There are many articles on how to measure the performance of Ethereum 2.0 validators, but very few articles on how to assess the health of the entire Ethereum network. Here are a few important metrics that provide useful information for network operators and those who want to participate in the Ethereum network (whether running a node or directly becoming a validator). In this article, we will define some of these metrics, explain what they mean, how they are measured, and how they can be used to discern the health of a network.
network activity
What is network activity? Where is it important?
Network liveness is a measure of how quickly new blocks are finalized on the Ethereum 2.0 blockchain. The importance of this indicator is that before a block has been finalized, it may be replaced, so the transfer in the block cannot be accounted for. The fundamental goal of providing immutability to transactions and state cannot be achieved if the Ethereum 2.0 blockchain does not consistently endow blocks with finality.
The score range for network activity is 0% to 100%. A score of 100% means that blocks are finalized as quickly as the protocol allows; a score of 0% means that blocks are often not finalized. If the network liveness is 0%, no matter how well the validators perform, they will start to lose money because the entire network cannot give finality to blocks.
Network liveness is usually 100%, dropping to 50% during periods of poor network communication between validators. If the network activity value drops below 50%, there is a serious problem with the network.
-Figure 1: Network Activity Value Interval-
How to calculate network activity value?
The calculation formula of the network activity value is as follows:
The current epoch can be calculated using the current timestamp and some network constants:
The finalization period is obtained from active Ethereum 2.0 nodes.
Participation Rate
What is the participation rate? Where is it important?
Participation rate is a metric used to measure the proportion of validators who actually generate attentations out of the expected number. The importance of this metric is that the lower the participation rate, the lower the reward for each validator who actually participates, and if the participation rate is too low, the network will lose activity.
A good engagement rate is between 80% and 95%. If the participation rate drops below 67%, blocks cannot be finalized and network activity begins to decline.
-Figure 2: Participation Rate Range-
How is the engagement rate calculated?
The formula for calculating the participation rate is as follows:
It is worth mentioning that there are many different ways to fill in the value of the numerator. It can be the number of witness messages contained in the block in the last period, it can be the number of witness messages in the last period seen by the node, it can be the number of witness messages contained in the block from the last period, etc. It is also possible to obtain a lagged participation rate with lagged data, for example using the correlation quantities for the penultimate period. The exact method used to calculate the engagement rate depends on the user and the data available to them.
Attesting validators are those validators that are considered active, retiring, or slashed according to the validator lifetime.
Expected Validator Earnings
What is the expected validator return? Where is it important?
Most validators participate in order to earn rewards. Expected Validator Earnings refers to the expected earnings that validators can get from performing their duties for one year, measured by the ratio of the expected ETH divided by the amount of pledged ETH.
- Figure 3: Maximum Validator Earnings vs. Total Number of Validators Submitting Proofs (Evaluation)-
It is important to understand that even if validators perform their duties perfectly, their rewards may be reduced due to 2 too low participation rates or network liveness values ​​that drop to 0%. Therefore, to be prudent, the expected validator payoff should only be a fraction of the validator’s maximum payoff value. For example, multiplying the underlying revenue described above by the participation rate yields a more representative estimate of validator revenue across the network, as a lower participation rate reduces the expected revenue for all validators. However, given that the network participation rate fluctuates widely, an average participation rate can be used to calculate a more accurate representative value. Even so, it is only possible to calculate an expected value, after all, this is a forward-looking indicator.
Whether the reward level is considered generous or not depends mainly on the cost of the validators participating in the witness. The cost here is varied, and it is necessary to understand the cost before considering the reward. It is worth noting that the cost of running a validator node is usually calculated in fiat currency, while the benefit is calculated in ether, so an exchange rate is required. Assuming that the monthly cost of each validator is $25 and the price of ETH is $200, the benefits are as follows:
-Figure 4: Expected Benefit After Costs-
How to calculate expected validator return?
The expected verifier income can be calculated according to the above figure according to the specific number of verifiers; the number of verifiers who provide witness messages can be obtained from the Ethereum 2.0 node.
Pledge validity
What is pledge validity? Where is it important?
Staking validity is a measure of a validator’s ETH stake. Ethereum 2.0 uses a metric called effective balance to determine the weight of proofs, and the vast majority of validators will have a discounted weight, that is, the actual balance is higher than the effective balance. For example, if a validator has a balance of 31.7 ETH, the effective balance is 31 ETH, of which 0.7 ETH is useless in the process of the validator generating the witness message. As the validator’s actual balance changes, so does the amount of “useless” ETH, but rarely equals 0.
The importance of staking effectiveness is that the more ETH is used to secure the network, the better. ETH that is locked by validators but cannot be used to generate proofs is a waste in terms of network security. Also, it is important for each staker, since returns are calculated based on effective balances, and lower stake validity reduces their expected return from validator operations.
It is estimated that once Ethereum 2.0 is released, the effectiveness of the pledge will be around 90%, which is basically stable, because some validators lose money and some validators make money. As node operators learn how to run their validator nodes more efficiently, staking effectiveness decreases, as there is no upper limit on the actual balance, but the upper limit on the effective balance is 32 ETH.
-Figure 5: Staking validity interval-
How to calculate pledge validity?
The formula for calculating the validity of a single validator’s pledge is as follows:
To obtain the validity of the whole network pledge, the effective balance should be the sum of the effective balances of all validators who provided proofs, and the actual balance should be the sum of the actual balances of all validators who provided proofs.
confiscation risk
What is forfeiture risk? Where is it important?
Slashing is the Ethereum 2.0 network’s ultimate sanction for validators: validators will be deducted a portion of their deposit and immediately ejected from the validator pool. However, the “part” in the latter sentence depends on the actions of other validators before and after a validator is slashed. The higher the number of validators slashed at the same time, the higher the penalty for each of them (see this article for details).
-Figure 6: Penalty as a percentage of deposit-
Predictably, since the slashing mechanism is well understood, the probability of this happening will be low. This also makes tracking this metric even more interesting, as a high value indicates a network attack. If the slashing risk exceeds 15%, it indicates that a large number of nodes have been slashed and the reason should be investigated.
-Figure 7: Penalty Risk Range-
How to calculate forfeiture risk?
The formula for calculating slash risk is:
Note that this is a valuation. There are two reasons: first, the slashing risk assumes that the actual balance of all validators is 32 ETH, which is not the case; second, the actual cost of being slashed depends not only on the current slashing risk, but also on the triggering of the slashing mechanism The risk in the last 18 days, because the previously slashed validators will be forgotten, and new validators will be slashed.
Summarize
These metrics provide high-level information about the entire Ethereum 2.0 network, can help ETH holders decide whether to participate in staking and manage their risk; can support operators to run their nodes smoothly; and can also show users that the Eth2 network is as expected run like that.
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