lighthouse/book/src/key-management.md

Key Management

Note: While Lighthouse is able to generate the validator keys and the deposit data file to submit to the deposit contract, we strongly recommend using the staking-deposit-cli to create validators keys and the deposit data file. This is because the staking-deposit-cli has the option to assign a withdrawal address during the key generation process, while Lighthouse wallet will always generate keys with withdrawal credentials of type 0x00. This means that users who created keys using Lighthouse will have to update their withdrawal credentials in the future to enable withdrawals. In addition, Lighthouse generates the deposit data file in the form of *.rlp, which cannot be uploaded to the Staking launchpad that accepts only *.json file. This means that users have to directly interact with the deposit contract to be able to submit the deposit if they were to generate the files using Lighthouse.

Lighthouse uses a hierarchical key management system for producing validator keys. It is hierarchical because each validator key can be derived from a master key, making the validators keys children of the master key. This scheme means that a single 24-word mnemonic can be used to back up all of your validator keys without providing any observable link between them (i.e., it is privacy-retaining). Hierarchical key derivation schemes are common-place in cryptocurrencies, they are already used by most hardware and software wallets to secure BTC, ETH and many other coins.

Key Concepts

We defined some terms in the context of validator key management:

• Mnemonic: a string of 24 words that is designed to be easy to write down and remember. E.g., "radar fly lottery mirror fat icon bachelor sadness type exhaust mule six beef arrest you spirit clog mango snap fox citizen already bird erase".
  • Defined in BIP-39
• Wallet: a wallet is a JSON file which stores an encrypted version of a mnemonic.
  • Defined in EIP-2386
• Keystore: typically created by wallet, it contains a single encrypted BLS keypair.
  • Defined in EIP-2335.
• Voting Keypair: a BLS public and private keypair which is used for signing blocks, attestations and other messages on regular intervals in the beacon chain.
• Withdrawal Keypair: a BLS public and private keypair which will be required after Phase 0 to manage ETH once a validator has exited.

Create a validator

There are 2 steps involved to create a validator key using Lighthouse:

1. Create a wallet
2. Create a validator

The following example demonstrates how to create a single validator key.

Step 1: Create a wallet and record the mnemonic

A wallet allows for generating practically unlimited validators from an easy-to-remember 24-word string (a mnemonic). As long as that mnemonic is backed up, all validator keys can be trivially re-generated.

Whilst the wallet stores the mnemonic, it does not store it in plain-text: the mnemonic is encrypted with a password. It is the responsibility of the user to define a strong password. The password is only required for interacting with the wallet, it is not required for recovering keys from a mnemonic.

To create a wallet, use the lighthouse account wallet command. For example, if we wish to create a new wallet for the Goerli testnet named wally and saves it in ~/.lighthouse/goerli/wallets with a randomly generated password saved to ./wallet.pass:

lighthouse --network goerli account wallet create --name wally --password-file wally.pass

Using the above command, a wallet will be created in ~/.lighthouse/goerli/wallets with the name wally. It is encrypted using the password defined in the wally.pass file.

During the wallet creation process, a 24-word mnemonic will be displayed. Record the mnemonic because it allows you to recreate the files in the case of data loss.

Notes:

• When navigating to the directory ~/.lighthouse/goerli/wallets, one will not see the wallet name wally, but a hexadecimal folder containing the wallet file. However, when interacting with lighthouse in the CLI, the name wally will be used.
• The password is not wally.pass, it is the content of the wally.pass file.
• If wally.pass already exists, the wallet password will be set to the content of that file.

Step 2: Create a validator

Validators are fundamentally represented by a BLS keypair. In Lighthouse, we use a wallet to generate these keypairs. Once a wallet exists, the lighthouse account validator create command can be used to generate the BLS keypair and all necessary information to submit a validator deposit. With the wally wallet created in Step 1, we can create a validator with the command:

lighthouse --network goerli account validator create --wallet-name wally --wallet-password wally.pass --count 1

This command will:

• Derive a single new BLS keypair from wallet wally in ~/.lighthouse/goerli/wallets, updating it so that it generates a new key next time.
• Create a new directory ~/.lighthouse/goerli/validators containing:
  • An encrypted keystore file voting-keystore.json containing the validator's voting keypair.
  • An eth1_deposit_data.rlp assuming the default deposit amount (32 ETH) which can be submitted to the deposit contract for the Goerli testnet. Other networks can be set via the --network parameter.
• Create a new directory ~/.lighthouse/goerli/secrets which stores a password to the validator's voting keypair.

If you want to create another validator in the future, repeat Step 2. The wallet keeps track of how many validators it has generated and ensures that a new validator is generated each time. The important thing is to keep the 24-word mnemonic safe so that it can be used to generate new validator keys if needed.

Detail

Directory Structure

There are three important directories in Lighthouse validator key management:

• wallets/: contains encrypted wallets which are used for hierarchical key derivation.
  • Defaults to ~/.lighthouse/{network}/wallets
• validators/: contains a directory for each validator containing encrypted keystores and other validator-specific data.
  • Defaults to ~/.lighthouse/{network}/validators
• secrets/: since the validator signing keys are "hot", the validator process needs access to the passwords to decrypt the keystores in the validators directory. These passwords are stored here.
  • Defaults to ~/.lighthouse/{network}/secrets

where {network} is the name of the network passed in the --network parameter.

When the validator client boots, it searches the validators/ for directories containing voting keystores. When it discovers a keystore, it searches the secrets/ directory for a file with the same name as the 0x-prefixed validator public key. If it finds this file, it attempts to decrypt the keystore using the contents of this file as the password. If it fails, it logs an error and moves onto the next keystore.

The validators/ and secrets/ directories are kept separate to allow for ease-of-backup; you can safely backup validators/ without worrying about leaking private key data.