🕹️BLACKHOLE vs ETHEREUM STAKING
Both Blackhole and Solo Staking are highly decentralized ways to secure Ethereum while getting staking rewards.
Solo staking is the base layer
Solo staking is the original implementation of Ethereum's Proof of Stake, the way its developers designed it. As a primitive, it is the most "bare metal" and pure way of staking, and all other staking systems are built on top of it.
It requires you to stake 32 ETH per validator, being quite rigid about the amounts for technical reasons. In order to solo stake, you need to set up your own machine, but thanks to it, it is the most decentralized and resilient option as it has the lowest number of dependencies. Ethereum is lucky to have a vibrant community of solo stakers, estimated to be around 6% of the network.
In an ideal world, more stakers would run their own machines, but because of the way the Ethereum protocol is designed, the requirements can be prohibitive for most:
Not everybody has the technical skills to solo stake.
32 ETH is a very high amount for most people, especially in lower income regions
The penalties for solo stakers can be discouraging
On the reward side, solo staking can also be unappealing for two reasons:
Your staked ETH is illiquid, which means there is an opportunity cost compared to Liquid Staking.
Rewards are highly variable, with large blocks rewards happening only once every few weeks or months.
🌱 Blackhole extends Ethereum staking
Blackhole was designed by asking "how could Ethereum staking work if we could redesign it from scratch?".
Blackhole maintains most the decentralization advantages of solo staking on Ethereum, as every Operator needs to run their own full Ethereum node.
The Blackhole Smart Contract acts as a wrapper of the Ethereum deposit contract, allowing:
Liquid Stakers to deposit their ETH into Ethereum validators, obtaining liquid blkETH which generates Staking Rewards.
Operators to run nodes to perform validation duties, locking blkETH collateral to generate base Staking Rewards plus additional Operator Rewards.
Ethereum staking Blackhole Staking
Collateral
Collateral 32Ξ per validator
1 (blk)ETH or less per key share
Mapping
1 key per validator
16 distributed key shares per validator
Keys to Sign
1 (100%)
11/16 (66%)
APR
Staking rewards
Staking + Operator rewards
Liquid Staking
No
Yes
Key Generation
Simple
Multi-party computation distributed key generation (MPC DKG)
Offline Penalies
Up to 16Ξ loss (1-2Ξ per year)
No loss if <33% of nodes are offline
Downtime
0.4% (all validators)
~0.01% thanks to DVT redundancy
Slashing Risks
Any 1 node can slash
Requires an attack or bug of >66% of nodes
Mev Stealing
Possible
>66% of nodes needed to steal
Infrastructure
Execution Client + Consensus
Client Blackhole Client connecting to an Ethereum node
Keys
Manual key generation
Automatic key management
Client Config
More “bare metal”
Easy Docker package, web UI
Liquid Stakers can stake ETH through Blackhole without the need to run their own hardware.
Anyone can be an Operator from only 1 ETH and generate higher rewards than solo staking.
Rewards for everyone are predictable and smooth, as they are averaged for the entire network.
Blackhole extends Ethereum validation with a greatly simplified client which handles all validation duties transparently. As an Operator, you don't need to handle validator keys, withdrawals, etc, as it's all handled by the Blackhole client.
The Blackhole client works a lot like Bittorrent: it connects to other clients via its P2P network, streaming validation duties automatically the way Bittorrent streams files.
Blackhole's DVT also means that Operators can go offline and are better protected against penalties, offering more flexibility and peace of mind than solo staking.
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