In-Depth Look: How EigenLayer Works
Missed our last post?
In that we delved into the Ethereum Staking Market, highlighting the dynamics of Liquid Staking Tokens (LSTs) and Liquid Restaking Tokens (LRTs).
Want to catch up, we have attach the link at the end of this post.
For now, let's explore the next big thing in crypto staking: Eigenlayer
Basically Eigenlayer is a protocol built on Ethereum that aims to enhance the security and utility of the Ethereum network by allowing users to "restake" their staked ETH.
Letâs dive into the process
ETH Holders:
- Stake your ETH in liquid staking protocols like Lido, Binance, Rocket Pool, etc.
- Or, directly restake your native ETH in EigenLayer.
Whatâs the role of Liquid Staking Protocols?
- Stake ETH to receive liquid staking tokens (LSTs) such as stETH , rETH .
- LSTs provide liquidity and additional yield opportunities in various DeFi applications.
How Restaking is done on EigenLayer?
- Restake your liquid staking tokens on EigenLayer.
- EigenLayer validators can choose which additional value services (AVS) to secure, such as oracles, data availability layers, and bridges.
How Do Additional Value Services (AVS) Contribute?
- AVS provide yield for EigenLayer validators and restakers.
- By restaking, validators help secure these services, enhancing the security and efficiency of the broader Ethereum ecosystem.
The role of Oracles, Data Availability Layers, Bridges:
Oracles: Provide real-time data feeds crucial for smart contracts to interact with real-world information.
Data Availability Layers: Ensure that data for transactions is available and verifiable, essential for the scalability of blockchain networks.
Bridges: Facilitate the transfer of assets between different blockchain networks, improving interoperability.
Overall EigenLayer introduces a novel mechanism where liquid staking tokens can be restaked to provide additional security for various AVS.
Let's keep the discussion going!
Link -https://x.com/TradedogCrypto/status/1818627940210688133
