How Staking works in Aqua Patina

Staking Process Explained

In the Aqua Patina ecosystem, the staking process is designed to maximize rewards and efficiency while maintaining a high level of decentralization. Below is a detailed explanation of the staking process, which outlines how ETH from the queue is converted into staking validators and generates rewards.

Step-by-Step Staking Process

Flowchart for the Aqua Patina Staking Process

1. Queue to apETH Contract:

   The staking process begins when users allocate ETH to the Aqua Patina queue. Once the queue reaches a certain threshold or time interval, the ETH is "flushed" into the apETH Contract.

2. Checking for 32 ETH:

   The Aqua Patina Daemon (APD) monitors the apETH Contract for available ETH. When the total ETH in the contract exceeds 32 ETH, the APD initiates the staking process.

3. Fetching Validator Key:

   The APD then fetches the next available validator key from the pool of pre-generated keys. These keys are required to set up new validators on the Ethereum network. (In a future version this step will become obsolete when we start using DKG for distributed key generation)

4. Calling the Deposit Function:

   The APD calls the "deposit" function on the apETH Contract, which then transfers 32 ETH to the assigned Eigenpod.

5. Eigenpod Verification and Deposit:

   The Eigenpod verifies the withdrawal address and sends the 32 ETH to the Ethereum Deposit Contract. This action activates the validator.

6. Registering on the SSV Network:

   Parallel to the ETH deposit, the validator keys are split into four key shares. The validator will be registered on the SSV Network by assigning the key shares and corresponding operator IDs to the network.

7. SSV Cluster Assignment:

   The SSV Network then assigns the validator to an Aqua Patina decentralized SSV Cluster, comprising four independent node operators who share the responsibility of managing the validator on their devices.

8. Validator Activation and Staking Rewards:

   Once active, the validator starts generating staking rewards. These rewards are sent to the Eigenpod, where they accumulate over time.

9. Reward Distribution:

   From the Eigenpod - we periodically withdraw these rewards to the apETH Contract. The accumulation of these rewards increases the apETH/ETH ratio, reflecting the growing value of staked assets for our users.

10. Delegating to AVS: For additional yield, Aqua Patina will delegate a portion of the staked ETH to Actively Validated Services (AVS) within the Eigenlayer network.

11. Additional AVS Rewards: AVS rewards are sent back to the Eigenpod, which then transfers them to the apETH Contract. These rewards, in ETH, further increase the value of apETH.

12. Initial APY boost for early adopters Additional rewards from other staking endeavors from AVADO AG will also be sent to the apETH contract, boosting the Aqua Patina APY further as a reward for early users in our protocol.

This process not only optimizes the staking rewards but also allows for diversified earning opportunities through AVS. The detailed steps ensure that every part of the system functions cohesively, providing users with a seamless staking experience and rewards early adopters with additional yield.