Author: Crypto Ape Club Source: medium Translation: LianGuai, Shanooba
Introduction
EigenLayer has become a groundbreaking concept in the Ethereum ecosystem, introducing a new approach to decentralized trust through a process called re-staking. Unlike Layer 2 solutions, EigenLayer offers a unique value proposition that allows users to stake their Ethereum (ETH) multiple times and then verify other chains and networks. This article delves into the complexity of EigenLayer, elucidating its functionality, advantages, and potential risks.
Understanding EigenLayer
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Re-staking and liquidity staking: Re-staking is the core principle of EigenLayer, involving staking ETH in Ethereum and then re-staking it on different applications and networks using the EigenLayer contract. This process allows users to earn additional staking rewards by verifying multiple chains. However, it also comes with additional risks of slashing.
Smart contracts and staking interaction: EigenLayer employs a series of smart contracts to facilitate the interaction between staking and re-staking. These contracts grant partial control to users while providing the slashing capability required to maintain the security of the EigenLayer ecosystem.
Rewards and risks of re-staking: While re-staking has the potential to increase rewards, it also comes with additional risks. Before participating in re-staking activities, users must carefully consider the possibility of slashing and evaluate the risk-reward trade-off.
EigenLayer as a decentralized trust market
Concept of decentralized trust: EigenLayer aims to create a “decentralized trust market” by offering a new form of trust that goes beyond traditional block space. EigenLayer not only provides storage space but also focuses on supporting the underlying security of decentralized systems.
Block space as a commodity: In blockchain networks such as Ethereum, users pay gas fees to be included in blocks, effectively purchasing block space. However, EigenLayer proposes that the decentralized trust offered by Ethereum itself is a valuable commodity that can meet the needs of new applications and protocols seeking robust security.
Utilizing Ethereum’s network effects: By aligning its fate with Ethereum’s proven consensus, new applications or protocols can leverage Ethereum’s network effects and decentralization. This enables developers to launch their projects and tap into the new supply of decentralized trust while benefiting from the established ecosystem of Ethereum.
Outsourcing trust: A comparison with cloud services: EigenLayer draws a parallel with cloud services where traditional applications outsource storage to trusted providers. Similarly, EigenLayer offers a way for blockchain and organizations to leverage Ethereum’s decentralized trust supply without relying on Ethereum solely as a block space. This flexibility opens up new possibilities for securing various applications and protocols.
Flexibility and Concerns
Flexible Application Security: EigenLayer’s re-staking mechanism introduces the concept of flexible application security outside of Ethereum. While this concept offers opportunities for increased security and staking rewards, it also raises concerns about potential biases and conflicts when interacting with external projects.
Potential Biases and Community Impact: Ethereum co-founder Vitalik Buterin has warned that projects outside of Ethereum may put pressure on the Ethereum community, leading to biased decision-making. Re-staking activities must be carefully evaluated to avoid conflicts of interest that could jeopardize the integrity and unity of the Ethereum community.
Low-Risk and High-Risk Re-staking Scenarios: Vitalik Buterin provides examples of low-risk and high-risk re-staking scenarios to illustrate potential impacts. While low-risk re-staking (such as Ethereum stakers participating in the Dogecoin validator set) may have minimal impact, high-risk re-staking (such as obtaining price oracles for future digital currencies issued by the Central Bank of Brazil) could cause conflicts and divide the Ethereum community.
Vitalik Buterin’s Perspective on Expanding Consensus Scope: Vitalik Buterin suggests caution when considering expanding the consensus scope beyond the core Ethereum protocol rules. While re-staking brings new opportunities, it also introduces complexity that needs to be carefully managed to ensure the stability and unity of the Ethereum ecosystem.
Rethinking the Landscape
Re-staking as Foundational Technology: Re-staking represents a foundational technology in the Ethereum ecosystem, comparable to the emergence of Miner Extractable Value (MEV) during the 2020 DeFi summer. It
Guiding New Networks through Re-staking: Developers can use re-staking as a means to bootstrap their networks in the early stages. By leveraging the security provided by Ethereum, new networks can tap into the existing Ethereum ecosystem and gradually transition to self-sufficiency in terms of security.
Breaking Free from Ethereum’s Security: The ultimate goal of re-staking is to mature the network and reduce dependence on Ethereum’s security. As networks evolve and mature, they can develop their own security mechanisms and reduce reliance on Ethereum.
Potential Risks and the Need for Caution: While re-staking opens up new possibilities, caution is still necessary. Degen stakers and participation in suspicious protocols pose risks to the overall stability of the ecosystem. It is crucial for participants to carefully assess projects and engage in re-staking activities responsibly.
Conclusion
EigenLayer represents a significant development in the Ethereum ecosystem, offering a novel approach to decentralized trust through re-staking. While it provides ample opportunities for users and developers, caution should be exercised to avoid excessive expansion of blockchain consensus. By understanding the dynamics and impact of EigenLayer, participants can navigate this ever-changing landscape and contribute to the continued development of decentralized finance (DeFi) and trust mechanisms.
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