Author: Eda, Web3 developer Source: mirror Translation: Shan Ouba, Golden Finance
EigenLayer has given me a lot of writing material. It's been a few weeks since they released their token whitepaper, EIGEN: The Universal Intersubjective Work Token, which introduced many new concepts. Yes, I have read the 43-page whitepaper, and I hope this will help you understand EigenLayer more deeply.
In this post, I will answer the following questions:
Background information: What is EigenLayer and why is it innovative?
What is the EIGEN token and its core features, what is a subjectively attributable glitch, how does the EIGEN token work?
What are the potential risks and unresolved issues of EigenLayer?
Before we start, please note that this article builds on concepts previously introduced in EigenLayer. If this is your first time learning about EigenLayer, it is recommended that you start here. You will also find some terminology explanations at the end of the article.
Background: Staking, Infrastructure Layer Innovation, and EigenLayer
Blockchain provides a new way to coordinate with different participants through an open and verifiable system that is secured through cryptographic methods.
Understanding Staking in Ethereum
Let’s look at Ethereum’s staking mechanism to understand how the blockchain works.
First, validators play a key role in maintaining the Ethereum network. They are responsible for verifying transactions, proposing new blocks, and ensuring the security and accuracy of the blockchain. To become a validator, users need to lock up their ETH, a process called staking. If validators behave dishonestly, they may lose their staked ETH through a penalty mechanism called "slashing."
The staking and slashing system ensures that validators have a financial incentive to act honestly. This encourages everyone to play fairly, keeping the network secure for all users.
The need for enhanced blockchain services
Ethereum has its limitations in innovating beyond the application layer. While Ethereum provides programmability at the application layer, it does not extend this flexibility to other underlying infrastructure components. Creating new blockchain services such as oracles, cross-chain bridges, and data availability layers remains challenging.
These services require significant resources and capital.
Resource issues: Building a new network from scratch requires attracting a sufficient number of validators/operators to ensure the security and functionality of the network. This can be slow and costly.
Capital issues: New services often create their own tokens to launch the network, which requires significant investment, marketing, and time to build value and utility. Additionally, navigating the regulatory landscape for new tokens can be complex and expensive.
High-level overview: Introducing EigenLayer
This is where EigenLayer comes in.
EigenLayer is based on Ethereum's model and introduces a new way to use staked ETH to run additional services. It does this through a mechanism called restaking. Restaking allows the same ETH to be used not only to support Ethereum, but also for other purposes.
Through this mechanism, stakers can run new services that provide additional yield, and developers can create innovative services without having to launch a separate network.
Let’s review the different roles in the EigenLayer ecosystem: stakers, node operators, and AVS (Active Validation Service).
Stakers: These are the people who lock up their ETH to support new networks and services. They can participate in two ways: native re-staking and liquidity re-staking.
Node operators (also known as native re-stakers): These are the people who manage and run the software for services built on EigenLayer. Misconduct by operators can result in their staked ETH being slashed (also known as “slashing”), thus keeping participants accountable.
Active Verification Services (AVS): Networks and services run by operators. For example: data availability layer, decentralized sequencer, oracle, etc.
Simply put, EigenLayer expands Ethereum's existing security infrastructure (validator set + staked capital), allowing developers to deploy new services that can leverage this infrastructure.
By using staked ETH, EigenLayer provides immediate economic security for new services. This lowers the barrier to entry for new services.
Stakers can earn more by re-staking their assets across multiple services.
Check out this cool EigenLayer metrics dashboard.
Deep Dive: Failures in Digital Services, Trans-Subjective EIGEN Tokens, and Forks
introduction
First of all, I didn’t know what “trans-subjective” meant before.
The main question that EigenLayer attempts to answer is: Can we have a system that extends cryptoeconomic security across subjective failures in digital tasks?
We will explain this step by step. First, to understand this, we need to distinguish failures in digital services.
Failures in digital services
Let’s categorize failures in digital tasks based on how they are identified. There are three main categories:
Objectively attributable failures:
These failures can be clearly identified using mathematical and cryptographic methods, without the need for outside opinion. For example, double signing a block can be proven with cryptographic proofs on the chain.
Cross-subjectively attributable failures:
These failures require broad consensus among off-chain observers to determine correctness — they involve more complex scenarios that require human judgment. For example, oracle price discrepancies.
Unattributable failures:
These failures cannot be externally verified or attributed. For example, in a secret sharing system, if nodes come together to reveal a secret, it is difficult to distinguish whether it is the system that is malicious or the secret storer that is malicious.
key point:
Objectively attributable failures: easy to prove and resolve on-chain.
Cross-subjectively attributable faults: The need for broad consensus among observers.
Unattributable failures: Difficult to resolve due to lack of external verifiability.
Focusing on trans-subjective failures in digital tasks
EigenLayer introduces the EIGEN token to resolve cross-subjectively attributable failures.
Why focus on cross-subjective attributable faults? Because objectively attributable faults are limited to problems that can be deterministically proven with mathematics and cryptography. However, advanced blockchain applications often involve cross-subjective assessments. For example, oracles that provide external data such as market prices.
By addressing cross-subjectively attributable faults, EigenLayer aims to extend the security and reliability of Ethereum to a wider range of services. This ultimately expands the types of tasks and applications that can be managed on the blockchain.
Re-staking ETH: Any task with objectively attributable faults can be resolved on-chain by integrating its dispute resolution mechanism on the Ethereum chain. EigenLayer uses this feature to re-stake ETH and expands the scope of staking ETH to protect active verification services (AVS) with objectively attributable faults.
Staking with EIGEN: The new EIGEN token introduces a complementary mechanism specifically to address “cross-subjective” failures — failures that cannot be resolved by re-staking ETH alone. - EigenLayer Blog
This makes the EIGEN token a universal token - it can be used for a variety of digital tasks and is not limited to a single purpose.
Summary: In the context of the EIGEN token, “inter-subjective” is used to describe failures (or verification) that require broad consensus among off-chain human observers, rather than failures that can be objectively verified through code.
Core Concepts and Features
EigenLayer solves cross-subjectivity failures through the following three core concepts:
Setup and Execution Phase (i.e., the two phases of the inter-subjective protocol): A consensus on coordination rules is reached during the initial setup phase. (These rules have certain constraints that make them self-verifying, in other words, they do not require human decision making for every failure.)
Penalty mechanism: If participants do not follow the rules, they will lose their staked tokens.
Token Fork: A mechanism for handling disputes in the system without changing the Ethereum blockchain. (This is not self-explanatory, but will be explained in more detail below.)
These design choices give EIGEN tokens the following four characteristics:
Versatility: The token is not limited to a single purpose but can support a variety of services. Designed during its setup to be able to fork and penalize in response to cross-subjective failures.
Isolation: The ability of a token to remain usable in applications that are unaware of its forking mechanism (explained in more detail below).
Metering: There is a cost to resolving failures. Metering in this context means tracking the costs involved in reaching consensus (e.g. rejecting malicious forks, switching from one coin to another). It ensures that the resources (time + computing power) used to reach social consensus are properly accounted for.
Compensation: When failures that affect users occur, the system can punish and redistribute stake to AVS users, ensuring fairness and accountability.
Ethereum consensus overload and token fork
A very important risk of EigenLayer is that if it is not designed properly, it may cause social consensus overload on Ethereum.
But what exactly does Ethereum social consensus overload mean?
Using the same capital to secure both Ethereum and a potentially malicious AVS could put all funds at risk. If a large number of participants were affected, it could result in significant losses and could require Ethereum’s social consensus to intervene.
EigenLayer solves this problem through a token fork mechanism, isolating the resolution of cross-subjective faults from the Ethereum core network. Through this mechanism, only staking activities and their related disputes will affect EigenLayer, while Ethereum remains focused on its core goal of consensus tasks.
Applications using EIGEN for non-staking purposes are also isolated from the complexity of token forks, as there is a separate token for such activities. These applications can be used without the need to understand any underlying forks.
Dual Token System: EIGEN and bEIGEN
In the EigenLayer network, tokens are used for various purposes: staking and non-staking use cases such as DeFi.
In order to clearly distinguish usage and manage dispute resolution, EigenLayer adopts a dual token mechanism.
bEIGEN：
This is the main staking token. Users lock their ETH into bEIGEN, which is then used to secure various services within EigenLayer. bEIGEN tokens directly participate in staking and can be punished.
When a failure is detected, the bEIGEN token can be forked to create a new version (e.g., from bEIGEN1 to bEIGEN2).
OWN:
This token is used for non-staking activities such as DeFi.
The main reason for adopting the dual-token model is to isolate the impact of the bEIGEN token fork from non-staking applications, that is, the isolation feature.
An important follow-up question here is: which bEIGEN will be supported? There are three designs (v1, v2, v3) that focus on governance and upgradability when determining which bEIGEN will be supported, aiming to enhance security with each upgrade. In v1, governance decided which bEIGEN to support. In v2, the governance feature was removed, making the contract immutable. In v3, additional protections were added to prevent potential corruption of the security committee.
Risks and unanswered questions
Implementation Challenges: EigenLayer is still in its early stages and much of the current work is experimental and theoretical. There is still a lot of work to be done to implement the system. In particular, managing the forking mechanism with many AVSs may become increasingly complex.
Impact on family pledgers: The introduction of AVS may affect the decision to become a family pledger.
Due to the high off-chain requirements, family stakers may not be able to run all AVS, they may get more advantages when delegating, and it is worth noting that family stakers may also introduce additional benefits.
Increased operator workload: Operators will face a greater workload and need to make more decisions. Keeping Ethereum clients updated becomes more critical, increasing the operational burden.
Operator centralization: If operators have high off-chain requirements, this can lead to concentration of resources and expertise among a limited set of operators.
Fairness among operators: Operators can choose to join a variety of services, each offering different potential rewards. This setup could significantly change Ethereum’s current “fair” reward system, where each node earns a similar annual percentage return for staking ETH. Different reward structures may incentivize operators to focus on maximizing returns, making it difficult to maintain a balanced and fair environment for all network validators.
Smart contract risks: hacking or implementation design issues in AVS. Given these uncertainties and challenges, it is important to keep a close eye on development progress and track it.
Summarize
EigenLayer is an important development for Ethereum, allowing staked ETH to be used for new services and applications. The dual token model separates staking activities from other uses such as DeFi, enhancing robustness against malicious behavior. This separation ensures that staking can continue while allowing EIGEN tokens to be used for a variety of non-staking applications. By handling complex disputes through an internal fork framework, EigenLayer helps protect the Ethereum network from issues that may arise in the AVS ecosystem.
Glossary
Active Validation Service (AVS): A service on EigenLayer that requires active validation by re-staking participants.
Cryptoeconomic security: Combining cryptographic techniques and economic incentives to ensure the security of digital tasks. This involves staking, slashing, and consensus mechanisms to maintain the integrity and credibility of the system.
Forked coin: A coin that can split into multiple versions in the event of disagreement or dispute. The forking process creates two versions of the coin, each representing a different interpretation or outcome. Holders can choose which version to support.
Cross-subjective faults: In blockchain networks, faults can be verified objectively (e.g., double signing, invalid state transitions) or require human consensus to verify (cross-subjective faults). Cross-subjective faults cannot be objectively verified on-chain and require broad consensus from multiple parties to determine correctness.
Liquidity Re-staking: Stakers delegate their ETH to the operator. They only provide financial support, and the technical requirements are handled by the operator.
Native re-staking: Stakers independently contribute tokens and operate a validator node.
Operator: A participant who runs the AVS verification service in EigenLayer.
Slashing: A mechanism where stakers lose their tokens if they fail to deliver on their promises or act maliciously. Slashing mechanisms ensure accountability and enhance security by penalizing non-compliance.
Stakers: Participants who stake their ETH to support the network and earn rewards. They can choose to be independent stakers or delegate their tokens to operators.
Staking and re-staking: Traditional proof-of-stake systems such as Ethereum require participants to stake tokens (ETH) to secure the network. EigenLayer builds on this by allowing ETH to be re-staked to perform additional tasks. This means that the same staked ETH can be used to secure a variety of services beyond the Ethereum network.
Work Tokens: A token that needs to be staked (locked) to perform some task or work within the blockchain network. It is both a requirement to participate and a form of collateral that can be slashed if the work is not done correctly. Here is a great article explaining work tokens.
