19 Pages @eigenlayer whitepaper summarized for you. Technical paper, explained simply for everyone.
EigenLayer: The open marketplace to rent pooled security provided by Ethereum validators.
19 pages to 19 threads. Brought to you by @PROBLYNTH.
Let's dive into it 🧵
EigenLayer: The open marketplace to rent pooled security provided by Ethereum validators.
19 pages to 19 threads. Brought to you by @PROBLYNTH.
Let's dive into it 🧵
1/ Introduction
EigenLayer is a set of smart contracts (SC) built on Ethereum that allows $ETH stakers to opt in, restaking their $ETH to validate new modules / protocols built on EigenLayer. As a result, these modules / protocols tap on Ethereum's strong security.
EigenLayer is a set of smart contracts (SC) built on Ethereum that allows $ETH stakers to opt in, restaking their $ETH to validate new modules / protocols built on EigenLayer. As a result, these modules / protocols tap on Ethereum's strong security.
2/ Main Value Propositions
A) Ethereum security is aggregated across all modules: Increased dApp security
B) Staging system: Battle-test new innovations for Ethereum
C) Permissionless innovation: Build new modules without having to build a trust network
A) Ethereum security is aggregated across all modules: Increased dApp security
B) Staging system: Battle-test new innovations for Ethereum
C) Permissionless innovation: Build new modules without having to build a trust network
3/ Blockchain Eras
1st Era | Bitcoin: Beginning of decentralized trust. App-specific, difficult to build new dApps
2nd Era | Ethereum: Modular blockchain concept. dApps are built permissionlessly on Ethereum. Decouple innovation & trust
3rd Era | Rollups
1st Era | Bitcoin: Beginning of decentralized trust. App-specific, difficult to build new dApps
2nd Era | Ethereum: Modular blockchain concept. dApps are built permissionlessly on Ethereum. Decouple innovation & trust
3rd Era | Rollups
4/ Problem: Fractured Trust Networks
A) Modules that cannot be deployed on Ethereum cannot tap on Ethereum's pooled trust layer
B) These modules need their own validator set, hence, known as actively validated services (AVS). This is either costly for the module or permissioned
A) Modules that cannot be deployed on Ethereum cannot tap on Ethereum's pooled trust layer
B) These modules need their own validator set, hence, known as actively validated services (AVS). This is either costly for the module or permissioned
5/ Downsides to AVS ecosystem (I)
A) Difficulty in bootstrapping new trust network for security
B) Capital cost: Opportunity cost and price risk for validators to stake with new token. Expensive for AVS ecosystems to compensate for this capital cost
A) Difficulty in bootstrapping new trust network for security
B) Capital cost: Opportunity cost and price risk for validators to stake with new token. Expensive for AVS ecosystems to compensate for this capital cost
6/ Downsides to AVS ecosystem (II)
C) Value leakage from Ethereum: Users pay fees to trust network + Transaction fees to Ethereum
D) Highly undesirable security dynamic: Cost of corruption = Minimum of middleware that dApp depends on (e.g. Oracle)
C) Value leakage from Ethereum: Users pay fees to trust network + Transaction fees to Ethereum
D) Highly undesirable security dynamic: Cost of corruption = Minimum of middleware that dApp depends on (e.g. Oracle)
7/ EigenLayer's Novel Ideas
A) Pooled security via restaking: Modules secured by restaked $ETH. Validators gain additional revenue. Open innovation expands beyond SCs
B) Free-market governance: Validators opt-in to restaking based on individual risk/reward preferences
A) Pooled security via restaking: Modules secured by restaked $ETH. Validators gain additional revenue. Open innovation expands beyond SCs
B) Free-market governance: Validators opt-in to restaking based on individual risk/reward preferences
8/ Addressing Fractured Trust Networks
A) New module bootstrap security from large Ethereum validator set
B) Marginal capital cost of restaking is minimal
C) Value accrual: Additional revenue streams for ETH stakers
D) Cost of corruption = Sum of entire stake
A) New module bootstrap security from large Ethereum validator set
B) Marginal capital cost of restaking is minimal
C) Value accrual: Additional revenue streams for ETH stakers
D) Cost of corruption = Sum of entire stake
9/ Different Ways to Restake
- Native restaking
- LSD restaking
- ETH LP restaking
- LSD LP restaking
Each path comes with different level of risks.
- Native restaking
- LSD restaking
- ETH LP restaking
- LSD LP restaking
Each path comes with different level of risks.
10/ Delegation of $ETH
Holders of $ETH or liquid staking derivatives (LSDs) may wish to participate in EigenLayer, but not as an operator.
They can delegate their $ETH or LSDs to other entities running EIgenLayer operator nodes.
Both operators and validators receive fees.
Holders of $ETH or liquid staking derivatives (LSDs) may wish to participate in EigenLayer, but not as an operator.
They can delegate their $ETH or LSDs to other entities running EIgenLayer operator nodes.
Both operators and validators receive fees.
11/ Slashing Mechanism
Cryptoeconomic security: Cost of Corruption (CoC) is > Potential Profit from Corruption (PfC).
This is different from trust security guarantees where the assumption is a % of validators are honest.
Restaker's $ETH will be slashed if they have misbehaved.
Cryptoeconomic security: Cost of Corruption (CoC) is > Potential Profit from Corruption (PfC).
This is different from trust security guarantees where the assumption is a % of validators are honest.
Restaker's $ETH will be slashed if they have misbehaved.
12/ Potential Risk
A) Many operators collude to attack a module: Operators may restake in a large number of modules, the PfC will become higher than CoC
B) Risk of honest nodes getting slashed
A) Many operators collude to attack a module: Operators may restake in a large number of modules, the PfC will become higher than CoC
B) Risk of honest nodes getting slashed
13/ Risk Mangement | A
Restrict PfC of a module. Monitor the number of modules validated by an operator. Smart contract can be specified to incentivize only operators that have yet to participate in too large number of modules.
Restrict PfC of a module. Monitor the number of modules validated by an operator. Smart contract can be specified to incentivize only operators that have yet to participate in too large number of modules.
14/ Risk Management | B
A) Security audits
B) Veto committee: Consist of reputable Ethereum and EigenLayer community members. Veto slashing conditions via multisig
Once the module ossifies, risk of unintended slashing will be minimal and can move away from veto committee.
A) Security audits
B) Veto committee: Consist of reputable Ethereum and EigenLayer community members. Veto slashing conditions via multisig
Once the module ossifies, risk of unintended slashing will be minimal and can move away from veto committee.
15/ Minimizing Centralization Risk
A) Hyperscale: Throughput requirements of each node can be small. Aggregation will help system achieve high throughput. Minimize profit from malicious actions
B) Lightweight: Home stakers can participate. Low cost and computing infrastructure
A) Hyperscale: Throughput requirements of each node can be small. Aggregation will help system achieve high throughput. Minimize profit from malicious actions
B) Lightweight: Home stakers can participate. Low cost and computing infrastructure
16/ New Applications
1. Hyperscale Data Availability Layer
2. Decentralized Sequencers
3. Light-Node Bridges
4. Fast Mode Bridges for Rollups
5. Oracles
6. Opt-in Event Driven Activation
7. Opt-in MEV Management
8. Settlement Chains with Ultra-Low Latency
9. Single-Slot Finality
1. Hyperscale Data Availability Layer
2. Decentralized Sequencers
3. Light-Node Bridges
4. Fast Mode Bridges for Rollups
5. Oracles
6. Opt-in Event Driven Activation
7. Opt-in MEV Management
8. Settlement Chains with Ultra-Low Latency
9. Single-Slot Finality
17/ Ethereum's Staging Network
Current landscape: Trade-off between democratic governance & rate of innovation.
With EigenLayer: Allows for agile innovation while Ethereum upgrades in cautious and stable manner. Ideas can be permissionlessly tested before Ethereum integration.
Current landscape: Trade-off between democratic governance & rate of innovation.
With EigenLayer: Allows for agile innovation while Ethereum upgrades in cautious and stable manner. Ideas can be permissionlessly tested before Ethereum integration.
18/ Decentralization Incentivization
Decentralization of validators is critical.
Modules can specify in the EigenLayer smart contract for decentralized validators to participate, e.g. home stakers.
This is akin to programmable decentralization.
Decentralization of validators is critical.
Modules can specify in the EigenLayer smart contract for decentralized validators to participate, e.g. home stakers.
This is akin to programmable decentralization.
19/ Business Model
Collection of fees will go to $ETH stakers, EigenLayer protocol and native protocol token stakers.
Collection of fees will go to $ETH stakers, EigenLayer protocol and native protocol token stakers.
This comes to the end of the summary and I hope you managed to have a good overview of what the whitepaper has described.
If this thread was helpful, do give this a like, retweet and follow me at @jinglingcookies and @PROBLYNTH.
If this thread was helpful, do give this a like, retweet and follow me at @jinglingcookies and @PROBLYNTH.
More information can be found at: eigenlayer.xyz/whitepaper.pdf and you can participate in the community forum to discuss more: forum.eigenlayer.xyz/t/announcing-t…
Congratulations to the team on launch of whitepaper:
@sreeramkannan
@EigenlayrIntern
@vkr1shnan
@chrisdury
@cjliu49
@kachapah
@samlafer
@soubhik_deb
@0xJoxes
@sreeramkannan
@EigenlayrIntern
@vkr1shnan
@chrisdury
@cjliu49
@kachapah
@samlafer
@soubhik_deb
@0xJoxes
Tagging some gigachads
@FishMarketAcad
@defi_mochi
@rektdiomedes
@defiprincess_
@TheDeFinvestor
@LouisCooper_
@Chinchillah_
@DefiIgnas
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@Slappjakke
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@defi_mochi
@rektdiomedes
@defiprincess_
@TheDeFinvestor
@LouisCooper_
@Chinchillah_
@DefiIgnas
@DeFiMinty
@midoji7
@BackTheBunny
@0xTindorr
@crypto_linn
@CryptoDragonite
@0xCrypto_doctor
@eli5_defi
@karl_0x
@WinterSoldierxz
@Slappjakke
@Blockworks_
@0xResearch
@blockworksres
@BanklessHQ
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@JasonYanowitz
@santiagoroel
@jake_pahor
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@thedefiedge
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@thedailydegenhq
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@ConsenSys
@blocmatesdotcom
@0xResearch
@blockworksres
@BanklessHQ
@banklessDAO
@JasonYanowitz
@santiagoroel
@jake_pahor
@RiddlerDeFi
@CryptoGirlNova
@FungiAlpha
@thedefiedge
@DegenSensei
@DegenCamp
@CJCJCJCJ_
@ViktorDefi
@thedailydegenhq
@crypto_condom
@ReveloIntel
@ConsenSys
@blocmatesdotcom
@adamscochran
@Route2FI
@CryptoHayes
@takegreenpill
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@CryptoHayes
@takegreenpill
@0xthade
@CryptoKaduna
@CroissantEth
@andrewsaunders
@Defi_Maestro
@byChadManDan
@mrjasonchoi
@Tangent_xyz
@TheBlockcrunch
@TheSpartanGroup
@ahboyash
@j0hnwang
@DegenSpartan
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