When Ethereum last summer switched to proof of stakeits new transaction processing system, it transferred control of the network from crypto-miners to validators.
Amid the crypto bear market, startup Obol Labs has raised $12.5 million in venture capital to develop Distributed Validation Technology (DVT), a kind of technology it claims solves some of the biggest problems in Ethereum’s new validation class.
Among those on board with Obol Labs’ vision are crypto-VC stalwarts Pantera Capital and Archetype, who co-led Series A. Led by alumni from Ethereum research and development firm ConsenSys, Obol Labs has now raised a total of $19 million.
“DVT is a primitive technology that allows an Ethereum Proof-of-Stake validator to run simultaneously on multiple nodes or machines,” Obol explained in a statement shared with CoinDesk. “The major breakthrough is the ability to split a single validator key, allowing a group of people to share the validation rights of an Ethereum validator.”
Validators, who earn rewards for operating the network of nodes that keep Ethereum running, face challenges ranging from high capital requirements (you need to “stake” 32 ETH to become a validator) and technical complexity ( validators can pay penalties if they fail or get disconnected).
Because of these barriers, power over the network has passed into the hands of some great actors, including crypto exchanges like Coinbase (Coinbase Ventures participated in Obol’s Series A) and Binance. Also among the largest validators is the Decentralized Autonomous Organization (DAO) Lido – a sort of collective of validators that pools user funds and distributes them across a network of professional node operators.
Obol says he is already working with Lido and StakeWisea similar service, to use DVT to more securely and efficiently distribute user funds among carriers.
Coinbase, Binance and Lido all have comes under scrutiny lately due to fears that if any of these parties gain enough control over the network, they could theoretically interfere with how it handles transactions.
In addition to providing software that can make outages and crashes less likely for small and large validators, Obol believes it will be able to improve some of the issues with centralized control. “Today, we consider validators as unique individuals or entities,” Oisín Kyne, CTO at Obol Labs told CoinDesk. “We believe that validators should actually be run by communities,” he continued. “Instead of just being able to manage a validator alone, we want to allow you to manage validators with a community of other actors in cooperation.”
Obol isn’t the only company interested in DVT. The concept – far from being unique to a specific company – is included in the Ethereum Roadmap shared by network co-founder Vitalik Buterin, with “distributed validators” included as a core ingredient to ensure a successful proof-of-stake network.
CORRECTION (January 17, 15:35 UTC): Corrects a “decentralized” validation technology (DVT) reference to “distributed” validation technology.