Learn EigenLayer – The First ReStaking Platform on Ethereum

• About EigenLayer
• Problems that EigenLayer can solve
• ReStaking mechanism
• Application of EigenLayer
• Ways of Restaking on EigenLayer
• Advantages of EigenLayer
• Risks with EigenLayer
• Epilogue

About EigenLayer

EigenLayer provides a solution for ETH stakers to retake their ETH into a smart contract, helping to protect the security of other protocols. This retake benefits both the protocol and the stakers.

Collateral is staked to maintain the security of Ethereum and the protocol, which increases the security of the protocol. Stakers will receive staking rewards from two sources, from Ethereum and from the secured protocol. However, in exchange for securing other protocols, stakers face the risk of the protocols' punitive terms.

Problems that EigenLayer can solve

In blockchain design, decentralized security is a current challenge, especially for the Ethereum network. When middleware applications and non-EVM applications are developed on the Ethereum network, they will need to create a separate trust network to ensure security. However, building such a security system is expensive and requires a lot of resources to maintain and extend. With the development of many applications, security becomes more and more decentralized.

EigenLayer has introduced a new feature called “ReStaking” to solve the problem of decentralized security. The ReStaking feature is a set of smart contracts that allow ETH stakingers to retake their locked ETH to extend the security of other protocols. EigenLayer creates an intermediary layer that allows stakers to grant additional execution rights to staked ETH and effectively allows retakes for other protocols.

EigenLayer's ReStaking feature provides additional penalty conditions for ETH staked on the consensus layer. This extends security to other protocols such as bridges and data availability layers built on top of Ethereum. EigenLayer may implement ETH ReStaking for other protocols and use penalty conditions to incentivize validators to act honestly. EigenLayer's design also allows the project to provide authentication services outside of Ethereum.

ReStaking mechanism

ReStaking offers two basic ideas: pooled security (so-called secure cloud) and free-market governance.

Pooled security is the ultimate security system created by ReStaking. This system allows protocols to utilize the security of the Ethereum network and makes the cost to attack protocols significantly higher. Staked ETH is used as collateral to secure Ethereum and is also used to provide validation services for other protocols. With Pooled Security, participating validators will have to comply with new slashing conditions for their stake.

Free-market governance allows protocols to self-manage the amount of pooled security consumed. EigenLayer creates a competitive market for pooled security dictated by supply and demand. The important point here is that validators are not required to provide pooled security. Instead, they have the ability to define their own set of risk and reward parameters before providing services for a given protocol. This allows validators to choose the protocol they want to service, creating an open and competitive marketplace, and eliminating many of the inefficiencies that exist in current security models. ReStaking also minimizes the marginal cost of validator services because restakers can reuse their initial capital on various protocols other than Ethereum to earn additional profits.

Application of EigenLayer

EigenDA is the first application built on the EigenLayer platform. It is a data availability layer that brings a new paradigm to today's data availability landscape. EigenDA allows Ethereum to offload data availability within the security of the ecosystem, instead of having to perform off-chain operations.

The dual quorum model in EigenDA consists of Ethereum stakers (Ethereum's staking economic quorum) and the rest is run by RocketPool ETH stakers (or other liquid staking platforms). In order to achieve data availability, both quorum is required, which is a combination of economic trust and decentralized trust.

EigenDA is a pure data availability layer and can achieve up to 15 MB/s throughput even in its current state, 176 times higher than Ethereum's current throughput without danksharding. Built on top of EigenLayer with a high degree of freedom and using the core cryptographic architecture of danksharding, EigenDA can achieve projected throughput of up to 1 GB/s in the future.

In addition, EigenLayer can also be applied in some other areas such as Mev Boost, Oracle and Bridge.

Ways of Restaking on EigenLayer

EigenLayer offers the ability to participate in ReStaking with a variety of assets, including Native Staking, LSD restaking, ETH LP restaking and LSD LP restaking. Restaker can participate in two ways: Solo Staking or Trust Model.

With Solo Staking, Restaker can choose to provide validation services for protocols or delegate operations to other operators while remaining a validator for the Ethereum network. Meanwhile, with the Trust Model, Restaker chooses a trusted operator to authorize. If the selected operator does not comply with the agreement, they will be subject to certain penalties.

Advantages of EigenLayer

EigenLayer gives developers the ability to use the security of Ethereum without the cost of running their own security systems. When using the security of Ethereum, protocols are also allowed to control the underlying mechanisms, such as the consensus mechanism and the penalty mechanism. Thus, this will allow protocols to decide for themselves the important factors to prioritize, be it decentralization, scalability, or whatever else they desire.

Risks with EigenLayer

Restaker allows EigenLayer to access their staked ETH. If there is ETH that has been staked through EigenLayer and this protocol is hacked or mined, this could have serious consequences for the safety of the Ethereum network.

Epilogue

Through this article, you have access to important information about EigenLayer. Protocol features and benefits were introduced, including the ability to participate in ReStaking with a variety of assets, the potential to ensure the security and stability of the Ethereum network, and Solo participation methods. Staking and Trust Model.

Stay tuned for the next articles to get the latest updates on EigenLayer and other blockchain projects.

• Ethereum EigenLayer “re-staking” protocol launched on testnet
• On-chain data signals Ethereum is unlikely to rise to $3,500