Swell Network Guarded Launch Update

Swell Network DAO will be postponing the second stage of its Guarded Launch

Swell Network DAO will be postponing the second stage of its Guarded Launch
Swell Network DAO will be postponing the second stage of its Guarded Launch

Swell Network DAO will be postponing the second stage of its Guarded Launch.

TL;DR

  • The rollout of Stage 2 will be postponed until the end of October to enable the DAO to work through an improvement to its architecture based on Stage 1 lessons learned.
  • Stage 1 monitoring revealed a rare edge case in the Beacon Chain’s calculation of validator balances that resulted in two validators not activating.
  • A PR (Pull Request) will be submitted to the Ethereum repository for longer term remediation.
  • Swell will undertake development work to mitigate the issue.

During our routine analysis on validator performances during Stage1 we found a couple of validators upon having fulfilled their 32 ETH requirements, were not activating on the Beacon Chain and hence were not in an ‘active’ state to begin attesting transactions and earning rewards.

After consultation with leading members of the Ethereum Foundation we found that due to security measures put in place on the Beacon Chain to prevent attackers from slowing down on-chain processing and Swell’s atomic deposit mechanism, rare edge cases occurred where the effective balance of the validator was not calculated as the actual balance of 32 ETH but required a further 1 ETH to be deposited.

This is due to how a validator’s effective balance is calculated using a hysteresis formula that applies thresholds to force a change to the effective balance to be uneconomical (> .5 ETH) for a bad actor. You can read more about it here.

To activate the two validators whose effective balances were short, the DAO used its own treasury funds to increase the balances by 1 ETH each to activate them and to this date they are successfully attesting and earning rewards. Affected validators are listed below.

Validator 1:

https://beaconcha.in/validator/b6c1531b7896e3493806a8dd72fa9c3387f4f7a2fdc565bf1e8e66becb0666f8c3938270a757703e3865619dcc34bf7c#deposits

Validator 2:

https://beaconcha.in/validator/8a4f2e7e2fea00a9ce77d669aeba2573137010db2f85e18c0265e492d3a9b5367e15f356abd58b2bfb3a3bddef9aece9#deposits

This issue has not resulted in any loss of funds by either the node operator or the staker, it has only delayed the process of validator activation. This is exactly what safety-first guarded launches like these are meant to detect. However with this in mind and our dedication to develop the best product for our users, Stage 2 of the guarded launch will be postponed until the DAO has completed the relevant improvements required to completely mitigate the issue and ensure timely activation of validators.

To rectify the issue in the longer term and for the wider staking community we will be submitting a PR to the Ethereum consensus specs repository. In the meantime we will also be modifying our contracts to pool the 32 ETH deposit per validator before submitting it to the Beacon Chain deposit contract. This will rectify the effective balance issue and will enable users to stake amounts < 1 ETH.

This will take some time to be fully developed, tested and audited, so we ask stakers and node operators in our community to please be patient with us over the coming period. A big thank you to everyone who participated in Stage 1, we are fully available to answer any questions about the postponement on our Discord.