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How our managed node clusters work

Participate customers work with one of our account managers to run a dedicated validator node.  If you’re interested in becoming a customer, please contact us using our Cloud Interest Form.  If you’re an existing customer, reach out to your dedicated account manager.

Nodes and surrounding infrastructure

Coinbase Cloud's platform does more than allow you to operate nodes on multiple blockchains. Both Participate and Query & Transact (QT) clusters are configured with the supporting infrastructure that allows for optimal operation.

For validator nodes, our Participate clusters provide you with 24/7 load-balancing, self-healing, monitoring, and alerting. This infrastructure helps your node stay online and perform well, even in adverse conditions.

Nodes in our QT clusters can be geographically distributed across providers and regions, creating partial or full redundancy. Requests are routed to nodes based on latency, and this setup helps ensure all requests are answered as efficiently as possible.

Participate clusters and Query & Transact clusters

Coinbase Cloud is the easiest way to run secure infrastructure on multiple blockchains. You can launch secure node clusters on Coinbase Cloud to participate in, or interact with, an ever growing list of blockchain protocols. If you want to participate in a protocol, you must run a Participate cluster. If you want to interact with a protocol, you must run a Query & Transact cluster.

Participate clusters consist of nodes that perform work on the blockchain, facilitating block production and validation to earn participatory rewards from the protocol. They participate in the critical operations of a blockchain protocol, including the governance and consensus processes.

Proof of stake is the consensus mechanism adopted by the majority of blockchain protocols that Coinbase Cloud supports. 

With proof of stake, you can earn participatory rewards on the tokens you stake to your node cluster to help secure the network. Rewards are typically distributed to nodes in proportion to how many tokens are staked relative to the entire pool of staked tokens (e.g. a node cluster that is staking 10% of all tokens in the pool will receive 10% of the rewards). 

There are 2 ways in which you can earn participatory rewards: 

  1. Directly by staking tokens to your node cluster

  2. Indirectly from tokens delegated to your node cluster by your community 

Each blockchain protocol determines the reward rate for staked tokens. 

Once calculated, Coinbase Cloud deducts a participatory fee. The remaining rewards issued to you are your node operator fees, which you earn both by being a direct staker and by being a delegated staker.

QT clusters are composed of read/write nodes, which allow for querying and posting transactions to a blockchain. They can be used for blockchain reporting, confirming transactions, building distributed applications (dapps), and more.

Supporting node decentralization

Coinbase Cloud enables scaled decentralization by making it easy for blockchain participants to run nodes across multiple cloud providers and regions on all our supported protocols. Our geographically distributed node clusters use enterprise-grade security to scale responsibly.

Slashing is a mechanism built into many blockchain protocols to discourage validator misbehavior. It's designed by protocol creators to incentivize security, availability, and blockchain participation. While the specifics are defined within each protocol, the slashing mechanisms are similar: a predefined percentage of a validator’s tokens are lost when it behaves abnormally on the protocol.

Most protocols have two conditions that trigger slashing: validator downtime and double-signing. Downtime and double-signing are counterbalanced considerations that we take very seriously. Typically, downtime results in a very small penalty (for example, 0.1% of tokens) whereas double-signing can incur a much higher penalty (for example, 5% of tokens).

Coinbase Cloud prioritizes double-signing prevention over downtime prevention because the penalty for double-signing is higher. We do this by ensuring that two signing nodes are not online simultaneously for any given customer’s cluster.

Bringing backup validators online when primary validators experience temporary issues introduces the risk of double-signing. That's why Coinbase Cloud only allows one signing node in a Participate cluster to be online at any given time. Our highly available infrastructure solution provides signing nodes that are ready and waiting to be used, but are unable to begin signing blocks until our block-signing monitor signals that it is safe to do so.

In the rare event of a cloud provider or regional signing infrastructure outage, Coinbase Cloud verifies that the primary validator cannot come back online before the signing node is moved to an available region. 

We are in the process of implementing additional protections to enhance our service and further reduce the likelihood of a critical event. In short, while slashing is always a risk when participating on proof of stake networks, we do our best to help minimize impact for our customers.

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