It’s time for the Ethereum 2.0 beacon chain to launch.
We’ve spent the last nine months testing the life out of this thing. The year began with huge, long-running single client testnets: Sapphire, Topaz and Onyx networks run by Prysmatic Labs. In April, there were small multi-client networks: Schlesi, Witti and Altona – all named after subway stations, in keeping with Ethereum testnet tradition.
Ben Edgington advises on Eth2 across ConsenSys. CoinDesk’s “Invest: Ethereum Economy” event is Oct. 14.
And then the big one, the Medalla testnet. Named after Medalla Milagrosa on the Buenos Aires Underground, it has been running for over two months, with four different client implementations involved throughout that time. It continues to run today with over 50,000 validators actively participating, making it one of the largest decentralized consensus networks in existence.
Progress has not all been smooth. A few days after the start of the Medalla testnet, one of the clients suffered a critical issue that disrupted the chain for a few days. But this is what testnets are for. We kept the chain running and were able to bring it back to full health, with a slew of lessons learned.
Among them, client diversity is important. If we want the beacon chain to be resilient, no single client implementation can dominate. As Danny Ryan, a core researcher at the Ethereum Foundation, wrote, “The incident on Medalla was significantly amplified by the failure of the dominant Prysm client, and as we move toward mainnet, we, as a community, must consciously seek to remedy this.”
Four high-quality, audited and battle-tested clients are currently available to run at beacon chain launch: Teku, Lighthouse, Nimbus and Prysm. Each has its own flavor and target user base. For example, Teku, the Eth 2.0 client from ConsenSys, has been designed and built primarily with institutional and professional stakers in mind (although I shall be running it at home), with extra security tools such as a remote signing service and a slashing prevention service.
The beacon chain will have real rewards and real penalties, and we simply can’t simulate these with testnets.
Client teams also learned to agree on common standards for migrating information between their implementations. This allows stakers to safely switch quickly between clients and will greatly help with incident recovery in future.
See also: A Day in the Life of an Ethereum 2.0 Validator
Skin in the game
Perhaps the biggest lesson? It is hard to faithfully replicate proof-of-stake on networks that are not incentivized. Participation in these testnets is completely free, which is not at all realistic. On testnets, stakers can neglect their nodes with no real consequences; they can register thousands of validators then just switch them off and they can put down stakes but never join the network.
On the real beacon chain, with significant value genuinely at stake, we expect user behavior to be quite different.
This is why it is now time to go live with the beacon chain. We have tested everything else in every way we can: the deposit contract has been formally verified; the deposit tools have been audited; the specification has been audited; the beacon chain has been formally modeled; the node discovery protocol has been audited; the networking protocol has been audited; the crypto-economics have been simulated; we are running incentivized attack nets; we’ve been doing fuzz testing; every client has undergone at least one third-party security audit. Hundreds of pairs of eyes have scrutinized the whole process over the last year.
However, the real beacon chain will have real rewards and real penalties, and we simply can’t simulate these with testnets.
On the reward side, with the minimum necessary number of 16,384 individual 32 ETH stakes (one stake is one validator), gross yield for validating on the beacon chain is over 20% per year. Even in these days of heady – if temporary – DeFi (decentralized finance) returns, this is quite compelling.
Penalties are not especially onerous. As long as you are able to keep your validator online at least half the time, you will not lose your stake except in extreme circumstances. And as long as you follow reasonable guidelines, enough protection is in place that there is no chance of your stake being slashed.
We’ve tested these things as far as we can in the lab: Now it’s time to run it in the wild. The Ethereum 2.0 roadmap has been carefully divided into phases so that we can try out this new, ambitious proof-of-stake mechanism in isolation, in phase 0, before anything else depends on it.
Thus, in the absolute worst case of a catastrophic failure or attack that affects a large proportion of stakers, there’s always the opportunity to agree to roll back the chain without any knock-on consequences.
We’re planning one more launch rehearsal in mid-October, the Zinken testnet. Not many days after that I expect the deposit contract to be deployed, with a target beacon chain genesis within about six weeks.
See also: 3 Things You Should Know Before Staking on Ethereum 2.0
Staking, from the start, will not be for everyone.
One reason for is it can be quite demanding technically. Stakers need to keep a server running as close to 24/7 as possible. They need to keep their systems secure and stay on top of client software updates. For those not confident about hosting a staking node themselves, there are plenty of third-party services becoming available. Within ConsenSys, we are offering Codefi Staking, a white-label, turnkey solution for businesses that want to stake on Ethereum 2.0.
Another thing to be aware of is that, once in, you are committed for the long haul. From the start, stakers will be able to stop validating and freeze their stake and rewards if they wish. However, that ether will remain stuck on the beacon chain until Phase 1.5 of the Eth 2.0 roadmap has been delivered.
Phase 1.5 is the point at which the current Ethereum chain gets on-boarded into the Ethereum 2.0 system, along with all its accounts and contracts. Only after that will stakers be able to claim their rewards and recover their stakes. Until then, there is no way to exit your funds. Work on Phase 1.5 is moving along nicely, but it does not have a fixed delivery timeline. It could be a couple of years away yet.
As for me, I’ve been involved in Ethereum 2.0 long enough, and followed it closely enough, that I believe I know where all the bodies are buried. I am confident enough in the integrity and security of what we have built, and the teams that have built it, that my household plans to be staking on the beacon chain from day one.
If you want to join us supporting this extraordinary evolution of the Ethereum network, look out for official announcements over the next weeks. Meanwhile, it’s not too late to get some practical insight into what’s ahead by joining the Medalla testnet.
See also: 3 Ways Staking Will Upend the Economics of Ethereum