals. Validators with the older 0x00 format will be able to switch to the 0x01 format after the Shanghai upgrade, limited to 16 switches per block. It may take two days for every validator to switch their credentials and another two to three days for most staking rewards to be withdrawn.</p><div class="kg-card kg-callout-card kg-callout-card-green"><div class="kg-callout-text"><a href="https://p2p.org/?ref=p2p.org">P2P.org</a> has 0x01 format by default, so if you stake with us, you are already eligible for withdrawals.</div></div><h3 id="navigating-the-post-shapella-market">Navigating the Post-Shapella Market</h3><ul><li><strong>Immediately (first days)</strong> after the Shapella upgrade, we expect only a limited number of validators to exit, as 58% of the total will lack the necessary withdrawal credentials. Substantial partial withdrawals should occur in the following days. We assume that half of the partial withdrawals (550k ETH) will be restaked in order to get more rewards, remaining 550k ETH will likely be sold to pay taxes, which may temporarily cause price pressure.</li><li><strong>Mid-term (around 3 months)</strong>, there will be large stake movements with the maximum possible full withdrawal limit reached and new validators (with long queues). The main factors will be a regulatory crackdown on CEX staking, switching staking providers, complete withdrawals, and staking of accumulated rewards. While waiting in the long activation queue (up to 20 days), validators don't receive any rewards. This is likely to lead to higher demand for liquid staking. It generates yield immediately after staking, distributing rewards among all staking derivatives holders. However, the downside of this feature is a reduced average APR for all liquid stakers (even for those who staked before the Shapella update). As a result, direct staking will generate a higher yield in the upcoming months.</li><li><strong>Long-term (several years)</strong>, we expect that the reduced risk associated with the enabling of withdrawals will bring more adoption but a corresponding drop in APR, which will conversely slow the adoption rate. The two factors balance each other out. Nevertheless, we estimate that 30% of ETH will be staked by the end of 2024 and 50% within 5 years (more on this below)</li></ul><div class="kg-card kg-callout-card kg-callout-card-green"><div class="kg-callout-text">There will be significant increased activation and withdrawal queues first 3 month after the Shapella.</div></div><h3 id="anticipating-the-withdrawal-queue-what-to-expect">Anticipating the Withdrawal Queue: What to Expect</h3><p>Various factors affect the demand for staking withdrawals. We have selected the most important ones, in our opinion, and tried to evaluate their effect on the market:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/02.png" class="kg-image" alt loading="lazy" width="1578" height="1030" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/02.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/02.png 1000w, https://p2p.org/economy/content/images/2023/04/02.png 1578w" sizes="(min-width: 720px) 720px"></figure><p>Below we have analyzed our assumptions in detail:</p><ol><li><strong>Regulatory crackdown on CEX staking</strong>: Kraken's recent fine by the SEC has led to the exchange winding down its US staking operations. We already know that Kraken will withdraw US investors' staked ETH shortly after Shapella, which represents approximately 400k ETH (2% of total staked ETH). Other CEXs may be more likely to withdraw a significant part of their staked ETH as well. However, this stake will likely be quickly restaked.</li><li><strong>Withdrawals to switch staking providers</strong>. There are numerous reasons to change staking providers, and we assume that at least 20% of validators will do it shortly (first three month)<br><br>2.1. Disliking validator performance: For example, around 8% of validators have effectiveness <a href="https://www.rated.network/?network=mainnet&view=pool&timeWindow=30d&page=1&ref=p2p.org">significantly lower</a> than the network average. <a href="https://www.rated.network/relays?network=mainnet&timeWindow=30d&ref=p2p.org">Some providers</a> don't have MEV-boost at all (10%) or use a limited number of MEV relays (10%). Additionally, <a href="https://www.rated.network/?network=mainnet&view=pool&timeWindow=30d&page=1&ref=p2p.org">8% don’t have</a> client diversity. All of the above is not necessarily a bad thing. The validator may have a super secure setup that reduces performance or a principled position to censor/not censor transactions. Our point is that more than half of the validators have been staking for over a year (before the merge and the appearance of MEV, at least). Therefore, disagreement with the provider's approaches is quite possible. <br><br>2.2. CEXs risks: The recent <a href="https://www.investopedia.com/what-went-wrong-with-ftx-6828447?ref=p2p.org">FTX</a> collapse and <a href="https://blog.kraken.com/post/17619/settlement/?ref=p2p.org">Kraken</a> unstake of all U.S. client assets cases have reminded us of custody risks. Currently, 27.3% of ETH is <a href="https://dune.com/hildobby/eth2-staking?ref=p2p.org">staked by CEXs</a>, and some part of that will be restaked.<br><br>2.3. Solo stakers may exit and stake their ETH with Liquid-staking derivatives (LSDs), as it is a better deal for them. It's hard to estimate the number of solo stakers, but according to our research of ETH deposits, approximately 350k ETH came from separate different addresses in the last three months alone (32 ETH per address). So, solo stakers likely account for 5-10% of validators in total, at least.<br><br>2.4. Switching LSDs to direct staking in favour of diversification: Currently, Liquid staking accounts for 33% of the total stake and seems to be increasing its market share. Despite good diversification in the validator pool, Liquid staking carries additional smart contract risk. Since it will be possible to unstake ETH, a good strategy would be to diversify and restake some amount of ETH in non-custodial direct staking services.</li><li><strong>One-time withdrawal of ETH</strong>, reflecting the need that has accumulated over two years: Staked ETH has been locked for more than 2 years, a considerable period in the blockchain world, during which many circumstances could have changed. Bankruptcy, alterations in portfolio strategy, and other situations may necessitate the sale of ETH. Based on Polkadot and Solana's largest unstakes (10-15% of the total stake within a month), we believe it's fair to assume that at least 10% of the stake will be withdrawn as soon as such an opportunity becomes available.</li><li><strong>Regular organic withdrawals.</strong> According to the Polkadot benchmark, there is evidence of organic stake/unstake movements. Polkadot's historical median value of unstaking is 0.04% daily, which amounts to 15% yearly. We cannot directly apply this benchmark to Ethereum, as it differs in terms of its popular liquid staking option (those who do not want to hold a stake for an extended period can use liquid staking). However, we believe it's reasonable to assume an organic unstaking rate of around 10% per year for Ethereum.</li></ol><p>Considering the assumptions above and the fact that the maximum unstake bandwidth is 57.6k ETH daily, we’ve calculated the potential exit queue for the upcoming month.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/03.png" class="kg-image" alt loading="lazy" width="1578" height="1049" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/03.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/03.png 1000w, https://p2p.org/economy/content/images/2023/04/03.png 1578w" sizes="(min-width: 720px) 720px"></figure><div class="kg-card kg-callout-card kg-callout-card-green"><div class="kg-callout-text">By the beginning of May, total exit time probably will increase to 30 days and will remain at this level until the end of July.</div></div><h3 id="forecasting-the-activation-queue-preparing-for-the-future">Forecasting the Activation Queue: Preparing for the Future</h3><p>The current percentage of staked ETH is low (15%) compared to other chains like Solana (68%) and Polygon (43%). The Shanghai upgrade should unlock pent-up demand from investors who have been reluctant to lock their ETH. A larger proportion of staked ETH will provide greater network security over time.</p><p>Yields from staking are higher than those from the largest and safest DeFi protocols. After the Shanghai upgrade, the risk of locking funds through staking will decrease, making it more attractive to investors.</p><p>In addition, partial withdrawals allow validators to withdraw rewards regularly and restake them, utilizing compounding. Validators can restake these rewards promptly to maximize their returns.</p><p>Until now, staked ETH has increased fairly linearly over time: +6 pp. to the staking ratio yearly (or around 220k new validators per year). But we believe that the <strong>Shapella update is a game-changer, and we will see accelerated organic growth</strong> (up to 440k new validators or 14M ETH per year).</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/04.png" class="kg-image" alt loading="lazy" width="1578" height="1030" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/04.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/04.png 1000w, https://p2p.org/economy/content/images/2023/04/04.png 1578w" sizes="(min-width: 720px) 720px"></figure><p>Other factors affect the activation queue</p><ol><li><strong>Staking of accumulated rewards</strong>: after partial withdrawals, validators may choose to restake their rewards in new 32 ETH units to generate additional yield. Now there are approximately 1.1M ETH rewards locked, and these will be withdrawn within the first week following Shapella. Most likely half of them will go to taxes, half will be staked.</li><li><strong>ETH restaked from Kraken unstake</strong>. 400k ETH within 3 months.</li><li><strong>ETH restake from switching staking providers</strong>. 3.5M within 3 months.</li></ol><p>Applying these assumptions to activation queue bandwidth (57.6k ETH daily), we are getting the following activation queue projections:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/05.png" class="kg-image" alt loading="lazy" width="1578" height="1049" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/05.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/05.png 1000w, https://p2p.org/economy/content/images/2023/04/05.png 1578w" sizes="(min-width: 720px) 720px"></figure><div class="kg-card kg-callout-card kg-callout-card-green"><div class="kg-callout-text">Total activation time is projected to increase steadily up to 10 days at the beginning of May and 25 days at the beginning of July.</div></div><h3 id="post-shapella-apr-factors-that-will-influence-your-return">Post-Shapella APR: Factors That Will Influence Your Return</h3><p>Since the activation and exit queues have similar bandwidth, and based on the assumptions mentioned above, during the first 3 months after Shapella, we can expect to see a stable number of active validators (57.6k ETH activations / 57.6k ETH exits daily). This leads to a consistent APR, as the number of active validators is one of the main factors influencing rewards. The more validators there are, the fewer rewards each of them receives.</p><p>Below is the APR baseline forecast that takes into account a limited number of factors. It may not be entirely accurate, as many other factors can significantly impact rewards. Nevertheless, it is interesting to consider the trends as a baseline scenario.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2023/04/06.png" class="kg-image" alt loading="lazy" width="1578" height="1049" srcset="https://p2p.org/economy/content/images/size/w600/2023/04/06.png 600w, https://p2p.org/economy/content/images/size/w1000/2023/04/06.png 1000w, https://p2p.org/economy/content/images/2023/04/06.png 1578w" sizes="(min-width: 720px) 720px"></figure><p>Regarding the other factors not accounted for in the baseline scenario:</p><p><strong>Factors that may increase rewards:</strong></p><ul><li>Increased DeFi activity after the update, potentially contributing to a period of higher execution rewards and APR immediately following Shapella.</li><li><a href="https://www.eigenlayer.xyz/?ref=p2p.org">Eigenlayer</a> mainnet release. Restaking will enable staked ETH to be used as cryptoeconomic security for protocols other than Ethereum, in exchange for protocol fees and rewards.</li></ul><p><strong>Factors that may decrease rewards:</strong></p><ul><li>A large influx of new validators may temporarily reduce the effectiveness of current validators due to increased attestation propagation time, affecting consensus rewards.</li><li>The average liquid staking APR for the first three months is likely to be lower than for those staked directly before Shapella (due to reward distribution among all pool members, even if their validators are not yet active).</li><li>The lengthy activation queue will implicitly impact those staked directly after Shapella, as validators do not receive any rewards while waiting for activation.</li><li>A shift of transactions from Ethereum to L2, leading to decreased priority fees &amp; MEV rewards.</li></ul><h3 id="conclusion-navigating-the-shapella-upgrade"><strong>Conclusion: Navigating the Shapella Upgrade</strong></h3><p>The Shapella upgrade presents both challenges and opportunities for validators. To maximize benefits, validators should ensure they possess the necessary 0x01 withdrawal credentials, plan their withdrawal strategies, and be prepared for potential market fluctuations. By understanding the withdrawal process and adapting to the changing landscape, validators can ensure a successful experience with the Shapella upgrade.</p><hr><h3 id="more-about-ethereum">More about Ethereum</h3><ol><li><a href="https://www.stakingrewards.com/journal/choosing-the-best-using-metrics-and-data-to-choose-the-right-ethereum-validator/?ref=p2p.org">Choosing the Best</a>: Using Metrics and Data to Choose the Right Ethereum Validator.</li><li><a href="https://p2p.org/networks/ethereum/apr-simulator?ref=p2p.org">P2P.org APR simulator</a> that calculates the average expected APR and possible deviations.</li><li><a href="https://ethereum-staking.p2p.org/?ref=p2p.org">Institutional Ethereum Staking with P2P.org</a></li></ol>

Vladislav Kurenkov

from p2p validator