How does EigenLayer work?
EigenLayer is a protocol that allows for the reuse of staking resources on the Ethereum network. It is implemented through the concept of restacking: users can offer their already staked ETH (e.g. via Ethereum Proof-of-Stake) as collateral for other applications or blockchains. This does not require leaving the Ethereum ecosystem.
EigenLayer supports new projects and blockchains without the need to build their own network by using Ethereum’s existing security mechanisms. In return, restacking users earn additional rewards from these new protocols.
How EigenLayer works:
1. A user stakes their ETH via Ethereum PoS.
2. Those ETH are “restacked” via EigenLayer.
3. Restacked funds are used as collateral for the operation of new protocols (e.g. for oracles or scaling solutions).
4. The user receives rewards for both the basic staking and the restacking.
However, if a user supports an insecure protocol, their funds can be confiscated (slashing).
What are modules in EigenLayer?
Modules in EigenLayer are individual components or protocols that use EigenLayer resources for security. These include decentralized oracles, sharding solutions, bridges, or scaling solutions. EigenLayer acts as a base layer that provides the infrastructure for these modules to operate.