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EigenLayer: A New Frontier for ETH Staking and On-Chain Security?
Jake Kennis and 1 other
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Key Takeaways
15 min read
  • EigenLayer lets ETH stakers earn extra yield by 'restaking' their ETH, allowing apps integrated with EigenLayer to benefit from Ethereum's security.
  • EigenLayer enables any application with an on-chain slashing mechanism to leverage security from staked ETH. Applications include blockchains, oracles, bridges, data availability layers, and more.
  • EigenLayer reduces the risk of slashing by having a governance model that involves a vetting committee with a permissioned reputation-based veto authority. This committee is responsible for overseeing upgrades to EigenLayer contracts, reviewing and vetoing slashing events, and admitting new projects to the platform.
  • EigenLayer will need robust apps offering competitive yields for restakers. It must demonstrate its value-adding security and gain market confidence to succeed.

Overview

EigenLayer introduces restaking, which is a mechanism that enables users to rehypothecate their staked ETH to get additional yield. By doing so, users can extend the underlying security of their staked ETH to applications integrated with EigenLayer. In short, restaking allows applications to access shared security from Ethereum.

There are a number of applications that can benefit from EigenLayer. Some of which include data availability layers, oracle networks, bridges, new consensus protocols, and of course blockchains. Other implementations will also be discovered over time so the design space is quite large.

Target Addressable Market

As of April 2023, the total value staked in Ethereum surpassed $34 billion, with 18m...