EigenLayer: Revolutionizing Decentralized Trust Through Restaking

Author: Crypto Ape Club Source: medium Translation: Jinse Finance, Shan Ouba

introduce

EigenLayer has become a breakthrough concept in the Ethereum ecosystem, introducing a new approach to decentralized trust through a process called restaking. Unlike Layer 2 solutions, EigenLayer offers a unique value proposition by enabling users to stake their Ethereum (ETH) multiple times, which subsequently allows them to validate other chains and networks. This article dives into the intricacies of EigenLayer, clarifying its capabilities, benefits, and potential risks.

Understand EigenLayer

Re-staking and Liquidity Staking: Re-staking is a core principle of EigenLayer and involves staking ETH in Ethereum and then re-staking it to different applications and networks using the EigenLayer contract. This process allows users to earn additional staking rewards by validating multiple chains. However, it also comes with the added risk of multiple rounds of cuts.

Smart Contracts and Staking Interaction: EigenLayer employs a series of smart contracts to facilitate the interaction between staking and re-staking. These contracts delegate partial control to users while providing the slashing power needed to maintain the security of the EigenLayer ecosystem.

Rewards and risks of restaking: While restaking has the potential to increase rewards, it also introduces additional risks. Users must carefully consider the possibility of slashing and evaluate the risk-reward trade-off before engaging in re-staking activities.

EigenLayer as a marketplace for decentralized trust

The concept of decentralized trust: EigenLayer aims to create a "decentralized trust market" by providing new forms of trust beyond the traditional block space. EigenLayer not only provides storage space, but also focuses on supporting the basic security of decentralized systems.

Block space as a commodity: In blockchain networks like Ethereum, users pay gas fees to be included in blocks, effectively buying block space. However, EigenLayer proposes that the raw decentralized trust offered by Ethereum is a valuable commodity in its own right, addressing the needs of new applications and protocols looking for robust security.

Leveraging Ethereum’s network effects: By tying its fate to Ethereum’s proven consensus, new applications or protocols can leverage Ethereum’s network effects and decentralization. This enables developers to launch their projects and take advantage of a new supply of decentralized trust, while benefiting from Ethereum's established ecosystem.

Outsourced Trust: Comparison to Cloud Services: EigenLayer draws an analogy to cloud services, where traditional applications outsource storage to trusted providers. Likewise, EigenLayer provides a way for blockchains and organizations to leverage Ethereum’s decentralized trust supply without having to rely on Ethereum as a block space. This flexibility opens up new possibilities for securing a wide variety of applications and protocols.

FLEXIBILITY AND FOCUS

Flexible application of security: EigenLayer's re-staking mechanism introduces the concept of flexible application of security outside of Ethereum. While this concept presents the opportunity to expand security and increase staking rewards, it also raises concerns about potential bias and conflict when interacting with external projects.

Potential bias and community influence: Ethereum co-founder Vitalik Buterin warned that projects outside of Ethereum could put pressure on the Ethereum community and lead to biased decision-making. Re-staking activities must be carefully evaluated to avoid conflicts of interest that jeopardize the integrity and unity of the Ethereum community.

Low-risk and high-risk re-staking scenarios: Vitalik Buterin provided examples of low-stakes and high-stakes re-staking scenarios to illustrate the potential impact. While low-stakes re-stakes (e.g. Ethereum stakers participating in the Dogecoin validator set) may have little impact, high-stakes re-stakes (e.g. acquiring a price oracle for a future CBDC digital currency) could create conflict and split Ethereum community.

Vitalik Buterin’s thoughts on expanding the scope of consensus: Vitalik Buterin advises caution when considering expanding the scope of consensus beyond validating the core Ethereum protocol rules. While restaking brings new opportunities, it also introduces complexities that need to be carefully managed to ensure the stability and unity of the Ethereum ecosystem.

Re-examine the layout

Restaking as a foundational technology: Restaking represents a foundational technology in the Ethereum ecosystem comparable to the emergence of miner-extractable value (MEV) during the DeFi summer of 2020. it

Bootstrapping new networks through restaking: Developers can utilize restaking as a means of bootstrapping their network during the initial phase. By leveraging the security provided by Ethereum, new networks can plug into the existing Ethereum ecosystem, gradually transitioning to self-sufficiency in terms of security.

Getting rid of Ethereum's security: The ultimate goal of restaking is to mature the network and wean itself off Ethereum's security. As the network grows and matures, they can develop their own security mechanisms and reduce their reliance on Ethereum.

Potential risks and need for caution: While re-holding opens up new possibilities, caution is still warranted. Degen stakers and ETH participating in questionable protocols pose a risk to the overall stability of the ecosystem. It is critical for participants to carefully evaluate projects and re-run activities in a responsible manner.

in conclusion

EigenLayer represents a major development for the Ethereum ecosystem, offering a novel approach to decentralized trust through restaking. While it presents a wealth of opportunities for users and developers, caution should be exercised to avoid overextending the scope of blockchain consensus. By understanding the dynamics and implications of EigenLayer, participants can navigate this changing landscape and contribute to the continued development of decentralized finance (DeFi) and trust mechanisms.