SafeStake

Ethereum smart contracts represent an ingenious advancement in contract execution, enabling the direct translation of the agreements between two parties into code. When it comes to smart contracts for ETH staking protocols, the importance of security cannot be overstated.Ethereum employs a cutting-edge Proof of Stake (PoS) model, where users willingly stake their ETH in an Ethereum smart contract to be able to run a validator that secures the network and earns staking rewards. This staked ETH serves as robust collateral to keep validators honest, but without the proper security in place in the deposit smart contract, the depositors would be at risk of having their funds stolen or validators compromised.Now, let’s take a closer look at ETH staking to understand why smart contract security is so important.<h2 id="header-0">An Introduction to ETH Staking</h2>ETH staking refers to locking up a certain amount of Ether (ETH) in a smart contract to participate in Ethereum’s consensus mechanism, the Beacon Chain. By putting 32 ETH at stake as collateral, users can earn rewards by running a validator.Validators come to consensus with other validators to verify transactions on the network, sign data, propose blocks, and participate in committees. Validators are incentivized to perform tasks for the network on time and correctly. When they do, they earn small amounts of ETH. The Beacon Chain rewards validators more ETH for important tasks, less for those that happen all the time.Conversely, validators that are offline or unavailable to fulfill their duties for the network are penalized, and small amounts of ETH are taken away. If a validator acts maliciously by incorrectly signing data or trying to manipulate the network, it will be slashed and forcibly removed.Over time, the earnings from ETH staking can add up to significant gains, gaining significant attention from both individual and institutional investors. This has led to the emergence of several staking as a service (SaaS) solutions, each offering different levels of security, usability, and decentralization.So, how is the staking process and rewards distribution mechanism for ETH staking managed and secured? You guessed it — smart contracts.Smart contracts handle the funds locked by users for staking, ensure that validators are correctly rewarded for their work, and manage penalties for offline validators and malicious behavior.<h2 id="header-1">Challenges in Building Secure Smart Contracts</h2>Smart contract security is a significant concern for ETH staking protocols, as vulnerabilities can lead to a loss of user funds or other negative consequences for the network.The 2016 <a href="https://blog.chain.link/reentrancy-attacks-and-the-dao-hack/" rel="noopener noreferrer nofollow">reentrancy attack vulnerability and resulting The DAO hack</a> is just one example of what malicious actors can do when they find and exploit vulnerabilities in blockchain smart contracts.In 2022 alone, <a href="https://blockworks.co/news/the-nine-largest-crypto-hacks-in-2022" rel="noopener noreferrer nofollow">nearly $2 billion</a> was stolen in various crypto hacks and smart contract vulnerability exploits. <img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/054cca1f09434dae84e14822ce68736c.jpg" />As a result of these hacks and exploits, some of the key challenges in smart contract development relative to security have been identified by the Ethereum Foundation and other developers, and should always be considered when building new contracts or updating existing ones.Here are some common examples:<ul><li>Code Vulnerabilities: Poorly written or audited smart contract code can lead to vulnerabilities that can be exploited by malicious actors.</li><li>Reentrancy: Even though it is mostly harmless, transferring control flow to untrusted contracts can potentially cause problems, such as reentrancy. A reentrancy attack occurs when a malicious contract repeatedly calls a vulnerable contract before the original function invocation is completed. This type of attack was used in the 2016 The DAO attack, referenced earlier.</li><li>Integer underflows and overflows:Both overflows and integer overflows can lead to unexpected changes in a contract’s state variables, resulting in unplanned execution outcomes. These situations have the potential to cause significant disruptions and should be carefully addressed to ensure the integrity and security of the contract’s operations.</li></ul>* It is important to note that the smart contracts that power and secure SafeStake’s DVT (Distributed Validator Technology) solution for ETH staking have been audited by CertiK, one of the most prestigious auditing firms in the industry.You can read more about our smart contract audits here:<a href="https://medium.com/ethereum-on-steroids/our-smart-contracts-are-audited-by-certik-5452ea7db8d1" rel="noopener noreferrer nofollow">Our Smart Contracts Are Audited by CertiK! | by Daniejjimenez | SafeStake | Medium</a><ul><li>External Dependencies: Some smart contracts may rely on external data sources or other smart contracts for their full functionality. If any of these dependencies are compromised, it can present significant security risks. One example of an external dependency is a smart contract relying on an oracle to monitor things.</li><li>Oracle Manipulation: Oracles often play a critical role in facilitating data integration for smart contracts, significantly broadening their scope and application. However, compromised oracles have the potential to introduce inaccurate or false information that could result in unfortunate outcomes. Adequately addressing this issue entails ensuring the precision, currency, and credibility of blockchain oracles, which can be difficult or even impossible in some circumstances.</li></ul>* It is important to note that unlike other DVT staking solutions, SafeStake smart contracts have no external dependencies and do not rely on an oracle to monitor the network operators to ensure they don’t front-run transactions and steal ETH rewards.<ul><li>Centralization: Centralized staking services can pose security risks, as they could become targets for attacks. They are also prone to producing censored blocks, as many use MEV relays that have fallen under the arm of regulation. One of the main reasons non-custodial DVT staking solutions like SafeStake exist is to promote Ethereum decentralization and assist centralized services in decentralizing their node operations.</li><li>Incompetent Development Teams: In some cases, inexperienced or incompetent development teams may inadvertently introduce security flaws into the smart contracts they build.</li></ul>After looking at what can go wrong, the need for secure and robust smart contracts for ETH staking protocols to ensure user asset protection and the overall health of the Ethereum blockchain becomes crystal clear.If you’re interested in learning more about smart contract vulnerabilities and tools for analyzing smart contracts and verifying code correctness, you can visit the official Ethereum Foundation blog here:<a href="https://ethereum.org/es/developers/docs/smart-contracts/security/" rel="noopener noreferrer nofollow">Smart contract security | ethereum.org</a> <img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/83c460463c0947409b68eac6ada3a2d7.png" /><h2 id="header-2">SafeStake: A Secure, Reliable Solution for ETH Staking</h2>SafeStake is emerging as a revolutionary DVT staking solution, designed from the ground up to tackle the security challenges that ETH staking faces. The SafeStake vision is captured and presented with the exceptional capabilities of the Rust programming language at its core. Rust is celebrated for its unwavering reliability, efficiency, and security when building a robust smart contract infrastructure with rock-solid security.<h2 id="header-3">What is SafeStake?</h2>SafeStake is a trust-minimized middle layer for secure, fault-tolerant, and decentralized non-custodial ETH staking, with the aim of maximizing staking rewards and decentralizing Ethereum. In short, SafeStake keeps validators online and available to perform their duties in the most secure way possible.SafeStake utilizes Distributed Validator Technology (DVT) to allow Ethereum validators to run on multiple nodes, solving current issues present in ETH staking like centralization, private key security, and fault tolerance for validator liveness.SafeStake allows users to stake their assets with confidence, minimizing the risk of penalties and slashing that can happen if a bad actor compromises a node and causes the validator to misbehave. It is a fault-tolerant environment where only 3 out of the 4 operators in the committee are required to attest on behalf of a validator, allowing one node to be offline or acting maliciously without affecting the validator’s performance or staking rewards.As previously mentioned, SafeStake is written in Rust, known for its ability to prevent memory-related bugs and vulnerabilities. It is the ideal choice for developing ultra-secure smart contracts and SafeStake developers utilize it and their exceptional development skills to address and effectively mitigate the security concerns associated with ETH staking.<h2 id="header-4">The Role of Rust in Smart Contract Security</h2>Rust has gained popularity for its focus on safety, performance, and concurrency. As mentioned, it is particularly well-suited for developing secure smart contracts for ETH staking protocols, as it offers several benefits over other programming languages:<ul><li>Memory Safety: Rust’s ownership model and strict compiler checks help prevent common causes of security issues in smart contracts, like memory-related bugs and vulnerabilities.</li><li>Performance: Rust’s efficient runtime and ability to manage large volumes of data make it ideal for handling CPU-intensive operations associated with running validators and operator nodes.</li><li>Concurrency: Rust’s support for multi-threading and asynchronous programming allows for efficient handling of concurrent operations in smart contracts, improving overall performance and security.</li></ul>By leveraging Rust’s strengths, SafeStake’s developers are able to provide a more secure and efficient platform for Ethereum staking, ensuring the security of user assets and contributing positively to the overall health of the Ethereum network.<h2 id="header-5">SafeStake and DKG</h2>DKG or Distributed Key Generation without a ‘trusted dealer’ makes it possible for multiple parties to generate a validator private/public key pair without any of them ever having custody of the key or knowledge of the shared secret.So, how does SafeStake implement DKG to keep validator private keys secure?SafeStake is being developed and released in stages. Currently, we are testing our Stage 1 code on supporting 32 ETH deposits on our Galileo Incentivized Testnet. Since this iteration is handling 32 ETH deposits from single users, DKG (Distributed Key Generation) is not necessary.Since the user making the entire 32 ETH deposit retains full custody of the private key, the protocol employs a client-side browser Dapp (decentralized app) with drag-and-drop interface to split the key into multiple encrypted shares and distribute them to the operators the user chooses to manage their validator. The private key never touches the SafeStake network and is never stored on SafeStake’s servers. Since the key shares will now represent the validator instead of the original private key, the private key can be stored offline in cold storage, offering users the ultimate private key security.In Stage 2, SafeStake will introduce pooled staking and liquid staking. We will lower the collateral needed to run a validator to 8 ETH. Since Stage 2 will handle ETH deposits from multiple parties, it utilizes protocol-level DKG without a trusted dealer, meaning no party (depositor or operator) ever has custody of the private key or knowledge of the secret. Stage 2 combines DKG with secret sharing, MPC (Multi Party Computation), and threshold signing to create the private/public key pair, split the private key into encrypted shares, and distribute those shares to the operators in the committee.<h2 id="header-6">Conclusion</h2>The importance of security cannot be stressed enough when it comes to building smart contracts for ETH staking protocols. Failing to recognize the potential pitfalls and build smart contracts that consider past exploits and hacks presents significant risks to the users that rely on them for secure staking.DVT protocols like SafeStake that are focused on promoting decentralization while utilizing cutting-edge programming languages and ideas will help achieve the mission of broadening and diversifying the base of validators in the ecosystem, leading to a more resilient and decentralized Ethereum.SafeStake’s smart contracts prioritize security, while retaining practical usability for those without technical knowledge. We recognize that it is critical to safeguard user funds and protect the network from potential smart contract exploits. By leveraging the Rust programming language and implementing a resilient smart contract infrastructure, SafeStake establishes a secure, reliable, decentralized framework that maximizes Ethereum staking rewards.Users will be able to engage in ETH staking with confidence and contribute to the overall security and decentralization of the Ethereum ecosystem.<h2 id="header-7">About ParaState</h2>Parastate is participating in ETH 2.0 PoS with a new tech stack called SafeStake, a trust-minimized middle layer that promotes decentralized ETH 2.0 staking. SafeStake is the first Ethereum liquid staking pool protocol written in Rust that implements distributed validator technology (DVT). It utilizes HotStuff consensus and BLS Threshold Signature architecture to provide robust security and reliability so that validators can maximize their ETH staking rewards.<a href="https://www.parastate.io/" rel="noopener noreferrer nofollow">Website</a> | <a href="https://medium.com/ethereum-on-steroids" rel="noopener noreferrer nofollow">Blog</a> | <a href="https://twitter.com/_ParaState" rel="noopener noreferrer nofollow">Twitter</a> | <a href="https://t.me/ParaState" rel="noopener noreferrer nofollow">Telegram</a> | <a href="https://discord.com/invite/zFS3Mnfpwj" rel="noopener noreferrer nofollow">Discord</a> | <a href="https://github.com/ParaState" rel="noopener noreferrer nofollow">Github</a>

Why Smart Contract Security Should Be Top Priority for ETH Staking Protocols

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SafeStake

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