On September 17, the Eigen Foundation announced on the X platform that it has opened the second quarter airdrop application, and the application window will last until March 16, 2025. As a re-staking model, EigenLayer brings a new security sharing model to Ethereum, allowing different blockchain protocols to share Ethereum's security infrastructure without having to build a large network of verification nodes themselves. This greatly reduces the startup cost of new blockchain protocols and enhances the security of the entire network.
1. What is EigenLayer?
Created in 2021, EigenLayer is a pioneer in the concept of re-staking. It is a middleware platform that sits between the Ethereum mainnet and other applications. The platform deploys a mainnet smart contract to allow stakers to re-stake their ETH and ETH staking derivative tokens (LST) on EigenLayer. Thereby obtaining double benefits and governance rights. That is, users who stake ETH can choose to join the EigenLayer smart contract to re-stake their ETH and extend cryptoeconomic security to other applications on the network. At the same time, it will provide additional benefits to network participants. This process not only improves the efficiency of capital utilization, but also enhances the overall security of the network.
Since its launch in June 2023, EigenLayer has experienced rapid growth, with total staked value exceeding $10 billion, making it one of the largest blockchain protocols on the market, with total staked value even exceeding many major decentralized finance (DeFi) platforms such as Aave, Rocket Pool and Uniswap.
EigenLayer innovatively introduces the "Restaking" mechanism, which cleverly utilizes the ETH that has been staked on Ethereum to provide solid support for the secure operation of other blockchain protocols and applications. Through restaking, Ethereum validators can flexibly invest some or all of their staked ETH in supporting active verification services (AVS) such as bridge protocols, sequencers, and oracles. These services originally needed to build their own staking and verification systems to ensure network security, but now, with the help of EigenLayer's restaking function, they can enjoy the same level of security as Ethereum without having to raise huge capital independently.
The re-pledge mechanism not only greatly expands the use of pledged capital, enabling it to support multiple networks at the same time, but also significantly improves the capital efficiency and security of the entire ecosystem. It is particularly worth mentioning that this mechanism does not require the introduction of any additional native tokens. It only needs to use existing ETH or liquid pledge tokens (such as stETH, rETH, etc.). Verifiers can easily participate in the pledge verification process of AVS. , further lowering the threshold for participation and promoting the flow and sharing of capital.
2. EigenLayer operation mechanism
EigenLayer is an innovative blockchain ecosystem, the core of which is the re-staking mechanism. This mechanism allows Ethereum validators to re-stake the pledged ETH into the EigenLayer network. These ETH not only serve as security capital to support the safe operation of the EigenLayer network, but also bring double benefits to the stakers: on the one hand, the verification income from the native Ethereum network, and on the other hand, the additional income from the active verification service (AVS) provided by EigenLayer.
Active Verification Services (AVS) are a key component in the EigenLayer ecosystem. They use re-staked ETH to provide enhanced network services such as computing, storage, data processing, etc. These services can be likened to middleware or modules, providing services for upper-layer applications such as new blockchains, data availability layers (DA layers), virtual machines, oracle networks, cross-chain bridges, etc. Through AVS, EigenLayer provides strong data support for applications such as DeFi, games, wallets, etc.
In the EigenLayer ecosystem, Rollups, as an Ethereum Layer 2 solution, also benefit from the modular services provided by AVS. In particular, EigenLayer's Super Data Availability Service (EigenDA) enables Rollups to achieve super-scale data processing, greatly enhancing its ability to process large-scale data.
In order to ensure the security and stable operation of the EigenLayer network, operators play a key role. They perform various verification tasks, such as verifying transactions, executing smart contracts, maintaining network security, etc. These verification behaviors rely on the staked ETH as a security guarantee, which is also the basis for AVS to rely on. The work of operators ensures that AVS can run reliably and provide support for upper-layer applications and services.
In order to deal with the additional risks that may be brought by re-staking, EigenLayer has introduced a number of risk control mechanisms. Among them, the "Distributed Validator Cluster" (DVC) system is used to disperse risks to ensure that even if some AVS have problems, it will not affect the security of the entire network. In addition, EigenLayer has also implemented a penalty mechanism to ensure the honest behavior of validators. If the validator acts maliciously, he will face the risk of having his pledge revoked.
In addition to the above mechanisms, EigenLayer has also introduced an internal points system. Every hour, the system will grant an EigenLayer point for each ETH deposited by each re-staker. This points mechanism is used to measure the user's contribution to the network, and the number of points reflects the activity and duration of their staking. Although the specific purpose of the points is not yet clear, many users continue to re-stake and look forward to token airdrops based on points in the future. This shows that users have expectations and confidence in the future development of EigenLayer.
3. EigenLayer team and financing information
EigenLayer is a re-staking protocol developed by EigenLabs. EigenLabs is a laboratory focusing on blockchain innovation and research, headquartered in Seattle, Washington, USA. Sreeram Kannan, the founder of EigenLabs, is an associate professor in the Department of Electrical and Computer Engineering at the University of Washington and the director of the UW Blockchain Lab. The EigenLabs team consists of 30 experts and enthusiasts from different fields and backgrounds, mainly engineers, but also product managers, strategic directors, and legal advisors. ‘’
EigenLabs has successfully secured $50 million in Series A funding, led by Blockchain Capital. This capital injection is in line with EigenLabs’ strategic plan to gradually roll out the first iteration of the EigenLayer protocol over a year. This round also attracted participation from a number of well-known investors, including Electric Capital, Polychain Capital, Hack VC, Finality Capital Partners, and Coinbase Ventures. EigenLabs’ previous funding activity was in August last year, when they completed a seed round of financing, raising $14.5 million, led by Polychain Capital and Ethereal Ventures. In EigenLayer’s private round in February this year, a16z invested $100 million.
4. EigenLayer Token Economics
The total initial supply of EIGEN is 1,673,646,668.28466 tokens. This number is derived from the result of encoding the word "open innovation" onto a classic telephone keypad. EIGEN is distributed as follows:
Community: 45% and all future inflation
Equity ratio: 15%
Future community plan: inflation plus 15% after activation
R&D and Ecosystem Development: 15% is allocated by the Eigen Foundation for R&D, funding, operating expenses, and overall ecosystem growth
Investors: 29.5%
Early Contributors: 25.5%
5. Future Value of EigenLayer
With the increasing number of blockchain projects, how to effectively reduce startup costs and ensure network security has become an urgent problem to be solved. The re-staking model proposed by EigenLayer provides a possible solution to this challenge through a shared security model, and may lead the development direction of future blockchain network security architecture. EigenLayer has gradually evolved from the concept of sharing Ethereum network security and generating additional income to a large ecosystem to meet the needs of infrastructure builders and investors, sparking great interest and high expectations in the infrastructure industry and the crypto market.
The market size and potential it faces are both huge, but there are also problems and risks such as technical difficulty, ecological compatibility, and market competitiveness. EigenLayer needs to continuously carry out technological innovation, ecological construction, and market promotion to achieve its project vision and goals. Therefore, EigenLayer is still in the early stages of development and has a lot of room for development and potential.
