Introducing Node Cloud — Restaking Cloud’s 2nd Protocol Release

With the demand for restaking growing, Restaking Cloud is increasing the number of tools available for builders and rewards for restakers.

What is Restaking

To understand the significance of Node Cloud’s addition to Restaking Cloud’s network, let’s take a step back and understand what restaking is. At its core, restaking is deterministically proving if information is either true or false with ETH backed security. This interaction is referred to as “Slashing”. Slashing doesn’t have to be a negative event, as it is simply a provable tamper proof verification of information. When viewing restaking from this understanding, it becomes apparent that not all protocols that require ETH backed security will also require node running operations, as the slashing can be more at the protocol level and on-chain or specific trackable event from a designated network source.

Slashing logic is the beginning of Restaking Cloud.

Key Takeaways

• Node Cloud is the second protocol in the Restaking Cloud ecosystem working concurrently with K2.
• Node Cloud will increase the opportunity for K2 restakers to earn yield.
• Those who are building on Restaking Cloud now have additional market and tools available to them.

Introducing Node Cloud

Node Cloud is a standalone protocol in coordination with K2. It enables networks to access machine infrastructure with ETH backed slashable security. Coordination between node operators and networks is permissionless. All payouts and slashings are deterministic and managed by Restaking Cloud and an ad-hoc network of ZK Reporters.

For a deep dive, view the video by the core contributors.

Below we will break down some of the key features and participants in Node Cloud.

Preferred Node Operators

Those that run services for networks. They now have access to unbounded node running revenue. Learn more about Preferred Node Operators here.

kNetworks

kNetworks are middleware that require Node Cloud PNOs to run services for their network.

Selecting Node Operators

kNetworks are permisisionless for opt-in by default, however, a kNetwork can gatekeep however they think is relevant. For example, KYC node operators, require a certain amount of uptime, clients, geographical location, or anything else.

Node Cloud Syndicates

Preferred Node Operators can create syndicates and share rewards and slashings similar to that of an MEV smoothing pool. This makes it easy for LST networks to coordinate large groups of node operators or smaller groups to work together for rewards.

Delegating in Node Cloud (Liquid delegation)

Those who are restaking but are not Preferred Node Operators (PNO) can delegate to any number of PNOs. At anytime these liquid delegations can change PNOs. They receive 80% of the revenue generated from their restaked ETH. 20% is paid as a commission to the PNO they delegate to.

Rewards and Penalties

Networks developing protocols or software that require Node Cloud, are required to specify rules for rewards and slashing. These rules are enforced by an ad-hoc network of ZK Reporters. Anybody can become a Reporter and run the software on an old laptop as it is super lightweight. This does not require updates for each new protocol but is generalized. The Reporters are paid 50% of the slashing penalties that they Report.

Rewards

Those who are PNOs have many opportunities for rewards. Currently there are five tiers of yield, but many more can come in the future. More information on these rewards is coming soon.

Penalties

To participate in Restaking Cloud, Preferred Node Operators are required to maintain an active validator in good standing with Ethereum. If they dip below certain thresholds in upholding their duty to Ethereum, they are automatically ejected from Restaking Cloud. Preferred Node Operators that incur slashing pay out ETH to the networks they support through Node Cloud immediately. This ETH comes from their rewards and/or those who are delegating to them (they could be delegating to themselves). If slashing exceeds 60% of the rewards they have accrued, the Preferred Node Operator is ejected from Restaking Cloud, and all delegations/rewards/penalties are properly returned or distributed.

Looking Ahead

Node Cloud significantly reduces the barrier for entry to run ETH protected node operations for their networks. At the same time, it gives an unbounded delegation opportunity for a solo stakers; This opens up even more possibilities for builders while increasing yield opportunities for restakers. Restaking Cloud believes this will bootstrap a value-aligned node network in the direction of more geographically decentralized node runners on Ethereum and further accelerate liquid delegation as a strong signal of empowering more decentralized innovation around the globe. This brings an equitable financial inclusion infrastructure on demand for everyone.

Those who want to build, become Preferred Node Operators, or have burning questions can find us in Discord or send a DM on Twitter.

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DISCLAIMER: The text above is just a description of how Restaking Cloud works in theory. Any figures mentioned serve only as an illustration. Engaging in any blockchain activities with or without the necessary skills or experience can result in a loss of funds. This is a very experimental tool, so please treat it as such.

Before participating please read the disclaimer here.