Strong trust assumptions between validators and node operators

[zobront]

It is assumed that validators and node operators will always act in the best interest of the group, rather than in their selfish best interest.

It is important to make clear to users that there are strong trust assumptions between the various parties involved in the DVT.

Here are a select few examples of attacks that a malicious set of node operators could perform:

1. Since there is currently no mechanism for withdrawals besides the consensus of the node operators, a minority of them sufficient to withhold consensus could blackmail the principal for a payment of up to 16 ether in order to allow them to withdraw. Otherwise, they could turn off their node operators and force the principal to bleed down to a final withdrawn balance of just over 16 ether.

2. Node operators are all able to propose blocks within the P2P network, which are then propogated out to the rest of the network. Node software is accustomed to signing for blocks built by block builders based on the metadata including quantity of fees and the address they'll be sent to. This is enforced by social consensus, with block builders not wanting to harm validators in order to have their blocks accepted in the future. However, node operators in a DVT are not concerned with the social consensus of the network, and could therefore build blocks that include large MEV payments to their personal address (instead of the DVT's 0xSplit), add fictious metadata to the block header, have their fellow node operators accept the block, and take the MEV for themselves.

3. While the withdrawal address is immutably set on the beacon chain to the OWR, the fee address is added by the nodes to each block. Any majority of node operators sufficient to reach consensus could create a new 0xSplit with only themselves on it, and use that for all execution layer fees. The principal (and other node operators) would not be able to stop them or withdraw their principal, and would be stuck with staked funds paying fees to the malicious node operators.

Note that there are likely many other possible attacks that malicious node operators could perform. This report is intended to demonstrate some examples of the trust level that is needed between validators and node operators, and to emphasize the importance of making these assumptions clear to users.