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Welcome to Seba - a system that generates continuous income from your Ethereum validation efforts, offering a new design to reward solo validators with ongoing returns.
Seba, built upon the foundation of the Smoothing Pool design, offers Ethereum solo validators a new way to generate perpetual yield. Validators who join Seba dedicate their Execution and MEV rewards for a predetermined period of 6 months. Once completed, they earn shares that continuously produce yield.
Validators register their ID and set their validator fee address to Seba.
During their 6-month commitment period, 50% of the Execution and MEV rewards are pooled and managed to generate yield through various options (aiming for approximately 10% APY). Meanwhile, the other 50% of the Execution and MEV rewards are directly transferred to a reward pool.
After commitment period, validators become eligible to graduate upon aHeroglyphs block being proposed that includes the validator ID.
Upon block proposal, validators graduate and receive shares which can then be redeemed for the protocol rewards
Participating validators keep all of their Consensus rewards, which are separate from Seba and are kept by the validator.
Validators must consistently perform their validation duties. Failing to do so will reduce their shares or, in the worst case, reset their 6-month Seba staking period, emphasizing the importance of consistent performance and rewarding dedicated validators.
Seba consists of a few core protocol contracts and some backend services to support it. Eligible solo validators can register their validator IDs in the SebaPool contract. By doing this, they must set their validators' fee address to the SebaPool contract. The stakers will then enter a 6-month graduation period during which they need to keep the fee address set to the SebaPool. Failing to do so will reset the graduation period to 0, effectively restarting the process for the affected validator.
50% of the Execution and MEV rewards from the registered validators, which the Seba pool will receive, are swept ~ every 5 epochs by a backend cron job and are sent by the yield manager to the Seba Yield vault. This process effectively swaps the ETH for the assets needed for yield generation by the underlying protocol. The underlying protocol is configurable by a multisig and later by DAO votes. The goal is to achieve at least 10% APY on the principal. This portion of the Execution and MEV rewards from Seba validators will be locked as principal in the protocol forever and will continuously generate yield.
The remaining 50% of the Execution and MEV rewards are directly sent to the Perpetual Yield Bearing Seba vault after being converted to sBOLD, which will be distributed to shareholders who burn their shares.
Participating validators can graduate after a specific period of successfully fulfilling their Seba pool duties. However, to access the yield generated by the platform, their validator ID must be included as a ticker in a valid Heroglyphs block. Additionally the execution rewards of this block should flow to the Seba pool.
Once such a block is proposed, the validator will receive shares from the pybSeba vault, which will continuously earn yield in the form of sBOLD from the Seba yield vault. The number of shares received by each validator is directly linked to their effective balance and attestation success rate during the graduation period. Additionally, holding specific NFT collections can provide extra boosts.
On the backend, a cron job runs every 5 epochs and processes the most recent finalized epochs. The state of each registered validator, including their attestation score, graduation eligibility epoch, effective balance, and proposal success rate, is then updated and stored in S3.
Both Alchemy and Beaconcha.in APIs are used to handle execution and consensus states, while also utilizing our own Subgraph to monitor contract events. Backend blockchain executions are carried out with permissioned wallets, whose private keys are stored securely in AWS Secrets Manager.
Validators graduate after completing their commitment period, earning shares based on their performance. These shares provide a long-term, ongoing yield. To activate this perpetual yield, graduated validators (or other validators) must propose a valid Heroglyphs block that includes their validator ID and make sure the execution rewards of that block flow to the Seba pool.
Seba will continually adapt and adjusts its strategies across stablecoin and liquidity pools, aiming for optimal returns (~ 10% APY).
Validators can choose to burn their shares at any moment to receive immediate yield or keep them for ongoing, increasing rewards. Early participants gain significant advantages, while later participants help maintain a vibrant, self-sustaining ecosystem and continue to earn perpetual yields.
We conducted detailed simulations to illustrate how rewarding Seba can be, especially with additional boosts for aligned validators. Our research was based on the repository https://github.com/htimsk/SPanalysis, where they modeled the expected returns for Rocket Pool validators. We modified these models to suit our protocol but used their Execution and MEV rewards data to run multiple Monte Carlo simulations, each with 1000 iterations. We then compared all models to the expected returns of the DappNode Smoothing Pool, which currently yields approximately 0.0166 ETH per validator per month.
Model 1: Average payouts (in ETH) leveraging 100% of MEV rewards as principal for yield generation, distributed by % of graduated validators.
In this model, a Monte Carlo simulation with 1000 runs was conducted, involving 1000 validators contributing to the protocol, with all Execution and MEV rewards flowing into the principal to generate yield. The results indicate that the rewards received, which derive solely from yield, are quite modest both at month 7—just after graduation—and two years post-graduation, assuming no validators participate anymore and the protocol operates solely based on the existing principal producing perpetual yield.
Month 7 Payout Analysis (with 1000 validators onboarded and ~10% protocol yield):
As can be seen, the 5% first validators to receive shares will still outperform the DappNode Smoothing Pool rewards, but it dramatically drops once 25% of validators own their shares. As shown, the initial 5% of validators receiving shares will still surpass the rewards from the DappNode Smoothing Pool, but this advantage decreases significantly once 25% of validators hold their shares.
Year 2 Monthly Perpetual Yield Analysis (In case no validators would contribute to the protocol anymore.):
As shown in the graph below, if we assume that no validators contribute Execution and MEV rewards to the protocol after 2 years, while the principal increased between months 6 and 12, the expected monthly returns nearly double due to the growth of the principal. However, if more than 25% of validators retain some of their shares, the protocol still underperforms compared to the DappNode Smoothing Pool. To enhance the rewards across all segments, we experimented with other models.
Model 2: Average payouts (in ETH) leveraging 50% of Execution and MEV rewards as principal for yield generation, 50% of MEV rewards directly to the reward vault and distributed by % of graduated validators.
In this model, we conducted a Monte Carlo simulation with 1000 runs, involving 1000 validators contributing to the protocol. Half of the Execution and MEV rewards are allocated to the principal to generate yield, while the remaining 50% flows directly into the rewards vault. The results indicate that the rewards received- comprising both yield and direct Execution and MEV rewards- are quite favorable. This is observed at month 7, the first month after graduation, and also two years post-graduation, assuming no additional validators join and the protocol continues operating solely on the existing principal generating perpetual yield.
Month 7 Payout Analysis (with 1000 validators onboarded and ~10% protocol yield):
As shown, all validators receiving shares will outperform the DappNode Smoothing Pool rewards, which is a very positive outcome. Now, let's consider year 2, assuming all validators cease validating.
Year 2 Monthly Perpetual Yield Analysis (In case no validators would contribute to the protocol anymore.):
If we assume that after 2 years only 5% of the original validator still have shares, they will outperform DappNode Smoothing Pool, although starting from 25%, the protocol underperforms. However, in our case, the validators don’t have to perform active validator duties anymore compared to DappNode Smoothing Pool, and we thus consider this free yield! A validator can even recycle its validator stack and register a new validator on Seba to compound Seba rewards.
Model 3: Boosting rewards for aligned communities.
While Model 2 appears quite promising, we chose to implement an additional boost to shares for aligned participants of the following:
Stakers Union POAP (2.5x)
0x22c1f6050e56d2876009903609a2cc3fef83b415
POAP Event ID: 175498Heroglyphs Kamisama (2.5x)
0xB1bbA5e43Cb1aca1E78C3Ec93Fae98a7A3dCeeeF
https://opensea.io/collection/kamisama-2First 100 Heroes (2.5x)
0xbA68FFC25f7A548ddff7b621Df9fd1C278eB196F
https://opensea.io/collection/100-heroesHero Socks POAP (+0.5x)
0x22c1f6050e56d2876009903609a2cc3fef83b415
POAP Event ID: 180703NFTs and POAPs by default must be stored in the validator's withdrawal address unless you set a reward address. In that case, the reward address needs to hold the NFTs.
Only the Hero Socks POAP can be compounded, providing the max of 3.0x.
The outcomes are displayed in the following two graphs.
Month 7 Payout Analysis (with 1000 validators onboarded, ~10% protocol yield, and a x2.5 boost for aligned participants):
This model is identical to Model 2, but it provides aligned validators who can prove this with a specific NFT a 2.5x reward boost. We considered First 100 Heroes NFT holders, or 10% of participants, as a reasonable estimate. These validators now find the rewards especially appealing, while regular validators still earn rewards at month 7 that greatly surpass those from the DappNode Smoothing Pool.
Year 2 Monthly Perpetual Yield Analysis (In case no validators would contribute to the protocol anymore.):
After two years, even if no validators contribute to the protocol anymore (worst case), the rewards for both categories remain quite attractive. This is because validators are no longer required to participate, making the yield effectively free.
In summary, Seba provides validators with a new opportunity to earn a different kind of yield. It offers simple opt-in options with additional benefits for aligned NFT holders, delivering perpetual yield through tokenized shares.
Join us today.
Website:
http://seba.heroglyphs.com
X. com
https://x.com/hero_glyphs
Discord:
https://discord.gg/heroglyphs
Farcaster:
https://warpcast.com/heroglyphs
Lens/Orb:
https://hey.xyz/u/heroglyphs
This notable difference highlights the clear advantage of being an aligned validator, either as a verified member of the Stakers Union, by owning a Heroglyphs Kamisama NFT, First 100 Heroes NFT, and an added boost for Hero Socks POAP holders . This not only boosts your ongoing yield but also continues to provide a substantial perpetual yield for all participants.
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1 comment
Great! LFG