Can You Over Pay an Ethereum Validator?

It has long been debated that crypto currency can be used to facilitate money laundering and a previous report identified that it is possible that around 0.46% and 1.56% are. But they are also hard to prove given that Blockchain transactions can also be made in error.

Validators play a crucial role in securing the blockchain by validating transactions and adding them to the blockchain. While the typical transaction process involves paying a standard fee, there are scenarios where we are seeing overpayments made to a validator. While it is easy to claim money laundering it’s essential to note that the method requires meticulous coordination and a deep understanding of how Ethereum transactions work and can also result in failed attempts.

The Intricate Impossible, Hair Line, Focus

Validators: Ethereum validators are responsible for validating transactions and adding them to the blockchain. They are compensated with transaction fees (gas fees) and in some cases, additional incentives for their work.

Importance of Coordination: Overpaying a validator involves more than just sending extra funds. It requires ensuring that the transaction is processed by the correct validator at the right time which demands close collaboration.

Know Your Validator: To overpay a validator, you need to know which validator will be responsible for validating your specific transaction. This is not straightforward as validators are typically assigned transactions based on the current state of the network and their stake.

Validator Information: You can gather information about validators through tools like Etherscan, Beaconcha.in or directly from the Ethereum network's beacon chain explorer. Knowing the validator's address and performance history is essential.

Reach Out: Contacting the validator directly is a critical step. You can do this through community channels, validator forums, or direct communication if the validator’s details are publicly available. The key here is to establish a trust relationship, as you’ll need to work closely with them.

Negotiate Terms: Discuss the terms of the overpayment. This includes agreeing on the transaction fee, the amount to be overpaid and ensuring that the validator understands the importance of validating your transaction at the agreed time.

Can You Make An Offer A Validator Can't Refuse?

Create the Transaction: Once you’ve identified and communicated with the validator, you need to prepare your transaction. This involves setting the appropriate gas price and limit.

Set a Higher Gas Fee: To overpay, you’ll need to set a higher-than-average gas fee. This is the amount that will be paid to the validator for including your transaction in the block. Ensure the gas fee is attractive enough for the validator to prioritize your transaction.

Include Extra Ether: Along with the gas fee, you can include extra Ether as part of the transaction payload. This is the overpayment that you intend to give the validator

Timing is Crucial: You must submit the transaction when the validator you’ve coordinated with is likely to be selected to validate the next block. Ethereum operates on a probabilistic model, so predicting the exact time is challenging which makes this method of money laundering not worth it as it is prone to failure.

Use Transaction Tools: Tools like Flashbots or MEV (Miner Extractable Value) tools can help in timing transactions. These tools allow you to submit transactions directly to miners or validators without going through the public mempool reducing the risk of frontrunning or interference.

Keep Your Eye On The Money

Track the Validation: Once submitted, closely monitor the transaction to ensure that it is picked up by the correct validator. You can use Ethereum explorers like Etherscan or specific tools that track validator activities in real time.

Confirm the Block Inclusion: Verify that your transaction has been included in the correct block by the validator you coordinated with. The block details will confirm whether the validator processed your transaction.

Check the Validator’s Rewards: After your transaction has been confirmed, check the validator’s rewards to ensure they received the overpayment. This can be done by looking at the validator’s account balance or rewards statement.

Confirm Receipt with Validator: Communicate with the validator to confirm that they received the overpayment as intended. This step is crucial to ensure that the funds were not mistakenly sent elsewhere.

Risk of Misallocation:* There’s always a risk that the transaction might be validated by the wrong validator or that the overpayment is not properly processed. Ensure you have contingency plans in place, such as setting up smart contracts that can reclaim overpayments or establishing clear agreements with the validator.

Not Worth The Risk, Easier To Open A Laundromat

Overpaying an Ethereum validator is not a common practice due to the risks and intricate requirements set out above but it can be done with careful planning, precise timing and strong collaboration with the validator.

Ensuring that your transaction is handled by the correct validator and that the overpayment is received as intended and not front run as transactions are all public is not easy. There is a risk that someone can swoop in and snipe your cash. Which shows why there is such a low rate of Money Laundering occurring via this method.

This process is highly specialized and could only be attempted by those with a thorough understanding of Ethereum's mechanics and the trust of the validators involved. Afterall, if an anonymous validator runs off with someone's cash, they are unlikely to be found.

image sources provided supplemented by Canva Pro subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services

Posted Using InLeo Alpha