Author: Jack Inabinet, Bankless; Translated by: Deng Tong, Golden Finance
Restaking was all the rage in early 2024 as airdrop hunters sought to profit from simple EigenLayer deposit tasks, however, soon after EigenLayer’s initial drop in April, the meta stalled and TVL has failed to grow since then — down 8% in ETH terms.
Since re-staking services have not yet been launched, deposits continue to be incentivized by promised future airdrops. But this model will change the moment the Active Verification Services (AVS) that leverage re-staking security go live, and their activation will bring actual returns to depositors and demonstrate where the demand for re-staking is.
Today, we’ll explore the top 5 AVS by EigenLayer re-staking capital to see how much revenue they are expected to generate.
EigenDA
ETH re-staked: 3.64 million ($9.8 billion)
EIGEN re-staked: 71.4 million (estimated $247 million)
Over $10 billion in crypto collateral has been re-pledged to secure EigenDA (assuming EIGEN’s pre-launch price of $3.46 at the time of writing), making it the largest AVS by TVL.
EigenDA is the flagship EigenLayer application being developed as a proof-of-concept for re-staking; it is a data availability network that will allow L2 to use re-staking operators instead of Ethereum to store historical transaction data, saving Rollup costs.
Data availability competitor Celestia shocked crypto investors in February this year with a fully diluted valuation of $20 billion, however, with the protocol having only earned ~3.5k TIA ($20,000 per analysis) in data availability payments since mainnet launch in October 2023, it is difficult to imagine how EigenDA can generate significant returns on its $10 billion+ of re-staked capital.
eOracle
ETH re-staked: 2.91 million ($7.8 billion)
EIGEN re-staking: N/A
Oracles are an important part of blockchain infrastructure, allowing developers to integrate real-world information into smart contracts, thereby enhancing on-chain programmability. One of the most common oracle applications is in lending markets, where price information from centralized exchanges is extracted and used to inform automatic on-chain liquidations.
eOracle leverages re-staking to improve the capital efficiency of oracle operations and create a competitive oracle market where anyone can independently provide or consume data.
Competing oracle network Chainlink derives 98% of its revenue from price feeds, and while that has declined significantly since June, the protocol earned $36.7 million in revenue from price feeds in the first six months of 2024, equating to an annualized return of just under 1% for eOracle re-stakers, if it were to steal all of Chainlink’s market share, which is unlikely to happen.
Witness Chain
ETH re-staked: 2.6 million ($7 billion)
EIGEN re-staking: N/A
Witness Chain positions itself as “DePIN-coordinated EigenLayer AVS.” The system enables off-chain DePIN networks to convert their physical properties (i.e. location and computing power) into verifiable on-chain proofs.
By maintaining a physical information repository, Witness Chain hopes to enable DePIN projects to connect to each other, creating an “end-to-end supply chain of decentralized infrastructure.”
While the revenue potential for a network that promises to revolutionize decentralized infrastructure sharing is certainly huge, adoption in the broader decentralized infrastructure space has been limited compared to centralized alternatives. As DePIN is still largely a proof-of-concept, the potential revenue that Witness Chain can generate remains a mystery.
Hyperlane AVS
ETH re-staked: 2.32M ($6.3B)
EIGEN re-staking: N/A
Hyperlane is a permissionless interoperability layer or bridge that enables smart contracts to transfer arbitrary information between different blockchains. The protocol is currently deployed on more than 35 chains, including EVM, Cosmos, and Sealevel.
Developers can customize Hyperlane’s security to fit their specific needs by selecting validator sets, setting rate limits, and adjusting the stake protecting their applications using programmable Interchain Security Modules (ISMs).
Year-to-date, Across Network has earned $5.43 million in fees from its bridge service; given the amount of ETH currently being re-staked, this equates to an annualized yield of 0.1% for Hyperlane AVS re-stakers.
Lagrange ZK Prover Network
ETH re-staked: 2.27M ($6.1B)
EIGEN re-staking: N/A
The Lagrange ZK Prover Network generates ZK proofs from arbitrary blockchain datasets and stores the packages using a decentralized network of "gateway" nodes that transmit the requested information to the Prover to convert it into readable data. The network can process smart contract information on any EVM-based chain and answer queries about contracts on another chain without the need for a third-party bridging solution.
When combined with the Lagrange Governance Council, an independent EigenLayer AVS secured by 2.02M re-staked ETH ($5.5B), Lagrange can provide fast confirmations for optimistic rollups, enabling them to bypass the standard 7-day fraud challenge period during normal operations to eliminate cross-chain bridging delays.
If Lagrange becomes the de facto interchain communication standard in the future multi-chain, its massive utilization could lead to astronomical profits for re-stakers. However, the protocol must first gain adoption and will be forced to compete with existing bridge solutions and upcoming alternatives such as Polygon AggLayer to achieve this goal.
Sustainability of re-staking
Restaking is not just about the earnings potential of any one platform. In order for EigenLayer to succeed, its underlying AVS needs to be a huge success as well.
While individually, the expected income from AVS may not seem sufficient to cover existing deposits, optional pooled re-staking enables operators to acquire multiple AVS simultaneously with the same capital, a cornerstone feature of EigenLayer that will create unprecedented capital efficiency in cryptoeconomic security.
In addition to this actual yield, re-staked depositors will receive native tokens as compensation, although the value of these inflationary incentives and the broader EigenLayer ecosystem will once again be entirely dependent on the long-term adoption of the underlying AVS.
We are still in the early days of re-staking, and while competing services such as Symbiotic are attracting deposits in a battle for re-staking supremacy, many questions remain about the long-term sustainability of the industry and its current juggernauts.