This is the final episode of the Merge series from SSV Network. What began as an 8-episode series has grown into a behemoth of talks that most likely benefits the entire audience.

This final episode will feature NON-STOP content for 2 hours. @AmMuroch discusses 'Distributed Validator Technology' and why all pools will have to use it. While @ vshapovalov + @langerstwit + Dave Rugendyke + @IsdrsP joins us from @LidoFinance and @Rocket Pool to discuss: LSD's Prospects; The Staking Market; What OFAC Means; Everything Else...

What is DVT?

DVT-'Distributed Validator Technology'-functions similarly to a multisig wallet in that 3 of 5 validators must agree on data before it is submitted to the network. This increases the liveness of any validator by allowing some nodes to be offline, and it reduces the possibility of slashing because a single validator cannot submit incorrect information on its own. DVT does not accept deposits of less than 32 Ether, and it only works with full validators. If you decide to do a DVT arrangement with your friends, you'll need to first put your 32 Ether in one wallet, then submit it to a DVT provider, where the keys will be split and each of you will be able to run a DVT node on your machine.

DVT products such as SSV are developed as middleware applications; at the moment, it appears that SSV.Network is really for developers, home users as well as services can and are using it by integrating it to their services. Anyone can become a node operator as well as run a validator… As an operator, you will run a full beacon chain node such as Nimbus, Teku, Lighthouse, or Prysm as well as a DVT instance on the machine.

It is critical to understand that DVT does not specify where MEV goes. Any participant in the "m of n" (think of this as a multisig if you're unfamiliar) who proposes a block could specify that the MEV be sent to a wallet they control rather than one shared by the group. This isn't a problem for enterprise or single-control DVT setups, but it can be problematic if multiple interests share a DVT validator.

• DVT requires 32 Ether Deposits

• DVT increases liveness and reduces the risk of slashing

What are Lido and Rocket Pool?

Rocket Pool and Lido offer Staking as a Service, essentially you exchange your Ether for their tokens (rETH or stETH), and the Ether are staked on your behalf by providers on the Rocket Pool or Lido network. There are significant structural differences between Rocket Pool and Lido. The main benefit of Rocket Pool and Lido is that you can earn staking rewards on your Ether even if you only have 32 Ether.

• Rocket Pool and Lido allow users to stake with less than 32 Ether

• Rocket Pool and Lido provide a liquidity ERC20 token so that your Ether is liquid during staking

Why DVT and RP/Lido aren't competitors

The most important thing to remember is that DVT solutions do not compete with smart contract staking platforms because they offer different products at different layers. DVT improves liveness by working with whole validators; it does not have a fractional deposit system. Although RP and Lido have fractional deposit systems, they lack the slashing protection and liveness guarantees that DVT offers.

What does all of this mean?

This means that products like Rocket Pool and Lido are very likely to integrate a DVT solution to increase liveness and resist slashing, but DVT and RP/Lido are not competitors. This can be very confusing because people always seem to pit these technologies against each other when they are not competitors.

Sassal stated that we already see a play out where in crypto a lot of the use cases seem to be novelties, speculation seems to dominate. There are obviously arguments that can be made about how much value it actually brings to the world. But he think we're all optimistic that they will in the future, and it kind of follows the pattern of something starting out as a novelty, only used by a small percentage of the population, and then blossoming out as time goes on.

Liquid Staking Derivatives

Liquid staking is a method of gaining additional utility from assets that are already staked. When you stake tokens through a platform like Lido or Rocket Pool, you receive tokens with the same value as the tokens you staked in the protocol.

When Ethereum switches to the proof-of-stake consensus mechanism later this , its security will be ensured by "validators" who stake their Ether to the network, allowing them to run block-producing nodes and earn staking rewards.

However, there is a catch: staking their Ether prevents them from using it in other, potentially more profitable ways. Although stakers will be compensated in Ether, transaction fees, and miner-extractable value, they may be able to earn a higher return on their Ether by depositing it in high-APY DeFi protocols.

Liquid staking derivatives provide a solution to this conundrum. Ether holders can pool their Ether and use it to run validators on their behalf through a protocol. These holders are then given protocol tokens that represent their staked Ether and can be used in other DeFi protocols just like Ether.

Governments are not particularly friendly, especially in light of the SCC and OFAC sanctions. The government has not been friendly toward cryptocurrencies, and other governments outside of the US have been even more hostile. We have miners, validators, block producers, or whatever name you want to call them. These entities essentially create these blocks and include transactions within them. And there has recently been a lot of discussion on Twitter about whether these block producers should be allowed to include or exclude any transactions they want from a block.

Centralization risks

Nobody has control over this network because it is decentralized. The protocol's developers argue that we should not intervene because otherwise, the sanctions and prosecution of a single individual will become increasingly severe. Businesses are free to make their own decisions, but the protocol and those who care about it should keep in mind that big businesses with huge stakes are vulnerable, and that vulnerability makes everyone else vulnerable as well. As a result, there is a systemic risk associated with all of us using the same protocol. The centralization needs to be not just technical and technological but also human in nature. As a result, we must ensure that we use technology to reduce systemic risks.

Those centralization risks within staking itself, as well as those large institutions owning a large portion of the network. It's kind of like a temporary phenomenon just because we don't have beacon chain withdrawals yet and there's not that much competition in this space yet.

If Coinbase is the only staking service available, Ethereum will be in danger, so it will require something in the middle, something that incorporates small staking services, medium staking services, large staking services at home, staking validators, and so on and so forth. The systemic risk of staking in Ethereum should be discussed further.

For the first time, we can actually measure it using proof-of-work. Systemic risk is significant, but Sassal believes that with technology, we can solve it or, at the very least, mitigate it to a large extent. The healthiest beacon chain is one that is not dominated by any one type of stake, and is hopefully globally distributed, as in they are actually based in different countries. There will be the necessary tools in order to enable this healthy beacon chain, because that's how we get that decentralization that we all want.

With cryptocurrency being such a volatile market, even Ethereum's leaders find it difficult to forecast the network's long-term future. Overall, The Merge is without a doubt one of the most significant moments in cryptocurrency history, as one of the largest protocols will undergo a massive change.

Hopefully, by reading all eight recap episodes of SSV Network's The Merge series, you have gained all of the necessary knowledge to be fully prepared for what is to come. Thank you for sticking with me for the entire 8-week period.

This is the final episode of the Merge series from SSV Network. What began as an 8-episode series has grown into a behemoth of talks that most likely benefits the entire audience.

This final episode will feature NON-STOP content for 2 hours. @AmMuroch discusses 'Distributed Validator Technology' and why all pools will have to use it. While @ vshapovalov + @langerstwit + Dave Rugendyke + @IsdrsP joins us from @LidoFinance and @Rocket Pool to discuss: LSD's Prospects; The Staking Market; What OFAC Means; Everything Else...

What is DVT?

DVT-'Distributed Validator Technology'-functions similarly to a multisig wallet in that 3 of 5 validators must agree on data before it is submitted to the network. This increases the liveness of any validator by allowing some nodes to be offline, and it reduces the possibility of slashing because a single validator cannot submit incorrect information on its own. DVT does not accept deposits of less than 32 Ether, and it only works with full validators. If you decide to do a DVT arrangement with your friends, you'll need to first put your 32 Ether in one wallet, then submit it to a DVT provider, where the keys will be split and each of you will be able to run a DVT node on your machine.

DVT products such as SSV are developed as middleware applications; at the moment, it appears that SSV.Network is really for developers, home users as well as services can and are using it by integrating it to their services. Anyone can become a node operator as well as run a validator… As an operator, you will run a full beacon chain node such as Nimbus, Teku, Lighthouse, or Prysm as well as a DVT instance on the machine.

It is critical to understand that DVT does not specify where MEV goes. Any participant in the "m of n" (think of this as a multisig if you're unfamiliar) who proposes a block could specify that the MEV be sent to a wallet they control rather than one shared by the group. This isn't a problem for enterprise or single-control DVT setups, but it can be problematic if multiple interests share a DVT validator.

• DVT requires 32 Ether Deposits

• DVT increases liveness and reduces the risk of slashing

What are Lido and Rocket Pool?

Rocket Pool and Lido offer Staking as a Service, essentially you exchange your Ether for their tokens (rETH or stETH), and the Ether are staked on your behalf by providers on the Rocket Pool or Lido network. There are significant structural differences between Rocket Pool and Lido. The main benefit of Rocket Pool and Lido is that you can earn staking rewards on your Ether even if you only have 32 Ether.

• Rocket Pool and Lido allow users to stake with less than 32 Ether

• Rocket Pool and Lido provide a liquidity ERC20 token so that your Ether is liquid during staking

Why DVT and RP/Lido aren't competitors

The most important thing to remember is that DVT solutions do not compete with smart contract staking platforms because they offer different products at different layers. DVT improves liveness by working with whole validators; it does not have a fractional deposit system. Although RP and Lido have fractional deposit systems, they lack the slashing protection and liveness guarantees that DVT offers.

What does all of this mean?

This means that products like Rocket Pool and Lido are very likely to integrate a DVT solution to increase liveness and resist slashing, but DVT and RP/Lido are not competitors. This can be very confusing because people always seem to pit these technologies against each other when they are not competitors.

Sassal stated that we already see a play out where in crypto a lot of the use cases seem to be novelties, speculation seems to dominate. There are obviously arguments that can be made about how much value it actually brings to the world. But he think we're all optimistic that they will in the future, and it kind of follows the pattern of something starting out as a novelty, only used by a small percentage of the population, and then blossoming out as time goes on.

Liquid Staking Derivatives

Liquid staking is a method of gaining additional utility from assets that are already staked. When you stake tokens through a platform like Lido or Rocket Pool, you receive tokens with the same value as the tokens you staked in the protocol.

When Ethereum switches to the proof-of-stake consensus mechanism later this , its security will be ensured by "validators" who stake their Ether to the network, allowing them to run block-producing nodes and earn staking rewards.

However, there is a catch: staking their Ether prevents them from using it in other, potentially more profitable ways. Although stakers will be compensated in Ether, transaction fees, and miner-extractable value, they may be able to earn a higher return on their Ether by depositing it in high-APY DeFi protocols.

Liquid staking derivatives provide a solution to this conundrum. Ether holders can pool their Ether and use it to run validators on their behalf through a protocol. These holders are then given protocol tokens that represent their staked Ether and can be used in other DeFi protocols just like Ether.

Governments are not particularly friendly, especially in light of the SCC and OFAC sanctions. The government has not been friendly toward cryptocurrencies, and other governments outside of the US have been even more hostile. We have miners, validators, block producers, or whatever name you want to call them. These entities essentially create these blocks and include transactions within them. And there has recently been a lot of discussion on Twitter about whether these block producers should be allowed to include or exclude any transactions they want from a block.

Centralization risks

Nobody has control over this network because it is decentralized. The protocol's developers argue that we should not intervene because otherwise, the sanctions and prosecution of a single individual will become increasingly severe. Businesses are free to make their own decisions, but the protocol and those who care about it should keep in mind that big businesses with huge stakes are vulnerable, and that vulnerability makes everyone else vulnerable as well. As a result, there is a systemic risk associated with all of us using the same protocol. The centralization needs to be not just technical and technological but also human in nature. As a result, we must ensure that we use technology to reduce systemic risks.

Those centralization risks within staking itself, as well as those large institutions owning a large portion of the network. It's kind of like a temporary phenomenon just because we don't have beacon chain withdrawals yet and there's not that much competition in this space yet.

If Coinbase is the only staking service available, Ethereum will be in danger, so it will require something in the middle, something that incorporates small staking services, medium staking services, large staking services at home, staking validators, and so on and so forth. The systemic risk of staking in Ethereum should be discussed further.

For the first time, we can actually measure it using proof-of-work. Systemic risk is significant, but Sassal believes that with technology, we can solve it or, at the very least, mitigate it to a large extent. The healthiest beacon chain is one that is not dominated by any one type of stake, and is hopefully globally distributed, as in they are actually based in different countries. There will be the necessary tools in order to enable this healthy beacon chain, because that's how we get that decentralization that we all want.

With cryptocurrency being such a volatile market, even Ethereum's leaders find it difficult to forecast the network's long-term future. Overall, The Merge is without a doubt one of the most significant moments in cryptocurrency history, as one of the largest protocols will undergo a massive change.

Hopefully, by reading all eight recap episodes of SSV Network's The Merge series, you have gained all of the necessary knowledge to be fully prepared for what is to come. Thank you for sticking with me for the entire 8-week period.