What's New in Eth2 - 13 November 2020

Ben Edgington (Eth2 at ConsenSys — all views expressed are my own)

Edition 56 at eth2.news

Top picks

Danny Ryan's updates are the nearest thing you'll get to "official" news:

• eth2 quick update no. 19 announcing the deposit contract, and
• eth2 quick update no. 20, so hot off the press that I haven't read it yet. But I know that it will be good

Phase 0: The beacon chain

If you haven't been completely off the grid for the last two weeks, you will know that the deposit contract was announced on November 4th. It had actually been deployed three weeks earlier, pretty much exactly as I told you all.

The manner of its deployment adds to the Ethereum narrative in an interesting way. The funds for deployment came from TornadoCash, so are effectively untraceable. The leftover Ether was sent to Wikileaks' donation address. I suppose the intended implication is that (1) nobody has control, and (2) we support openness and censorship resistance. There's a parallel with Bitcoin suggesting its own manifesto in its genesis block.

At the same time as the deposit contract announcement, v1.0.0 of the spec was released with some very minor updates. This is an incredible milestone: the culmination of around 28 months of work, with direct contributions, both large and small, from over eighty people, and discussion, participation, and research from a huge host more.

Client team updates

For this week only, I am promoting client team updates, because it is important to know what to expect in the run up to genesis.

• Lighthouse
• Prysm
• Teku
• Nimbus, and latest info

Bottom line is that all client teams expect to make a release between the 24th of November (when the genesis state should be known) and the 1st of December (genesis day). That release will bake in the genesis state and a good set of boot-nodes (as well as any last minute fixes) - the protocol gives us a week's grace to do this.

So, whichever client you plan to run, expect to update during that week, and be on the lookout for release announcements from teams. Teku has a new mailing list and a new Twitter account for this purpose, so, Teku users, please sign up.

A couple of the testnet launches were tripped up by stakers not updating clients in time for genesis. So, if you want a nice, smooth launch, you know what to do!

Testnets

Medalla continues to run for the time-being, with 71,000 validators, but barely over 70% participation. The entry and exit queues are each over three weeks long now. The general view among devs is that Medalla has had a glorious run, but it's time to begin its wind-down. The spec version it runs is not up to date, and the long queues render it not useful for stakers who just want to test their configurations or get a little experience.

We spun up a quick devnet on Tuesday called Toledo with 16,384 validators restricted only to client teams. There's an Eth2Stats monitor for it. This is purely to test out the full mainnet spec in a benign environment. After settling down it has been running all but perfectly. Toledo is planned to live for only a few more days.

The next big public testnet will be Pyrmont, launching at noon UTC on Wednesday 18th November. We are starting it with 100,000 validators run by client teams, and will then open it to wider participation. Unlike Medalla, we will be asking people to run only a very small number of validators each. This is to keep the queues open for people to hop on and hop off, and also to reduce the risk of non-finalisation. It's undecided right now whether Pyrmont will become long-lived or not: watch this space (or Twitter, or whatever).

Tooling and analysis

The most important news in this section is that the Ethereum Foundation announced Eth2 Staking Community Grants. These are to fund "the creation of tools, documentation, and resources to make for a delightful staking and validator experience." Get to it! The deadline for proposals is any time the day of Tuesday, December 22nd, 2020.

Analysis

We discussed the Medalla Data Challenge last time. Since then, the EthStaker folk got some of the authors together to present their results live. Lots of good info in there.

This visualisation from Barnabé Monnot is incredible. So much information condensed into such a visually appealing format - I've watched it a hundred times. The accompanying notebook has some useful insights as well.

Tooling

Alex Stokes is putting together a fork monitor for the beacon chain that promises to be super useful. It's monitoring the Toledo devnet at the moment, which is currently running near perfectly, so there aren't many interesting forks to see yet.

Jim McDonald has updated his chaind beacon chain data extraction tool to work with the latest versions of Teku, Lighthouse, and Prysm.

Beacon Fuzz update 09 from Sigma Prime is out. In the last little while, the structural differential fuzzer was able to find two new critical vulnerabilities in Prysm, and a minor, non-exploitable issue in Teku.

Stakefish has created a batch deposit contract to save gas when making multiple deposits. They are seeking feedback and review. As discussed below: please exercise extreme diligence before sending your stakes anywhere unusual.

Yorick Downe is seeking to make life easier for Docker users, with "unofficial" docker build instructions for Eth2 clients. There is an accompanying YouTube tutorial.

While on the topic of tooling, Superphiz of EthStaker is seeking participants for an Ethereum Due Diligence Committee (EDDC) to evaluate and report on tools in our ecosystem. See also his bench chat, and contact him if this is up your street.

Staking

Deposit progress

The place to make your deposits is on https://launchpad.ethereum.org/. Do not use any other site that purports to accept Eth2 deposits without extreme due diligence!

The Launchpad itself reports progress towards the minimum deposit goal, while the Dune Analytics dashboard gives some more insight. You can even see pending transactions here, and explore past deposits on The Graph.

As I write, we are around 12% of the way to the goal of 16,384 validators. This may seem like a slow start, but per Tetranode, and Justin's poll, the majority haven't moved yet and I expect a huge uptick as the 24th approaches^*. Anthony Sassano urges you to join The Genesis War Effort! Vitalik has done his duty.

(^* Yes you read that right - if you want to guarantee being a genesis validator, you need to get your deposit into the contract before noon UTC on the 24th of November, a full week before genesis. After that, you may end up being queued and inducted well after genesis.)

Taxation

Everybody's favourite topic–-the tax treatment of Eth2 deposits–-was vigorously debated on Twitter this week. The key issue is whether the act of sending a deposit to the deposit contract constitutes a disposal of Ether for capital gains tax purposes (a "taxable event" under US tax law, and I guess UK which is similar). This in turn likely depends on whether Ether on the Eth1 chain and Ether on the Eth2 chain are considered to be the same asset or different assets. James Prestwich (a noted contrarian) energetically argues that the two are distinct assets; Justin Leroux (an actual tax accountant) energetically argues that they are not. Other characters join the fray, including TokenTax; it's a sprawling discussion over many threads.

I am in the happy position of being able to side-step all of this. But the bottom line is that nobody knows what the various tax authorities globally might decide. As with many taxation matters, there is a variety of viewpoints the authorities might take, and they will decree whatever it suits their purposes to decree. Take this as a heads-up to be careful and intentional about tax liabilities. Do your own research; get professional advice; be cautious about making decisions based on a bunch of Twitter threads.

Relevant here could be Liquidstake, which was announced this week. It offers a way to borrow USDC against stakes placed through the scheme. The Block has a nice quote from Andrew Keys, "If you enter into a swap you have clarity on the regulatory and tax treatment. It allows users to have their stake and eat it too."

The Great Explainers…

…and other media. I've got a long list of unordered things that I'm just going to insert below:

• A compilation of guides to staking for mainnet, and a nice guide to running Teku on Ubuntu.
• Bankless continues their killer run of Eth2.0 podcasts. Next up: Preston Van Loon. Also available on YouTube.
• Check out these Bench Chats from Superphiz: 1, 2, 3, and 4. Bite-sized, 5 minute insights from possibly my fave person in Ethereum right now.
• For some long-form Superphiz on staking, see his Yield TV video with Defi_Dad. I haven't had a chance to watch yet, but have every reason to believe that it will be brilliant.
• Eth2 was on TechRadar! (Fight your way through the blizzard of pop-ups, sigh.)
• The Defiant is asking the important questions: Hurray! You Can Now Stake ETH. But Should You?
• A nice six-minute Eth2 overview video from my good friend Conor Svensson, CEO of Web3 Labs. Last month he was asking me about staking services; now he's planning to run his own validators - yay!
• Tetranode began live blogging using Launchpad to make staking deposits. I want to know how the story ends!
• Viktor Bunin of Bison Trails has been writing informative updates. Here are numbers three and four.

Research

Collin Myers and Mara Schmiedt published a nice paper, The Internet Bond: Digital Work Agreements in the Web3.0 Era. They use the economic framework of bonds as a way of analysing staking in Eth2 and modelling the market for participation.

Vitalik is suggesting some modifications to the "quadratic leak" (aka the inactivity leak). This is the mechanism that kicks in during times of non-finalisation to accelerate the demise of non-active validators and allow the network to recover. The main observation from Medalla is that it overly punishes validators that are genuinely trying to do their best, but struggling due to the adverse network conditions. The proposal is designed to be much kinder to validators that have intermittent activity while still penalising those that don't show up at all.

Alex Vlasov of team TXRX is keen to make the Eth2 specifications more amenable to formal verification. He proposes a minimally disruptive approach to this in his article, Towards formal semantics of the beacon chain’s pyspec.

Regular Calls

Implementers

Call #52 took place on the 12th of November.

• Agenda
• Video
• My quick notes and from Mamy.

Some testnet chat, but the main thing that caught my attention was Vitalik's proposal to explicitly decouple future work on sharding, light client support, and the Eth1/Eth2 merge. This means that these three could effectively be delivered in any order, leading to designs like an executable beacon chain which could embed Eth1 directly into the beacon chain before we even get to shards.

This is all very fluid and dynamic right now, and it remains to be seen how it all pans out. It's also very pragmatic, and definitely an "engineering approach". I just need to get it out there that I mourn for our nice, pure Phase 0, Phase 1, Phase 2 roadmap, with its execution engines and beautiful abstractions. Then again, I also mourn for the original Web3 vision founded on Ethereum, Whisper, and Swarm. Apparently, I am a sucker for elegant but undeliverable designs.

Upcoming events

• Hudson Jameson will be live-streaming setting up his Eth2 staking infra, Saturday 14th November at 4:15 PM EST (21:15 UTC). Watch him on YouTube.
• EthStaker Community Call, Monday 16th November at 18:00 UTC.
• Eth2 genesis AMA, Wednesday 18th November at 13:00 UTC.
• ETH Staking Webinar by Staked, Thursday 19th November at 12 pm EST (17:00 UTC). Registration required.
• EthStaker Staking Workshop - Learn to set up a Staking client in a live workshop. Saturday 21st November at 13:00 UTC. Details TBA - watch the EthStaker calendar for further info.

In other news

• Eth2 pages on ethereum.org have been soft-launched. My first PR is in already
• Quantstamp completed the formal audit of Teku. We are very pleased with the results: "Quantstamp found the codebase to be of the highest quality". The full report can be downloaded here.
• Vitalik felt moved to write an updated justification, Why Proof of Stake (Nov 2020).

And finally…

Nothing to add… just turning my thoughts to getting some deposits done this weekend.

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