What is EigenLayer?
EigenLayer is a protocol built on the Ethereum network that leverages a new concept, “restaking,” to extend the security and utility of the network to other projects in the industry.
Introduction
Staking is the process of locking up your crypto assets to earn rewards and, at the same time, boost the security of the network. Eigenlayer, a protocol built on Ethereum, has added a new way for users to make use of their already-staked assets. This new concept is called “Restaking,” and in this article, we are going to look at just what EigenLayer is all about, how it works, and its peculiar features.
What is EigenLayer?
Introduction
Staking is the process of locking up your crypto assets to earn rewards and, at the same time, boost the security of the network. Eigenlayer, a protocol built on Ethereum, has added a new way for users to make use of their already-staked assets. This new concept is called “Restaking,” and in this article, we are going to look at just what EigenLayer is all about, how it works, and its peculiar features.
What is EigenLayer?
EigenLayer is an Ethereum-based protocol with a new concept called Restaking. Restaking allows stakers to use their already staked ETH to secure other decentralized services and projects. This means Layer-2 projects that make use of EigenLayer do not spend money on gathering new validators; instead, they can make use of the security EIgenLayer provides.
With EigenLayer, security infrastructures are enhanced across the ethereum network without requiring stakers to invest more funds. What this means is that dapps can now apply their already staked tokens when using the EigenLayer, rather than having to stake fresh assets. This method eliminates fragmentation and leads to a more unified and secure ecosystem. With this, EgenLayer has successfully come up with a way to secure and unite the ecosystem.
EigenLayer’s architecture consists of key components that ensure the smooth flow of its services. They include:
- Restakers: They provide shared security through Ethereum and function as the pillar of EigenLayer.
- AVS: Actively Validated Services make use of the restaked ETH to power their functionality.
- Rollups: These rely on the services rendered by the AVS, such as hyperscale data availability powered by the EigenLayer ecosystem.
- Operators: These provide validation services, which are the foundation of the AVS.
EigenLayer’s new mechanism, “Restaking,” solves the issues challenging the security of the cryptocurrency industry. Restaking serves as a set of smart contracts in which users who stake their $ETH can reuse their locked $ETH to provide crypto-economic security to other dApps built on the Ethereum network.
Users can unlock staking via the EigenLayer website when they stake their ETH or Liquid staking tokens used to represent the staked amount of tokens on a Proof-of-stake (PoS) blockchain. This is done through the use of smart contracts, a mechanism that allows staked assets to be reused, raising the security for other dApps and services within the Ethereum ecosystem. By placing the existing stake, you contribute to enhanced network security and gain additional rewards.
There are two major pillars involved in EigenLayer: pooled security through staking and an open marketplace.
Pooled Security Through Restaking
EigenLayer’s pooled security allows users and validators to restake their ETH, thus gathering security for the protocol and services. Validators will have to choose which services (AVS) they wish to secure, which earns them additional rewards in return. However, if they fail to carry out their duties properly, then the AVS can slash their staked ETH. This keeps both parties honest and diligent in their task. This part of operations is taken care of by the second pillar, the open marketplace, where validators and AVS can select each other without restrictions.
