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Node Operator Manual

This document is intended for those who wish to participate in the Lido protocol as Node Operators—entities who run Beacon validator nodes on behalf of the protocol and receive fee in return. It consists of two sections: General overview and Operations HOWTO. If you’re here for the technical details of interacting with the protocol, feel free to skip to the latter.

General overview#

Node Operators manage a secure and stable infrastructure for running Beacon validator clients for the benefit of the protocol. They’re professional staking providers who can ensure the safety of funds belonging to the protocol users and correctness of validator operations.

The general flow is the following:

  1. A Node Operator expresses their interest to the DAO members. Their address gets proposed to the DAO vote for inclusion to the DAO's Node Operator list. Note that the Node Operator address should be supplied to the DAO with zero signing keys limit.

  2. The DAO votes for including the Operator to the list of active operators. After successful voting for inclusion, the Node Operator becomes active.

  3. The Node Operator generates and submits a set of signing public keys and associated signatures for future validators that will be managed by the Operator. When generating the signatures, the Operator must use the withdrawal credentials supplied by the DAO.

  4. The DAO members check the submitted keys for correctness and, if everything’s good, vote for approving them. After successful approval, the keys become usable by the protocol.

  5. The protocol distributes the pooled Ether evenly between all active Node Operators in 32 Ether chunks. When it assigns the next deposit to a Node Operator, it takes the first non-used signing key, as well as the accociated signature, from the Node Operator’s usable set and performs a deposit to the official DepositContract, submitting the pooled funds. At that time, the Node Operator should have the validator already running and configured with the public key being used.

  6. From this point, the Node Operator is responsible for keeping the validator associated with the signing key operable and well-behaving.

  7. The protocol includes Oracles that periodically report the combined Beacon balance of all validators launched by the protocol. When the balance increases as a result of Beacon chain rewards, a fee is taken from the amount of rewards (see below for the details on how the fee is nominated) and distributed between active Node Operators.

The fee#

The fee is taken as a percentage from Beacon chain rewards at the moment the Oracles report those rewards. Oracles do that once in a while—the exact period is decided by the DAO members via the voting process.

The total fee percentage, as well as the percentage that goes to all Node Operators, is also decided by the DAO voting and can be changed during the lifetime of the DAO. The Node Operators’ part of the fee is distributed between the active Node Operators proportionally to the number of validators that each Node Operator runs.

For example, if Oracles report that the protocol has received 10 Ether as a reward, the fee percentage that goes to Operators is 10%, and there are two active Node Operators, running 2 and 8 validators, respectively, then the first operator will receive 0.2 StETH, the second — 0.8 StETH.

The fee is nominated in StETH, a liquid version of ETH2 token introduced by the Lido protocol. The tokens correspond 1:1 to the Ether that the token holder would be able get by burning their StETH if transfers were already enabled in the Beacon chain. At any time point, the total amount of StETH tokens is equal to the total amount of Ether controlled by the protocol on both ETH1 and ETH2 sides.

When a user submits Ether to the pool, they get the same amount of freshly-minted StETH tokens. When reward is received on the ETH2 side, each StETH holder’s balance increases by the same percentage that the total amount of protocol-controlled Ether has increased, corrected for the protocol fee which is taken by minting new StETH tokens to the fee recipients.

For example, if the reward has increased the total amount of protocol-controlled Ether by 10%, and the total protocol fee percentage is 10%, then each token holder’s balance will grow by approximately 9.09%, and 10% of the reward will be forwarded to the treasury, insurance fund and Node Operators.

One side effect of this is that you, as a Node Operator, will continue receiving the percentage of protocol rewards even after you stop actively validating, if you chose to hold StETH received as a fee.

Operations HOWTO#

Becoming a Lido Node Operator involves several steps, all of which are detailed below.

Expressing interest to the DAO holders#

To include a Node Operator to the protocol, DAO holders must perform a voting. A Node Operator is defined by an address that is used for two purposes:

  1. The protocol pays the fee by minting StETH tokens to this address.
  2. The Node Operator uses this address for submitting signing keys to be used by the protocol.

Pass this address to the DAO holders along with the other relevant information.

Generating signing keys#

Upon inclusion into the protocol, a Node Operator should generate and submit a set of BLS12-381 public keys that will be used by the protocol for making Beacon deposits. Along with the keys, a Node Operator submits a set of the corresponding signatures as defined in the spec. The DepositMessage used for generating the signature must be the following:

  • pubkey must be derived from the private key used for signing the message;
  • amount must equal to 32 Ether;
  • withdrawal_credentials must equal to the protocol credentials set by the DAO.

The fork version used for generating the signature must correspond to the fork version of the Beacon chain the instance of Lido protocol is targeted to.

You can obtain the protocol withdrawal credentials by calling Lido.getWithdrawalCredentials(). On the Etherscan page for the Prater-deployed Lido, it’s the field number 19. The ABI of the Lido contract can be found in lib/abi/Lido.json.

Using the forked eth2.0-deposit-cli#

In a testnet environment, you can use a fork of eth2.0-deposit-cli which is also published to the Docker Hub as lidofinance/deposit-cli. It is modified to support passing a pre-defined withdrawal public key instead of generating new one. The withdrawal public key is not currently accessible on the Lido contract instance, but you can get the key from one of the DAO holders and verify that it matches the withdrawal credentials obtained from the Lido contract instance.

To generate the keys and signatures, run the following:

docker run -it --rm -v "$(pwd):/data" lidofinance/deposit-cli \
new-mnemonic \
--folder /data \
--chain="$CHAIN_NAME" \

Here, CHAIN_NAME is one of the public Beacon chain names (run the container with the --help flag to see the possible values) and WITHDRAWAL_CREDENTIALS is the withdrawal credentials from the protocol documentation.

As a result of running this, the validator_keys directory will be created in the current working directory. It will contain a deposit data file named deposit-data-*.json and a number of private key stores named keystore-*.json, the latter encrypted with the password you were asked for when running the command.

If you chose to use the UI for submitting the keys, you’ll need to pass the JSON data found in the deposit data file to the protocol (see the next section). If you wish, you can remove any other fields except pubkey and signature from the array items.

Never share the generated mnemonic and your private keys with anyone, including the protocol members and DAO holders.

Submitting the keys#

After generating the keys, a Node Operator submits them to the protocol. To do this, they send a transaction from the Node Operator’s withdrawa address to the NodeOperatorsRegistry contract instance, calling addSigningKeysOperatorBH function and with the following arguments:

* `uint256 _operator_id` the zero-based sequence number of the operator in the list.
* `uint256 _quantity` the number of keys being submitted.
* `bytes _pubkeys` the concatenated keys.
* `bytes _signatures` the concatenated signatures.

The address of the NodeOperatorsRegistry contract instance can be obtained by calling the getOperators() function on the Lido contract instance. The ABI of the NodeOperatorsRegistry contract can be found in lib/abi/NodeOperatorsRegistry.json.

Operator ID for a given reward address can be obtained by successively calling NodeOperatorsRegistry.getNodeOperator with the increasing _id argument until you get the operator with the matching rewardAddress.

Etherscan pages for the Görli/Prater contracts:

Using the key submitter UI#

Lido has the specialized [web interface for submitting the keys].


Prepare a JSON data of the following structure and paste it to the textarea that will appear in the center of the screen:

pubkey: 'PUBLIC_KEY_1',
signature: 'SIGNATURE_1',
pubkey: 'PUBLIC_KEY_2',
signature: 'SIGNATURE_2',
// ... etc.

If you’ve used the forked eth2.0-deposit-cli, you can paste the content of the generated deposit-data-*.json file as-is.

Click Check button, and then the interface would run required checks connect the MetaMask and click Submit button.

Once the keys are submitted, Node Operators can check whether the supplied keys are valid with the [web interface for checking the submitted keys]. If the keys are valid, they can vote for increasing the key limit for the Node Operator.

Using the Aragon UI#

Alternatively, you can use the Node Operators Registry app UI for submitting the keys. For the Görli/Prater deployment, you can find it here:

Make sure you’re using a browser that exposes a Web3 provider allowing to sign transactions on behalf of the Node Operator’s reward address. Press the Connect account button in the top-right and allow the access to the account associated with the reward address. Then, find yourself in the list of Node Operators — the corresponding item will be suffixed by (you):


Then, press the ... button on the right of the item and select add my signing keys:


Prepare a JSON data of the following structure and paste it to the JSON field in the side panel that will appear on the right:

pubkey: 'PUBLIC_KEY_1',
signature: 'SIGNATURE_1',
pubkey: 'PUBLIC_KEY_2',
signature: 'SIGNATURE_2',
// ... etc.

If you’ve used the forked eth2.0-deposit-cli, you can paste the content of the generated deposit-data-*.json file as-is.

Then, press Add signing keys and sign the transaction. Wait for it to be included in a block, refresh the page and make sure that the number in the Total field corresponds to the number of the keys you’ve just submitted:


Importing the keys to a Lighthouse validator client#

If you’ve used the forked eth2.0-deposit-cli to generate the keys, you can import them to a Lighthouse validator client by running this command:

docker run --rm -it \
--name validator_keys_import \
-v "$KEYS_DIR":/root/validator_keys \
-v "$DATA_DIR":/root/.lighthouse \
sigp/lighthouse \
lighthouse account validator import \
--reuse-password \
--network "$TESTNET_NAME" \
--datadir /root/.lighthouse/data \
--directory /root/validator_keys