SSV Network Proposes ETH-Based Fees and cSSV Staking Model

SSV Network has introduced a proposal to significantly redesign its protocol economics by shifting fee payments from SSV tokens to an ETH-based structure. The proposal, now under review by the decentralized autonomous organization, also outlines the introduction of a new staking token called cSSV and an updated accounting system aligned with Ethereum’s post-Pectra validator framework. The initiative reflects an effort to align protocol incentives more closely with Ethereum-native economics while addressing operational challenges faced by node operators.

The proposal arrives as SSV Network continues to expand its footprint within Ethereum’s staking infrastructure. According to industry data, the network has become the second-largest staking infrastructure provider on Ethereum. Despite this growth, its token economics have not scaled proportionally. Volatility between SSV and ETH pricing has required frequent parameter adjustments, adding complexity for operators attempting to forecast costs and manage long-term sustainability.

Transitioning to ETH-Denominated Fees

Under the proposed framework, both operators and the protocol would collect fees directly in ETH rather than SSV. Validator clusters would be assigned a fee denomination, either SSV or ETH, with the network expected to increasingly favor ETH-based clusters over time. This change is intended to simplify accounting, reduce exposure to token price volatility, and create a more predictable cost environment for infrastructure providers.

The proposal also introduces a new staking mechanism for SSV holders. Participants would be able to stake SSV into a dedicated contract and receive cSSV tokens on a one-to-one basis. These cSSV tokens would represent staked positions and entitle holders to a proportional share of protocol fees earned in ETH. Rewards would accrue automatically to wallets holding cSSV and could be claimed at any time without requiring users to unstake their underlying SSV.

Governance and Oracle Delegation Structure

The staking model incorporates a governance component tied to oracle selection. cSSV holders would be required to delegate voting power, which determines the composition of the Effective Balance Oracle set. Initially, delegation would be evenly distributed among DAO-elected oracles. Over time, the system is expected to evolve toward a more permissionless oracle selection process, reducing reliance on centralized governance decisions.

This governance structure is designed to balance decentralization with reliability during the early stages of the new accounting system. By linking staking participation with oracle oversight, the proposal aims to align incentives between token holders and protocol integrity.

Adapting to Ethereum’s Pectra Upgrade

A key driver behind the proposed overhaul is Ethereum’s Pectra upgrade, which increased the maximum effective balance per validator from 32 ETH to 2,048 ETH. This change allows significantly more stake to be consolidated under a single validator key. SSV’s existing fee model, which charged based on validator count rather than actual stake, would result in undercharging large validators under the new rules.

To address this, SSV Network plans to introduce new accounting variables known as cluster effective balance and operator effective balance. These metrics would track the cumulative effective balance across validators, ensuring that fees scale according to actual stake rather than the number of validator keys in use.

Effective Balance Oracles and Risk Management

Because validator balances reside on Ethereum’s consensus layer and are not directly accessible to smart contracts, the proposal includes the deployment of Effective Balance Oracles. These off-chain services would monitor validator balances on the beacon chain and submit on-chain updates when changes exceed thresholds defined by the DAO. This system enables accurate fee calculation while maintaining decentralization.

With fees, collateral, and liquidations all denominated in ETH, the proposal suggests that cluster risk profiles would improve. The network anticipates that liquidation parameters could become more capital-efficient while preserving safety, although specific thresholds have not yet been disclosed.

Community Review and Broader Context

The proposal remains under active discussion within the SSV governance forum, and no final decision has been reached. For participants in the Incentivized Mainnet program, the changes would introduce a split model, where ETH-denominated clusters would not face network fee deductions from incentives, while legacy SSV clusters would continue under the current system.

SSV Network launched on Ethereum mainnet in late 2023 and has since gained meaningful market share in staking infrastructure. As Ethereum continues to evolve and distributed validator technology gains broader attention, the proposed shift toward ETH-based fees and effective balance accounting could position SSV for long-term scalability if approved by the community.

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