In the dynamic landscape of Ethereum staking, implementing regional diversity is quickly becoming an essential pillar of business continuity and risk mitigation for institutions and asset managers.

Validator Region Landscape

Generally, we can categorize the existing staking solutions into three categories:

Single Region Solutions 

These staking providers only allow staking in one specific region. This option simplifies operations and financial reporting requirements. However, it creates a single point of failure, in which if the infrastructure experiences downtime, all validators of the customer cease to operate, missing attestations and proposals while suffering from penalties and missed proposals. Due to geographical regulatory requirements or restrictions, customers may need regional optionality and be unable to stake with a provider offering a single-region staking solution. 

Region-Agnostic Solutions 

These staking providers spread validators across a multitude of regions through their cloud infrastructure without granting customers the option to select specific locations. While this approach achieves geographic diversity, it may leave customers with limited control over the placement of their validators, potentially subjecting them to unfavorable regulatory or financial outcomes. For example, if certain validator functions are performed in a jurisdiction that does not have a tax treaty with the country the customer resides in, the customer’s staking rewards might be subject to withholding taxes.

Multi-Region Support 

These staking providers present curated multi-region support options to customers, providing flexibility for strategically selecting deployment regions for their validators. The inclusion of multi-region support is geared towards boosting resilience and business continuity for both staking providers and their customers. Nevertheless, customers should be mindful that their finance and legal teams should conduct their own due diligence to identify the most suitable options for their operations. 

Benefits of Multi-Region Support

At Figment, we have implemented  a robust multi-region support feature to cater to customers seeking regional diversity as part of their staking strategy. Here are some of the benefits:

Navigating the Regulatory and Financial Landscape

This feature empowers our customers to strategically distribute their validators and leverage the regional benefits effectively while maintaining compliance with regulatory frameworks. By offering a choice of locations, we enable customers to distribute validators in regions where they can derive potential operational, legal, and other regional benefits, such as favorable tax treatments. We recommend that our customers conduct their own due diligence and consult with their legal counsel and tax professionals to determine what regions are the most appropriate for them.

Increasing Robustness

Operating across diverse regions significantly enhances infrastructure resilience. By spreading validators across cloud zones and data centers, we limit potential disruptions. In the event of an outage at one site, others can persist unaffected. This means that the distribution of validators reduces the negative impact on rewards from downtime since unaffected areas continue earning, ensuring that temporary disruptions don’t bring operations to a standstill.

Mitigating Risks and Planning Disaster Recovery

Multi-region support empowers our customers to develop robust risk mitigation plans, which are crucial for business continuity and disaster recovery. In the rare event of an indefinite outage in infrastructure, multi-region support provides customers with the ability to relocate their validators to operational regions if the validators cannot come back online in the affected region. 

Figment’s Approach to Multi-Region Validators for Ethereum

At Figment, we’ve implemented a thoughtful and robust multi-region solution, carefully selecting regions based on customer demand, while aligning with our region diversity guiding principles. This process involves close collaboration among our finance, tax, legal, compliance, engineering, and product teams.

Currently, our operations span across Canada and Ireland, where we handle the majority of the workload. However, it is crucial for our customers’ finance and legal teams to perform their own due diligence when expanding into new regions, ensuring that they are in sync with their strategic and regulatory needs.

In our implementation, regions operate independently, with validator keys kept only at one region. This deliberate isolation prevents double signing and slashing events. If you’re curious about the risks and penalties of downtime versus those of double-signing, you can find more information in our Ethereum staking risks summary. 

While our multi-region solution enhances robustness and reliability, it is not a fail-safe solution against regional outages to improve validator uptime. To safeguard our customers against double-signing and slashing, we maintain validators in affected regions offline until the regional outage is resolved.

This new functionality is now available via API and when staking directly with Figment. 

An overview of the Figment App Staking Dashboard on Goerli Testnet

While provisioning new validators on the Figment app, stakers are presented with an option to select their preferred hosting region. The Multi-Region feature is also accessible for developers through the Figment API. This integration allows developers to utilize the flexibility of choosing the region for hosting their validators directly within their applications.

If you’d like to learn more about our multi-region support or have questions about our region diversity guiding principles, please meet with us.

The information herein is being provided to you for general informational purposes only. It is not intended to be, nor should it be relied upon as, legal, business, tax or investment advice. Figment undertakes no obligation to update the information herein.