Running own staking nodes has lots of risks and needs a large amount of money to start. It is hard for individuals to maintain a 24/7 online server and not do anything wrong causing penalties. To help individuals easier to stake and earn rewards, there appears staking-as-a-service. Node providers will take care of the infrastructure and users only need to stake their funds.
Node providers provide node operation services. They provide service to individuals and liquid staking derivatives. To individuals, node providers charge a monthly node operation fee or commission fee. To liquid staking derivatives, node providers usually get a percentage of the staking rewards.
There are lots of node providers in the market. They differ in the following aspects:
Source: Staking Rewards
Big players have already established large user groups, good reputations, and safe operation records. It is hard for new players to take a large market share. Big market players believe the opportunities for small players are the following:
Though small players are hard to compete with large players, large players do face some challenges:
Decentralization is the key to a network. If several node providers have a major stake in the network, these node providers are a stratum for cartelization.
To build a decentralized and permissionless product, compliance is a big problem.
Node operators put safety first because the safety incident can cause asset loss. In Jan 2021, ETH2 validators got slashed due to a bug. Here is the recent slashing history for ETH2 validators.
Node providers are trying to increase the stability of the infrastructure with new tech like SSV. The secret shared validator network is a tech that can reach active-active redundancy. All validators in the network actively produce new blocks. The mechanism is like a multi-sig wallet.
Other techs used for slashing prevention are the local slashing protection database which records messages causing slashing, and remote slasher which records all attestations and blocks received.
Also published here.