Introduction

Based on the report “Ethereum Validators Performance” from Kiln, let’s break down why some staking solutions outperform the network average in terms of rewards. By dissecting how staking infrastructures optimize their Consensus Layer (CL) and Execution Layer (EL) performance, we can better understand the mechanics behind high-performing validators.

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1️⃣ Understanding Consensus Layer (CL) Rewards: Uptime & Accuracy

The Consensus Layer (CL) is responsible for validating transactions, proposing new blocks, and ensuring the blockchain remains secure. Validators earn CL rewards based on two key factors:

✅ Uptime – The more time a validator remains online and active, the higher its participation in block attestations.

✅ Accuracy – Correctly attesting and proposing blocks increases validator rewards.

How High-Performing Validators Optimize CL Rewards

🔹 Maintaining Near-Perfect Uptime

• Running validator nodes on enterprise-grade, high-performance servers (cloud-based or self-hosted).
• Using low-latency networking to minimize attestation delays.
• Employing redundant nodes & failover systems that switch to backups within milliseconds if the primary node fails.
• Distributing nodes geographically to prevent downtime from regional failures.
• Implementing DDoS protection and secure key management to mitigate attack risks.

🔹 Optimizing Block Proposals & Attestations

• Ensuring validators always submit attestations on time.
• Using relay nodes for faster message transmission to the Ethereum network.
• Reducing attestation submission delays with optimized networking stacks.

💡 Key Takeaway: By consistently maximizing uptime and reducing attestation delays, high-performing validators earn 0.5% - 1% more CL rewards than the network average.

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2️⃣ Execution Layer (EL) Rewards: MEV & The Luck Factor

Unlike the CL, where rewards are relatively stable, Execution Layer (EL) rewards fluctuate significantly due to Maximal Extractable Value (MEV) opportunities and priority fees from users.

✅ MEV (Maximal Extractable Value) – Validators can extract extra value by reordering, including, or excluding transactions in a block.

✅ Priority Fees – Users pay higher transaction fees to prioritize their transactions in a block.

✅ Luck Factor – Some validators get assigned blocks with high-value MEV transactions, while others receive low-fee transactions.

How Some Validators Earn More EL Rewards

🔹 Capturing MEV Opportunities

• Running MEV Boost relays to capture high-value transactions before others.
• Using specialized software to optimize block inclusion for maximum revenue.
• Strategically positioning validator nodes closer to Ethereum’s main transaction relays.

🔹 Reducing Block Proposing Latency

• High-speed processing to ensure transactions are signed and broadcast within 12 seconds.
• Using low-latency peer connections to get transaction data faster.
• Employing custom network tuning (e.g., TCP Fast Open, buffer optimizations) to reduce delays.

💡 Key Takeaway: Validators with optimized execution strategies can earn 30-40% more EL rewards than the network average, largely due to MEV opportunities.

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3️⃣ How Staking Infrastructure Gives an Edge Over the Network

Since every validator competes for rewards, small infrastructure optimizations make a significant impact. High-performing validators gain an edge by:

🔹 Running redundant validator nodes across multiple data centers for zero downtime.

🔹 Using custom networking stacks to process transactions faster.

🔹 Employing advanced MEV strategies to capture high-value transaction opportunities.

🔹 Implementing AI-driven monitoring for real-time performance tracking.

The Bottom Line

✔️ Consensus Layer (CL) Rewards: Better uptime and accuracy = higher earnings.

✔️ Execution Layer (EL) Rewards: Faster processing and MEV strategies = higher profits.

By investing in superior infrastructure, validators consistently outperform the network in both CL and EL rewards.