What is Eigen Layer?

EigenLayer: A restaking collective for Ethereum

EigenLayer is a protocol built on Ethereum that introduces restaking, a new primitive in pooled cryptoeconomic security. This allows for the rehypothecation of Ethereum on the consensus layer and creates the first iteration of an on-chain decentralised trust and security validating mechanism.

In simpler words, the protocol allows for Ethereum validators to opt-in and validate other actively validated services (“AVS”), also called software modules, on top of the Ethereum ecosystem.

What is a module? It includes, but not is limited to a new blockchain, data availability layers, bridges, oracle networks and keeper networks.

Existing Ethereum validators can restake their ETH, while using existing hardware to validate new, innovating modules. Each module comes with its own objectively verifiable set of rules, that need to be followed by validators. Should a validator fail to follow the predefined rules, they risk getting their ETH slashed. In return, each module will pay the EigenLayer fees in the denomination of their specific token issued. These fees will go to all restakers validating the module.

Aggregating Ethereum security across modules increases their inherent security while benefitting from the world’s largest decentralised validator infrastructure. EigenLayer enables new applications while creating a positive flywheel effect by boosting Eigen native staked ETH yield.

How to participate in EigenLayer?

EigenLayer launched on the 14th of June. There are two main ways to participate:

1. LST Restaking

Users can restake by depositing their liquid staking token (LST), representing a claim on ETH already staked via protocols like Lido, Rocketpool and Coinbase, into the EigenLayer smart contracts.

2. Validator Native Restaking

Validators that are operating Ethereum nodes can restake their staked ETH natively by pointing their withdrawal credentials to the EigenLayer contracts. They guarantee with their Ethereum stake (32 ETH per node) and must adhere to objectively verifiable slashing rules. If they adhere to the rules, they earn additional yield from EL modules, however if they don’t, they risk their ETH being slashed.

Users opting to use the LST restaking method are not at a risk of slashing, as the slashing risk is limited to validators as per their whitepaper.

For more information we suggest that users consult the EigenLayer whitepaper.