Introduction
Liquid Staking Derivatives Networks (LSD Networks) is a set of smart contracts that are built around the Stakehouse protocol. Just like Stakehouse, it is intended as a public benefit infrastructure for Ethereum staking. Although LSD Networks is a standalone protocol, it utilizes Stakehouse infrastructure for stake delegation operations and as a derivative accounting layer to allow for trustless liquid staking on Ethereum. Stakehouse LSD Networks is the first protocol owned solely by the DAO.
For details on LSD Networks and Stakehouse view the links below.
LSD Networks documentation
Stakehouse Position Paper
This proposal is a follow-up to the LSD Networks Notice which was posted in the official DAO governance forum previously.
Background
Liquid staking is prevalent in the Ethereum network. Therefore, the Blockswap Labs team has created the Stakehouse protocol. It is a non-dilutionary unified pooling mechanism to align with current market demands for liquid staking with accessibility for anyone. Continuing on the Stakehouse mission to decentralize Ethereum, the LSD Networks are permissionless and trustless for all participants and give complete autonomy over node operations. Ethereum can have thousands of LSD networks instead of the small handful that currently exist.
Anybody can create an LSD Network adapted to their needs or ideas. Out of the box it is permissionless, trustless, and doesn’t charge any commissions. Due to the customizable nature, individuals, DAOs, protocols, or collectives may decide to Gatekeep who is allowed to join, charge their own commissions, or set other unique parameters.
LSD Networks are released as open-source software under MIT license. Anybody can create and alter them however they want as the software is provided on an “as is” basis. If they choose to make a different LSD Deployer those LSD Networks created will not have access to the Giant Pools. Giant pools are a facility for liquidity provision of an LSD Network allowing node runners to run validators for as little as 4 ether.
Proposal
On behalf of Blockswap DAO it is proposed that Blockswap Labs deploy an instance of the LSD Networks, Giant Pools for unified liquidity for LSD networks, LSD Deployer for creating LSD Networks, provide a UI for users to interact with LSD Network protocol, marketing and support materials, and anything else that may be required for the adoption of Stakehouse LSD Networks.
Testing and Security
Stakehouse has been rigorously tested, audited, and went through an open community security verification process.
LSD Networks has been through an Audit Competition with Code4rena. This allowed the community to have the first look at the open source LSD Network codebase and provide feedback. Details, results, and repo for this competition can be found here.
The MEV Payout Pool contract which acts as an MEV smoothing pool for LSD Networks went through a formal verification audit competition. This was hosted by Code4rena, where participants could gain access to the Certora Prover to write rules and look for bugs. The results and repo can be found here.
There is also a Testnet for LSD Networks where users have tested the protocol in a real-world type environment on the Goerli testnet. Over 1302 Ethereum wallets have joined the testnet as of February 16, 2023. Users supplied the core contributors with valuable feedback which was implemented into the UI, code, and other important areas.
The Stakehouse LSD Networks codebase will be published here on Stakehouse-dev. The current codebase is from V1 and an updated codebase will be published after the deployment. This includes security tests and formal verification.
Prior to release and post-deployment, Blockswap Labs (core contributors) will release its internal security verifications and continuous assessments for the community to review including a formal verification dashboard for adequate disclosure. Everyone will be able to review the code and formal verification efforts via the dashboard. Blockswap Labs is working in partnership with Runtime Verification in doing an internal assessment of LSD Networks. Find all the latest information on formal verification here.
For additional information on Stakehouse security please visit the Security and Research page.
Next Steps
- The Blockswap DAO community can voice any questions, comments, or concerns about deploying LSD Networks over the course of 3 days.
- After 3 days if there is no logical opposition to the deployment, core contributors will take initiative to deploy the LSD contract and publish the details to the community and on stakehouse-dev GitHub.
- If there is a logical opposition to the deployment, then the deployment will be delayed. After this delay, the DAO will enter a voting process to decide on the deployment of LSD Networks contracts.
Conclusion
LSD Networks is a natural extension of the Stakehouse protocol. Stakehouse was intended as a middle layer for the delegation and accounting of Ethereum validators. Using LSD Networks, more users will now have access to the benefits of Ethereum staking. Since this is a DAO owned protocol it is up to the DAO if it is deployed.