Voting Options

• For: Forming a working group to address the foundational issues presented in this Temp Check, and acknowledge, but leave aside, the other issues/approaches presented in the other Temp Check.

• Against: Do not address these issues in the way and order presented in this temp check, and continue the discussion on the previous temporary check, and explore different solutions/approaches.

[TEMP CHECK] Fixes to Recent Issues with Public Operator Economics

Recently, SSV's operator economics have not been a high priority, and the current state is one where likely no public operators are running profitably. This has been growing into a serious problem where we risk a large number of operators shutting down. Beyond the consequences to our operator set, there could be a significant impact on staking customers using public operators in the case of a mass exit of those operators.

The DAO has brought forward a comprehensive and likely complete set of problem statements and potential approaches with [TEMP CHECK] Revisiting the Operator Marketplace and Fee Models, but it ended up being too convoluted and hard to decide on by the DAO.

However, among the many issues presented there, what stands out is the inability to feasibly adjust operator fees to SSV token volatility and the effects of validator consolidations after EIP-7251 (i.e., Pectra Update).

The many other improvements to the operator market that have been suggested should be acknowledged, but for the sake of forward progress, this temp check will focus on the foundational issues that already seem to have a strong consensus. The following tasks (ordered by priority) are required to minimally address this issue:

1. [ASAP] Change the fee structure to be a function of effective ETH balance instead of validator count. Currently, a validator with 2048 ETH pays the same fees as one with 32 ETH. Since most validators have been consolidated, operator income has decreased considerably.

2. [ASAP] Design a new policy that allows operators to feasibly change their fees. Currently, operators are limited by a 10% fee change once every two weeks, which is too prohibitive. Note that this must be sensitive to customer shock and liquidation risk.

   • Ideally, this should also include a change (e.g., denominating fees as a % of ETH rewards) to mitigate SSV token price volatility and match the common pricing industry standard.

3. [Soon] A prominent suggestion to sign up for our monitoring services (e.g., monitorssv.xyz) on cluster creation and maybe on the app and explorer for greater awareness. This will help to mitigate impacts of operator fee changes and shutdowns. This could also include the addition of minor alerting features if deemed appropriate (e.g., a method for an operator to deliver a signed message to those registered for alerts).

4. [Soon] A mechanism to help distribute stakers across operators to discourage centralization and spread income over more operators. Many options exist, ranging from a simple heuristic-based semi-random suggestion of verified operators when creating clusters (i.e., populate the form with recommendations) to more complex solutions like sophisticated recommendation algorithms or, eventually, automated cluster management tools. The scope of this proposal should be limited to the easiest and quickest solutions, leaving the investigation of more complex options for later.

Unfortunately, upon initial investigation, most of these tasks seem non-trivial and will require significant development work and changes to the protocol by SSV Labs, influencing the allocation of budget and resources and subsequently, the overall roadmap. This temp check proposes forming a small working group.

The responsibilities of the working group will include:

• Designing preliminary solutions.
• Collaborating with SSV Labs to make decisions on final solutions to implement.
• Writing a DAO proposal (or multiple proposals) to contract SSV Labs to complete this work.
• Facilitating the work's completion with SSV Labs.
• Reporting the outcome back to the community.