[Proposal] Zero ETH Club
Introduction
There was positive feedback from the community on the Zero ETH Club Temperature Check. This is a new and novel idea for onboarding quality node operators. Therefore, the DAO, anybody the DAO empowers, and the community must be open to adapting to prevailing conditions. After much consideration, there have been some changes to the Temperature Check required to align Zero ETH Club (ZEC) with the broader Ethereum ecosystem. Most of these changes create simplicity and reduce the time commitment required by all parties.
Overview
The Zero ETH Club (ZEC) is an idea aimed at promoting decentralization within the Ethereum ecosystem and enabling qualified individuals to become node operators in Stakehouse LSD Networks without providing the standard 4 ETH staking requirement. The ZEC creates a structured process for onboarding node operators and maintaining a high level of performance and security within the network. The committee will be made of Representatives voted in by the DAO, these Representatives can whitelist Node Operators (Members).
Representatives
ZEC Representatives will form the ZEC Council. Their primary responsibility will be evaluating and approving potential Members (Node Operators). If more Representative applications come in after the initial Council is formed, it will be the Council’s responsibility to determine their inclusion in the Council.
Becoming a Representative will require submitting a proposal to the Blockswap DAO governance forum. The initial Council will be voted on by the DAO where any subsequent additions to the Council must be approved by the standing Council. A new section for community application proposals will be added to the governance forum.
Requirements to become a Representative:
- Create a proposal for the Blockswap DAO community or sitting ZEC Council.
- Have contributed to the decentralization of Ethereum, are currently an active member of the Ethereum community, or have a proven track record of quality ETH staking.
- Be voted in by the DAO or ZEC council.
Representative Proposals
Proposals for acceptance as a Representative into ZEC will need to be submitted to the DAO governance forum. The proposals must include:
- Name of the Representative and/or the organization.
- Involvement with ETH staking.
- The ECDSA address to be used as the Representative address.
- A pitch to the DAO outlining why they are a positive addition to the ZEC Council.
- Any other relevant information.
Node Operators (ZEC Members)
To become a Node Operator for ZEC, candidates must meet eligibility criteria and adhere to the operational requirements. These may change from time to time. There are currently two requirements to become a ZEC Member Node Operator.
- Have at least one self-funded validator (4 ETH) that is currently online, operational, and not leaking within Stakehouse LSD Networks.
- Node Operators must have their ECDSA address whitelisted by a Representative of the ZEC Council.
Once whitelisted, ZEC Members will be able to source liquidity from a specific Giant Pool for their collateralized SLOT tokens.
There will be a limit of 1,000 validators initially available to ZEC. This will likely be increased in the future, but initially, this initiative should be monitored and assessed as it is the first of its kind. Additionally, Node Operators will be required to deposit 0.1 ETH per validator that they operate. This is collected to cover any gas costs required by the CIP MPC protocol if they do not uphold their node operations to specification.
Node Operators will receive a few benefits:
- On-chain reputation for node operation.
- 10% of the MEV of the LSD Network proportional to their share (normally 50%).
- ETH Validator to operate with a 0 ETH bond.
Note: ZEC members will only be able to join LSD Networks with a desirable payoff rate and deemed in good health. Beyond this, they can join any LSD Network.
Misbehavior
In the case that Node Operators are not fulfilling their duties up to specification, they will be penalized. These specifications will be watched autonomously and manually and could result in the validator being rotated to a new Node Operator or the validator ejected (all stakeholders of the validator will receive ETH). Once a ZEC member is removed, they will be blacklisted from receiving another validator. Some of the duties that will be expected to be maintained are below:
- If leaking or slashing is more than 0.15 ETH. This could reduce as the network matures. If slashed it could result in the loss of additional validators and possibly to get disqualified indefinitely.
- Set the correct fee recipient address immediately. A single missed block payout could result in an ejection of all the validators by the node operator.
- Discovery of any illegitimate or worrisome information or issues with the node operator during the application process or after. This could be brought to light by the community, Representatives, or Blockswap Labs.
Next Steps
- Form the initial ZEC Council: The Blockswap DAO will form a Council of experienced and dedicated Ethereum community members to oversee the ZEC initiative. To do this Representatives will need to submit applications by April 26, 2023.
- The DAO will decide who is qualified to become a Representative.
- Node Operators can apply to receive validators for 0 ETH to the ZEC Council.
- Once approved Node Operators will be able to source ETH from a specific MEV Staking pools to receive the collateralized 4 ETH and use the main Giant Pools for the remaining ETH.
- Throughout this process, Blockswap Labs will create the necessary tooling required to facilitate the ZEC.
BSN Token
It is important to set the intended goal of distributing the BSN token. For ZEC the DAO should look at onboarding 1,000 validators through this method and then assess the overall impact. 40,000,000 BSN could be allocated for this with 5,000,000 to representatives and 35,000,000 to liquidity providers.
ZEC Representatives
To encourage ZEC Representatives’ participation and good behavior, the DAO can distribute tokens to the Representatives. For each successful validator that is brought in they could be allotted BSN tokens. This should be dependent on the overall quality of the node operation based on staking rewards accrued over 120 days. Only one Representative will be attributed with each Node Operator brought in. Rewards will be distributed linearly with each validator worth up to 5,000 BSN.
Liquidity Providers
Collateralized SLOT tokens are a nascent cryptographic advantage introduced with the Stakehouse protocol. ZEC is currently the only opportunity to collect these without staking a validator yourself. Although these are not yet integrated deeply into DeFi, they could become much more valuable than all other Stakehouse derivatives. That said, during the onset, those providing liquidity to ZEC are forgoing a portion of their MEV rewards they could receive by staking as a MEV Staker directly. Therefore, the DAO should allocate BSN tokens to these unique liquidity providers.
This could be done linearly for the first 4,000 ETH staked or 8,750 BSN per ETH.
Proposal
- Blockswap DAO empowers Blockswap Labs to design, develop, create, support, and execute the above in a way they think is best for Blockswwap DAO.
- The DAO sets aside 40,000,000 BSN tokens for distribution to bootstrap the ZEC initiatives over the first 120 days after DAO approval. All remaining tokens at the end of the 120 day period will be returned to the DAO.
- The community is welcome to provide feedback throughout the entire process.
Conclusion
In conclusion, the Zero ETH Club (ZEC) proposal aims to foster a more decentralized and secure Ethereum ecosystem by enabling qualified individuals to become node operators. By establishing a robust committee, incentivizing active participation, and facilitating a transparent accountable application process, the ZEC has the potential to empower a broader range of Ethereum community members and contribute to the long-term health and growth of the network. The success of this proposal will ultimately depend on the collaboration and commitment of all stakeholders working together to bring Ethereum staking to the mainstream and secure the future of the decentralized blockchain.
Achieving a quorum for a proposal in the Blockswap DAO requires the participation of at least 200 million BSN tokens. However, due to the limited distribution of BSN tokens currently in circulation, reaching the necessary quorum may prove to be challenging. To address this, multiple proposals and temperature checks may advance to a vote simultaneously. This approach ensures that the proposals’ advancement generates enough community interest and engagement, rather than being hindered by the limited availability of BSN tokens.