Protopool Staking Service

Date: Jan 06, 2023

Introduction

Summary
Geographical distribution and hosting decentralization are two of the major challenges for the Ethereum
ecosystem that could act as a single point of failure. A black-swan event could potentially destroy everything
that was built by thousands of people during the last seven years.

Protopool’s vision is to build the biggest liquid stacking service with a geographically diverse infrastructure that
utilizes bare metal servers housed in a global set of independent enterprise data centers.

ETH holders will be able to stake any amount of ETH on Protopool without a need to run their own node.
Protopool has a unique solution to the liquidity problem by minting NFT as a certificate of deposit (CD) for
users that stake with us instead of minting an ERC20 rebasing token. NFTs will be easily sold on secondary
NFT marketplaces or used in liquidity pools.

 Our target audience is ETH holders that prioritize decentralization, network health, and freedom from
censorship.

Team
The project team is comprised of four individuals from two firms.

Huntington Analytics
Huntington Analytics has experience deploying validators on Ethereum, NEAR, Gnosis, and Tendermint-based
blockchains and currently has four operator nodes and two validator nodes deployed on SSV Shifu Testnet 2.

Samuel Lauridsen
The firm’s founder draws upon over 15 years of prior experience designing, deploying, and managing mission-
critical infrastructure for Silicon Valley’s leading tech companies including Apple, Intel, Facebook, Equinix, and
Tesla. In addition to his work in Northern California, he has 6+ years of experience working at one of the
largest media conglomerates in the world, including one of the “big five” motion picture studios. Currently
based in Los Angeles this connection to the art world brings unique opportunities for collaboration to the project
team.

Hannah Lauridsen
Hannah is a co-founder of Huntington Analytics. Her experience spans several industries and includes eight
years as a small business owner; 10+ years of visual design/multimedia freelance; and three years in
education. Core components of these roles have combined in Hannah’s current data visualization position. She
is passionate about projects and tools that empower others to obtain equitable access to information and
opportunities.

MaxinAI
MaxinAI was founded in 2017 as an AI technology company to solve complicated business challenges around
the world. The company piloted its transition to blockchain in 2021 and has since used its extensive blockchain
development services to deliver over 30 robust smart contracts across Ethereum and EVM chains. MaxinAI is
based in Tbilisi, Georgia, and consists of a 60+ person full-time team.

Ioseb Khutsishvili
Ioseb is a co-founder of MaxinAI. He has 20+ years of experience in developing core back-end applications
and managing teams of 150+ software engineers. MaxinAI has piloted its transition to blockchain under Ioseb’s
technical leadership.

David Khosroshvili
David is a serial entrepreneur, Forbes Georgia 30/30 award winner, and decentralization evangelist. He has
built multiple technology companies during the last 10 years that currently employ over 120 talents in the
blockchain and data science industries. David is a CEO and a founding member of MaxinAI.

Deep Dive into the Problem

The success of the Ethereum “merge” event marked an incredible technical achievement and has brought
great benefits to the network and its stakeholders. However, this same achievement has also brought many
unintended consequences. These second-order effects threaten accessibility, immutability, resiliency, security,
and core ethos of the Ethereum project at large.

The root cause of the core issues can be easily identified, visualized, and understood.

Geographical Centralization
Ethereum nodes are not meaningfully geographically distributed. Currently, over 45% of Ethereum nodes
reside within the United States. Germany has the second highest concentration with just over 11% of nodes.
This exposes most of the network to the United States regulatory regime and enforcement arms.

Centralized Hosting
Amazon Web Services hosts over 58% of Ethereum nodes. This places the majority of the network
infrastructure, traffic, and oversight in the hands of one of the current big five or “GAFAM” tech monopolies.
This gives Amazon the opportunity to take on many roles, including but not limited to: enforcement arm for
regulatory agencies, chain data miner, chain data broker, and potentially - as a single point of failure. Given the
majority of nodes reside both within the borders of the United States and within the AWS platform, U.S. policy
or enforcement actions can be put into effect nearly instantly and without disclosure, impacting the entire
Ethereum network.

Lack of client software diversity

Ethereum client execution and consensus client diversity are low. Over 79% of nodes utilize the Geth client for
the execution layer. Consensus client diversity has shown improvement compared to the execution layer.
However, the Prysm client still maintains the majority market share.

 The Product
Protopool is a staking service offering extremely robust staking products to both individuals as well as DAOs
and institutional customers. Our highly redundant, geographically diverse infrastructure utilizes bare metal
servers housed in a global set of enterprise data centers. Our unique approach ensures that our entire tech
stack, from the bare metal up, has no single point of failure or censorship.

In addition to the robust security provided by our unique infrastructure, users that stake with Protopool can
utilize one of our integrated vault strategies to increase potential APR or use their staked position as collateral.

Go To Market
Our core target audience are ETH holders that care about decentralization and do not believe the public
blockchain should be censored. We will be positioned as the main staking protocol for those that want Ethereum
to be on the market long-term and be used by the next generations. Who are these people?
- Large ETH and Ethereum ecosystem token holders for whom centralized failure of Ethereum is a big
risk;
- DeFi projects that are built on Ethereum;
- NFT projects that are built on Ethereum;
- DAOs built on Ethereum;
- Institutional customers that believe in a decentralized future.

We believe that our clear positioning as a decentralized, censorship-resistant, and accessible Ethereum
staking protocol will attract core ecosystem stakeholders. The mission of Protopool is aligned with the core
values of the community and aims to facilitate increased accessibility, growth, and resilience of the network.
Community outreach and collaboration with ecosystem stakeholders will be a significant and essential
component of the project.

Though it should be mentioned that we also want our platform to be attractive for more casual users and more
passive users such as NFT traders. We are cognizant that not all Ethereum users may have an awareness or
interest in ensuring the network is secure, decentralized, and censorship-resistant. To be appealing to the
broader crypto audience we are going to use the following GTM strategy:

- We are going to mint NFTs as a certificate of deposit (CD) for each staking user. We want to bring more
value to it by collaborating with top NFT artists in the space and create commemorative NFTs with
special art.

Collaboration with different artists on a weekly or monthly basis will attract their followers to our protocol. We
envision that this may attract participants that would otherwise have no interest in network participation. These
users would be motivated to stake solely by the NFT artwork.

This novel approach lowers the barrier of entry and increases accessibility to more casual users that previously
would not have participated in the growth and security of the Ethereum network. These users will now become
stakeholders in the ecosystem which will foster greater participation.

Competitive Advantages
● Utilizes a diverse set of data centers located in multiple countries for the staking pool. In addition, our
infrastructure can be seamlessly leveraged by independent validators via a plug and play software and



 hardware solution herein referred to as the “ProtoNode” software and hardware package. We intend to
roll out integration with third party operators, ProtoNode users included.
● Utilizes execution and beacon chain client diversity for additional resilience
● Simplified staking mechanics that eliminate complexities inherent to rebase tokens
● Infrastructure will utilize cutting-edge clustering and storage replication technology
● Process mirrors that of traditional finance Certificate of Deposit products (CD). Users receive a
certificate of deposit in the form of a yield bearing ERC-721 (NFT) token.
● Ease of selling NFT on the secondary markets
● NFT could have a liquidity pool on Sudoswap
● Access to the broader audience of NFT buyers
● Yield-bearing NFT can be used as collateral for use in borrowing and lending platforms.

Future Roadmap Objectives

Continuous improvement is a core tenant of business practices. The following items have been identified for
implementation after the completion of core milestones and product mainnet launch.
● ProtoPool will revise offline keystore generation and storage to utilize DKG technology. This will enable
Protopool to eliminate the need for off-chain keystore computation on ProtoPool hardware and
eliminate the need for ProtoPool to retain custody of generated keystores.
● The core mission of ProtoPool is to decentralize the Ethereum network, lower barriers to entry for user
participation, and give all stakeholders agency over their assets. To meet this objective ProtoPool is
developing a plug-and-play consumer validator device unlike any currently available on the market. The
team is working in collaboration with the Ethereum on Arm team as well as an established ARM OEM
partner to create a low-cost, energy-efficient home appliance unit. Users will be able to leverage our
professional network of operator nodes to pair validators deployed via the software package bundled
with the Protonode. Initially this affords users with a simplified, and subsidized method to deploy an
independent validator. In the future we plan to roll out integration with 3rd party Node Operators,
including Protonode device users.
● ProtoPool plans to work with third party Node Operators. At the launch stage working with third party
operators creates an additional layer of risk. Protopool will have onboarding instructions and set or
requirements for third party operators.

Why SSV

The team chose to implement SSV technology as it dramatically improves the security and resilience of the
infrastructure. Validator keys will not need to be online, stored on a machine that also contains large stores of
Ethereum. In addition, the technology allows for increased resilience for the network as a whole and allows for
better integration with High Availability implementations that will power the clustered infrastructure.

Furthermore, and perhaps most importantly the mission statement and core beliefs regarding decentralization,
free speech, free trade, and personal agency. Protopool will not utilize MEV relays that practice censorship,
even if that may impact validator earnings.

 Proposal Details
Our platform offers users to stake any amount of ETH into our platform to earn staking rewards. Users start
earning staking rewards from the moment they are staked. We achieve this by keeping an outstanding ETH
reserve on a validator, which is used to instantly serve new users.

Instead of minting liquid rebasing tokens to the users (as the majority of staking platforms do), we mint an
ERC721 NFT as a certificate of deposit (CD).

Below you can find the draft version of the NFT (CD) that is generated dynamically and includes the following
information both on-chain and in its design:
● Amount of ETH staked
● Date when the user staked ETH
● Block number on which the user staked ETH
● (In the future we might also show the accumulated validator rewards once OpenSea and other
marketplaces refresh the metadata more frequently)

(A draft version of the NFT (CD))

Rewarding an NFT has several major benefits compared to rebasing ERC20 tokens:
● Simpler architecture that leaves less room for attacks, market manipulation, or exploitations

 ● Appealing to NFT users

● A lot of opportunities to add additional value in collaboration with artists
● Access to liquidity on the secondary market (Looksrare, X2Y2, OpenSea, etc)
● Ability to set up liquidity pools on Sodoswap and similar platforms
● Ease of calculating and recording rewards on the back end

High-level overview of both validator and operator provisioning:

ADDITIONAL VALIDATOR PROVISIONING:

1. The Master Management automation is responsible for ensuring sufficient inventory of validator nodes
and operator nodes. It will keep an appropriate amount of free capacity depending on demand.
Validator nodes are provisioned and ready prior to being needed by the Validator Activator. The
overwatch bot which monitors the accumulator within the staking contract assists in this function by
updating the Master Management automation of accumulator fill percentage and also when the
accumulator is full and a free provisioned validator enters activation stages.
2. First the Master Management automation calls the Ethereum deposit CLI to generate a keystore and
deposit file. It simultaneously selects a set of operator nodes from the Protopool operator registry. The

 keystore and the operator keys are sent to the SSV Key Distribution CLI which produces validator
activation data which is stored in the Protopool validator registry for future use.
3. This data is also fed into the Protopool validator registry to complete the entry for the newly provisioned
validator.
4. Master Management automation will also be responsible for maintenance operations such as updating
and removing validators via the SSV Network Smart Contract.

ADDITIONAL OPERATOR PROVISIONING:

1. In addition to being responsible for ensuring sufficient inventory of validator nodes the Master
Management automation is responsible for ensuring that there is sufficient operator node capacity for
the corresponding validators.
2. When the Master Management calculates that current operators are approaching the maximum
capacity of validators that may be comfortably assigned to them, it will trigger the Operator Provisioning
automation. The Operator provisioner begins starting a new node via Terraform. The newly provisioned
operator returns the operator keys back once complete. This information is then sent to the SSV
Network Smart Contract for operator registration, and in return receives the new operator ID. Finally, all
relevant information for the operator is sent to the Protopool Operator Registry, ready to serve
additional validators.

High-level overview of the staking pool service workflow:

1. The user interface (UI) handles all user interaction with smart contracts and the backend. Users can
stake, get rewards, and unstake their funds (from the instant unstake reserve). We may show high-level
statistics & analytics on the first stage.
2. Staking Smart Contract - Receives any amount of ETH from stakers.

 3. NFT is minted automatically. It stores data both on-chain and in design about the number of ETH
staked, date, and block number of stake events. Metadata API - The API generates metadata JSON
according to chain data, images for NFTs are dynamically generated according to its parameters.
4. Off-chain Overwatch Bot - Listens to staking events thrown from the smart contract and if the
accumulator balance amount is greater than 32 ETH sends RPC call to the validator activation
automation and updates the master management automation to update capacity. In this case the
inventory of free provisioned validator nodes has decreased by one. Depending on capacity this may
trigger the provisioning of additional validator nodes.
5. Validator activation automation retrieves data from the validator registry for the next provisioned
validator in the queue. Once selected the validator activation automation deposits Ethereum to the
Deposit contract. It also registers the validator with the SSV network.
6. The validator is now running and can begin service immediately.
7. For each reportable epoch Chainlink oracle retrieves the list of validator keys to watch for. Then it gets
the Protopool validators from the reportable beacon state and summarizes their balances. The state of
balances is recorded on-chain. The process repeats in daemon mode. Reported balance will be used to
show the amount of rewards to each user based on NFT metadata.

Protonode and independently run validator workflow:

In addition to the staking pool product, independent validators can also leverage this infrastructure.
1. First, all operators will be available on the SSV Operator Marketplace for use by any validator with SSV
capabilities.
2. Second, a staker who owns a ProtoNode plug-and-play device will have access to a simplified single
taker gateway, which lowers the barrier of entry for stakers, and in the future we plan to expand the
operator pool to include Protonode users and other 3rd parties. Protonode stakers are taken through a

 setup wizard and eventually prompted to register the validator key to begin activation. The staker will
not need to interact directly in any way with the SSV tooling, and Protopool Treasury will cover the cost
of validators deployed via the Protonode software package. The workflow is largely the same as above.
The Protonode software queries the Protopool Operator Registry for four operators with appropriate
capacity. The Master Management automation is updated to track operator usage and update the
validator count. The External Validator Activator now has all the appropriate information to register the
validator with the SSV Network via SSV Network Contract. This along with SSV tokens from the
ProtoPool Treasury are supplied to activate the validator. The SSV tokens paid by the external validator
to Protopool operators are then returned to the treasury.
3. Third, Protopool intends to further develop the above software to offer a staking as a service product
when product market fit has been achieved.

How do we solve Geographical Centralization?

Infrastructure will be deployed across geographically distributed data centers and their respective nodes. By
utilizing SD-WAN technology and exploiting private network traffic between cooperating data centers we can
cost-effectively deploy enterprise cluster technology that spans many data centers as well as country borders.
Operator and Validator VM entities can move freely between nodes to load balance, recover from failure, and
easily adapt our infrastructure to maintain compliance with ever-changing regulations and policies.

How do we solve the Hosting Centralization issue?

Protopool will utilize multiple providers across geographically distributed data centers. Validator and operator
deployment is completely automated using a combination of Terraform, Ansible, and docker-compose
technologies. In addition, we will continuously strive to lower the barrier of entry for independent validators. We
will offer a plug-and-play appliance that is both cost-effective, consumes low power, and has almost no moving
parts to generate noise. The stand-alone software for the package will also be released for deployment on
user-procured hardware.

Our extensive experience deploying infrastructure for critical utilities, power plants, and other entities critical to
national security allows us to provide industry-leading security architectures that conform to the highest NIST
RMFs and US-CERT standards.

Operator Selection
A large operator pool will be operated by Protopool globally, while also making best efforts to ensure diversity
for several critical properties. These include but are not limited to ISP, datacenter, nation-states, legal regimes,
hardware configuration, and software configuration. New validators deployed by the off-chain monitoring bot
will dynamically select the four operators based on load, ping, and cluster location.

SSV Payments
SSV payments will be completely handled within the protocol and be transparent to users. SSV will be held in
reserves by the project and flow from each validator back to the operator accounts per the SSV architecture
specifications. Every new validator deployed by Validator Activators will also trigger a smart contract call to
deposit SSV tokens from the Protopool SSV treasury to the validator’s associated wallet to ensure proper
payments are made to the operator nodes. Protopool operators will serve three distinct user demographics.
First, Protopool operators will serve validators within the liquid staking pool product. Secondly, Protopool
operators will be made available to the plug-and-play home staking unit (ProtoNode) by default. However,

advanced can opt to always opt to edit any of the default configuration settings during setup. Only ProtoNode
devices utilizing default operators will have SSV payments subsidized by Protopool. Finally, Protopool
operators will be available on the SSV marketplace for any SSV-capable validator to utilize.

Works Cited

“Ethereum Node Tracker.” Etherscan, https://etherscan.io/nodetracker. Accessed 31 October 2022.

“ProtoPool Operator D0.” ProtoPool Operator D0, https://explorer.ssv.network/operators/886.

Accessed 14 December 2022.

“ProtoPool Operator D1.” ProtoPool Operator D1, https://explorer.ssv.network/operators/904.

Accessed 27 12 2022.