Disclaimer: This announcement is part of a series showcasing the innovations being developed at Puffer. Stay tuned for more updates in the coming weeks.

Improving Reward Efficiency for Permissionless Validators

Puffer is pleased to introduce Fast Path Rewards (FPR), a new funding mechanism for permissionless validators on our Liquid Restaking protocol. This feature is designed to significantly improve the process of claiming rewards, enhancing both user experience and profitability for our Staking Node Operators (SNOs).

FPR addresses key inefficiencies in the current reward distribution system, offering a more streamlined and cost-effective method for validators to access their earnings. By enabling faster and less expensive reward claims, FPR aims to optimize the validator experience on the Puffer network.

Demystifying Rewards on Puffer: A Quick Refresher

Before we dive into the excitement of FPR, let’s recap how rewards work on Puffer LRT. It’s a unique system carefully crafted to align incentives and foster Ethereum’s decentralization.

Validators on Puffer earn two types of rewards:

1. Consensus Layer Rewards: Earned from participating in Proof of Stake voting.

2. Execution Layer Rewards: Gained from proposing blocks, including priority fees and MEV.

At the heart of Puffer’s protocol are Staking Node Operators (SNOs) and Validator Tickets (VTs). SNOs get to run validators by minting and depositing VTs. Here’s where it gets interesting: the ETH from minting VTs is paid to pufETH holders as rewards. This decouples pufETH holder rewards from SNO performance, creating a win-win scenario.

In return, SNOs keep 100% of the rewards their validator earns. This mechanism not only incentivizes SNOs to perform well (stay online and avoid slashing) but also protects pufETH holders from underperforming SNOs. It’s a delicate balance that supports our mission of fostering permissionless SNOs for Ethereum’s decentralization and credible neutrality.

The Puffer Reward Flow: A Quick Summary

Let’s break it down:

1. SNO mints VTs, and pufETH holders get paid.

2. SNO runs their validator using the ETH originally deposited by pufETH holders.

3. SNO keeps any rewards earned from running the validator.

Simple, elegant, and addresses issues that typically arise with permissionless validator operations.

Accounting in EigenLayer

Now, let’s talk about EigenLayer. All Puffer validators are tethered to EigenPod contracts. This integration brings both opportunities and challenges:

- Execution layer rewards go directly to the SNO’s wallet upon block proposal.

- Consensus layer rewards, however, must flow through the EigenPods to be claimed.

Here are the difficulties: historically, claiming these consensus layer rewards has been prohibitively expensive, with up to 30% of rewards lost to gas fees. This inefficiency led us to temporarily disable consensus layer reward claiming while we developed a more efficient solution.

FPR: The Game-Changing Solution

Enter Fast Path Rewards — our answer to the consensus layer reward conundrum. FPR is set to vastly improve the SNO experience by allowing direct reward claiming on an L2. Here’s how it works:

1. Consensus layer rewards accrue as ETH inside EigenPods.

2. The protocol mints an equivalent amount of pufETH and bridges it to the L2.

3. SNOs can claim their rewards cheaply and frequently on the L2.

4. The protocol gradually migrates the EigenPod ETH into the pufETH vault when gas prices are optimal and we can best amortize proving costs.

What FPR Means for You

For SNOs who’ve been with us since day one of mainnet: congratulations! You have a significant payday coming your way. For new SNOs, FPR means you can claim consensus layer rewards cheaply and frequently, helping cover your operating costs more effectively.

From the protocol’s perspective, FPR is a gas-efficiency powerhouse. These savings translate directly to increased benefits for both SNOs and pufETH holders. It’s a win-win-win scenario!

Ready to Claim Your Rewards?

Excited to experience the power of FPR firsthand? We’ve got you covered. Follow our step-by-step tutorial to claim your rewards and see the difference for yourself:

https://docs.puffer.fi/nodes/rewards

By the way validators, did you know you have been earning Puffer points? Check out your status here:

https://quest.puffer.fi/restake

The future of validator economics is here, and it’s faster, cheaper, and more efficient than ever before. Welcome to the era of Fast Path Rewards — where Puffer continues to push the boundaries of what’s possible in the Ethereum staking ecosystem.

Stay tuned for more exciting announcements as we continue to innovate and evolve the Puffer ecosystem. The future of Ethereum is bright, and with Puffer, it’s more accessible and rewarding than ever!

About Puffer Finance

Puffer Finance is a leading innovator in Ethereum infrastructure, focusing on next-generation rollups supported by liquid restaking (LRT) and preconfirmation as an AVS. With products like Puffer UniFi and Puffer UniFi AVS on EigenLayer, we are dedicated to enhancing Ethereum’s decentralization. puffer.fi