Blockchain messaging protocol developer LayerZero Labs partnered with Eigen Labs, a research organization, to co-create a framework for CryptoEconomic Decentralized Verifier Networks (DVNs). This collaboration aims to bolster security through cryptoeconomic guarantees.

The CryptoEconomic DVN Framework introduces a level of cryptoeconomic security to omnichain messaging, ensuring that verifiers are both technically competent and financially motivated to act with integrity. This framework enables projects to establish a DVN on EigenLayer, utilizing any tokens, operators, and slashing rules.

This framework is designed for any third-party DVN to adopt, enhancing security by integrating CryptoEconomic principles through the use of various tokens. It incorporates four fundamental mechanisms to secure LayerZero’s omnichain messaging: stake, verify, veto, and slash.

In this system, stakers lock assets, such as ZRO, EIGEN, or ETH, into a DVN’s AVS. These assets act as a financial safeguard, ensuring that the DVN operates in the best interest of the applications it supports. Additionally, users or applications can initiate a permissionless round-trip message that travels from Ethereum to the Source Chain, then to the Destination Chain, and back to Ethereum. This process verifies that the packet hash sent and confirmed by the DVN matches the packet hash recorded on-chain. If the hashes align, the veto process is bypassed.

However, if a mismatch occurs during message verification, a separate veto contract is activated on Ethereum, allowing token holders to vote on whether the offending DVN’s stake should be slashed. If the veto concludes that no malicious activity was committed by the DVN, the staked assets remain untouched. Conversely, if the veto confirms a packet mismatch, the assets staked in the DVN’s AVS will be slashed.

Introducing CryptoEconomic DVNs

LayerZero Labs and @Eigen_Labs have co-developed the CryptoEconomic DVN Framework, enabling DVNs to enhance security with cryptoeconomic guarantees. This framework allows projects to easily bootstrap a DVN on EigenLayer using ANY tokens and… pic.twitter.com/yGzDuelZJc

— LayerZero (@LayerZero_Core) October 2, 2024

LayerZero DVNs And EigenLayer’s CryptoEconomic Security

The LayerZero Labs DVN is the first to implement this framework, a collaborative effort between LayerZero Labs and Eigen Labs. Users have the option to stake ZRO, EIGEN, and ETH into the LayerZero Labs DVN AVS staking contract. 

In the event of a detected packet discrepancy, ZRO holders have the authority to vote on whether the staked assets should face penalties through slashing. This arrangement enhances the security for applications that rely on this DVN to authenticate LayerZero messages.

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