👨‍💻DISTRIBUTED VALIDATION

By encasing the Consensus Layer Deposit Contract in an Ethereum wrapper, Blackhole's Smart Contract adds new features:

To create Staking Rewards, Liquid Stakers must deposit ETH in order to obtain blkETH.

• Nodes do not have to be run by liquid seekers. Nodes are operated by operators.

• DVT Key Shares are used by operators in place of Ethereum validator keys.

• Each DVT Key Share powers one validator.

• Operators are required to lock 1 blkETH collateral per Key Share, as opposed to 32\ per validator for Ethereum.

• For the Key Shares they manage, operators earn extra blkETH Operator Rewards.

Creation & Distribution of Key Shares

ETH deposits are made to the Blackhole Smart Contract by Liquid Stakers. When 32Ξ becomes available, it deposits them to the Ethereum Consensus Layer, creating a new validator that generates Staking Rewards through the operation of 16 distinct Key Shares.

Distributed Key Generation is used to construct Key Shares (DKG). This enables the Operator peer-to-peer network to use "Boneh–Lynn–Shacham" BLS threshold signatures to divide validator keys into Key Shares run by different nodes.

Modern Multi-Party Computation (MPC) used by the Operator network generates key shares, preventing single points of failure by preventing private keys from ever coming together. Wallet custodians such as Fireblocks use this technology to operate wallets safely.

In a random yet equitable method, operators award Key Shares to newly appointed validators, guaranteeing an even assignment of responsibilities throughout the network. To stop Sybil attacks and clusterization, this is essential.

Principal Advantages

Blackholes's DVT enables it to run a network of permissionless and trustless nodes, translating into improved performance with less risks.

There are actual benefits to this:

• Lower risk offline penalties since its DVT permits several nodes to go offline without problems, delivering up to 500x higher uptime.

• Reduced chance of misplacing keys because Key Shares are reusable and dynamically regenerable.

• Reduced chance of slicing because any malevolent action would need the cooperation of two thirds of the Key Shares, which would result in the collateral being seized.

• Reduced possibility of MEV theft

• Improved financial circumstances for operators as well as liquid holders.

• Low latency optimization improves Staking Rewards.

• Completely trustless: Use Blackhole without having to put your trust in any of its users.

• Run Blackhole nodes without obtaining permission from anybody by going permissionless.