How Minipools Work

A Up AI Validator minipool represents a validator that was funded via ETH contributed from liquid stakers using the deposit pool and ETH contributed from node operators during their registration with Up AI Validator.

How are minipools created?

A node operator brings their NodeId to Up AI Validator and registers with it. This indicates that they have their own hardware set up and are ready to become an Ethereum validator. For detailed instructions on setting up a node.

To become a validator with Ethereum, a node needs 20 ETH. Through Up AI Validator, the node operator contributes half of this amount, while the remaining half is sourced from the liquid staking deposit pool. To secure the half obtained from the deposit pool, the node operator pledges at least 1 ETH worth of collateral in the form of UP tokens. This collateral serves as a commitment to good behavior and allows the protocol to recover losses in case of misconduct.

After registering their NodeId, staking 10 ETH, and collateralizing with UP tokens, the node operator's minipool is created.

The minipool is then matched with liquid staking funds from the deposit pool. The OracleDAO transfers these funds from the C-chain to the P-chain for staking purposes and registers the minipool as a validator in the Ethereum network.

To ensure consistent returns for liquid stakers and compound returns for node operators, the protocol implements minipool cycling.