Key Points:
Eigenlayer is a re-staking protocol built on Ethereum. Ethereum nodes can re-staking the staked ETH through EigenLayer to obtain additional income. Protocols such as class middleware, data availability layer, and side chains allow them to enjoy Ethereum-level security at a lower cost.
Coincu interpreted this long-overdue white paper for the first time, focusing on Eigenlayer’s basic principles, operating mechanism, security assurance, governance framework, application scenarios, commercialization prospects, and other core content. We will then conduct a more in-depth analysis of EigenLayer.
Currently, thousands of decentralized applications (dApps) are built on top of Ethereum, and the entire ecosystem is constantly growing. A credible decentralized underlying network value foundation stems from: developers do not need any reputation or trust, and the dApp they develop can be adopted by anyone who trusts and verifies the underlying blockchain.
Rollup is an important direction of Ethereum performance expansion: do not use EVM to execute transactions, and finally return to Ethereum for settlement. Although different Layer 2 adopts different security verification methods, people trust Layer 2 based on Ethereum.
However, any module that is not deployed or proven on top of the EVM cannot take advantage of the security of Ethereum’s trusted bottom layer, such as side chains based on new consensus protocols, data availability layers (DA), new virtual machines, oracles, and trustworthy Generally speaking, they need to build their own independent AVS (Active Verification System) to be responsible for their own system security. The current AVS ecology has some shortcomings:
EigenLayer introduces two new concepts, re-staking and free market governance, to extend the security of Ethereum to other systems and improve the efficiency of governance.
Re-staking
EigenLayer allows users to re-staking the ETH staked on Ethereum to EigenLayer. These re-staking assets can be used for the data availability layer, oracle machine, middleware, Layer2, etc. Validators can also obtain corresponding rewards by providing them with security and verification services.
Free market governance
EigenLayer allows verifiers to freely choose which modules to participate in according to their own risk preferences, but the premise for verifiers to make profits is to ensure safety. EigenLayer’s governance model has two advantages. The first is to integrate the robust underlying blockchain into fast and efficient elements. The second is the optional verifier mode that enables new modules to fight for other resources among verifiers. So as to better balance security and performance.
AVS on EigenLayer can rent the security services of Ethereum validators, which has the following benefits:
EigenLayer provides a variety of staking methods similar to Lido’s Liquid Staking and Superfluid Staking, where Superfluid Staking can allow the staking of LP pairs, specifically:
For those re-stakers who are interested in EigenLayer but do not want to be node operators, they can entrust their rights to other node operators, and these node operators will then stake their tokens to Ethereum and will receive benefits. A portion of the stake is allocated to this re-staking. EigenLayer provides two modes:
Cryptoeconomic security quantifies the cost of attacking a network, which is referred to as the “Cost-of-Corruption.” When the damage cost is greater than the possible damage benefit (Profit-from-Corruption), the system has strong security. EigenLayer’s slashing mechanism will increase the cost of destruction and make encrypted networks more secure.
EigenLayer will not issue homogeneous tokens as staking warrants because each user may have different options for appointing stakes, so they also have different risks of confiscation; at the same time, if homogeneous tokens are used to guarantee transparency, creates conflicts between position owners and node operators.
The concept of EigenLayer re-staking is similar to the merged mining concept of Bitcoin/Namecoin, Bitcoin/Elastos, Bitcoin/RSK, and Litecoin/Dogecoin. Merged mining can save a lot of costs because the mining machine can mine different PoW blockchains at the same time under the same encryption mechanism. For the PoS blockchain, the highest cost for the verifier is the staking cost, and re-staking allows the staking funds to be utilized on different execution layers.
However, the similarities between merged mining and re-staking end there. Assuming that some of the main public chain verifiers for both PoS and PoW are verifiers of multiple chains at the same time (that is, merged mining occurs in PoW, and re-staking occurs in PoS), when they attack smaller public chains (such as: Deliberately sign the wrong state root and cause problems with cross-chain assets), then there will be two situations:
There are two types of risks in EigenLayer:
Carrier collusion
In reality, only a subset of operators opt-in to a given AVS, some of these operators may collude to steal funds from a group of AVSs, and sophisticated attacks can then emerge.
Accidentally confiscated
Before the AVS and its related infrastructure and contracts are tested in practice, many slashing risks need to be controlled to avoid greater overlapping risks. One risk is an accidental slashing vulnerability (e.g., a code bug) in the creation of AVS that, if triggered, would result in honest operators losing funds.
We propose two solutions here:
EigenLayer is governed using a reputation-based committee made up of prominent figures in the Ethereum and EigenLayer communities. This committee will be responsible for upgrading the EigenLayer contract, reviewing and vetoing slashing events, and allowing new AVS to enter the slashing review process.
AVS can use this committee to reassure re-mortgagers in EigenLayer that they will not be maliciously or wrongly slashed. At the same time, AVS developers can conduct practical tests on the code base related to AVS. Once mature and gained the trust of re-stakers, AVS can stop using the committee as a fallback. When AVS is created on top of EigenLayer, the committee may need to conduct security audits and other due diligence, including checking the system requirements for validators to serve AVS.
We noticed that when all the ETH re-hypothecated using EigenLayer is used to secure an AVS, the maximum security of this AVS can be obtained. However, there are two obstacles to this:
EigenLayer proposes two possible module design patterns to alleviate these concerns:
EigenLayer can support many types of protocols by providing AVS services, including a data availability layer, a decentralized sequencer (sequencer), light node bridge connecting Ethereum, a faster bridge between Rollup, oracle, event-driven activation Functions, MEV management, low-latency side chains, helping Ethereum achieve single slot finality, etc.
Ethereum nodes are heterogeneous in terms of computing power, risk-return preference, and characteristics:
The update of Ethereum is currently slowly advancing through a robust off-chain democratic governance method. EigenLayer allows innovations to be quickly deployed on the trusted layer of Ethereum, providing testing and experience for the innovation of the Ethereum mainnet like a testnet, avoiding the need for Ethereum’s trade-offs between rapid innovation and democratic governance.
EigenLayer provides AVS with a decentralized monetization market. AVS can specify that only Ethereum personal nodes (home validators) can participate in tasks, which can help AVS maintain decentralization. At the same time, personal nodes can obtain additional benefits, which can encourage more users to run Ethereum personal nodes and improve the degree of decentralization of the main network.
EigenLayer allows the AVS of the protocol to designate its own node group (quorums) to run together with the node group that re-stakes ETH. For example, protocol A can choose to use two node groups; one node group needs to re-stake ETH, and the other node group requires a staking agreement token $A when both nodes and the node group agree that a certain matter is valid, protocol A finally agrees that the matter will take effect. Such a mechanism can help the protocol token $A gain utility and accumulate value for the protocol.
The business models that can be adopted by the protocol using EigenLayer include:
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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Harold
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