Building a decentralised system without Breaking the Bank

Picture this: You're building the coolest decentralized system ever, a beacon of innovation and collaboration. But before you can even flip the switch, you're faced with a daunting task: bootstrapping its security. In Proof of Stake (PoS) networks, this translates to attracting and incentivizing validators – the guardians who lock up their capital to secure your decentralised network. Validators have the financial incentive to follow the rules of the network. They earn rewards for honest participation, but may get their stake slashed for misbehaviour.

Now, here's the real kicker: getting Validators to join your party isn't exactly a walk in the park. You have to launch your token, find validators to run your validator infrastructure and offer them endless incentives to buy and stake your token. Generally, this means having high token inflation rates to incentivize stakers. A high inflation on the other hand can disincentivize users from buying and holding the token, thus impacting ecosystem growth. It's a long arduous, costly process fraught with risks. Basically, it's like trying to build a decentralized castle out of toothpicks – impressive if you pull it off, but one wrong move and the whole thing comes crashing down.

Eigen Layer with restaking offers a revolutionary alternative. Forget the token launch and the validator hunt. This clever mechanism allows you to leverage the already established security of the Ethereum network. Think of it as borrowing the castle's sturdy foundation instead of building your own from scratch.

Simplifying the life of a builder

• Resting on a giant: Instead of convincing validators to join and stake in your project, builders tap into the massive pool of Ethereum validators. Their staked capital, already securing Ethereum, can be used to secure your project too. Eigen Layer just connects the Ethereum validators to infrastructure buidlers.
• Stable Security - Security of Token bootstrapped services is highly dependent on token’s volatility. Any negative sentiment leads to volatility and may decrease the security of your service significantly. Ethereum is a relatively stable asset and little volatility won’t impact the security of your service significantly.
• Focus on innovation: Ditch the token launch , emission schedule headache and channel your energy into building. Focus on what matters most – creating a groundbreaking decentralised application that benefits the entire ecosystem.
• Not limited to ETH - Stakers can provide economic security using any token including your own token.

Unlocking Greater Capital Efficiency for Validators

As a validator on Ethereum, you may ask - Why should I care about Eigen layer?

Because forget one-trick ponies, your staked ETH deserves a side hustle. With Eigen Layer, your staked ETH does double duty, it will earn you Ethereum protocol rewards while simultaneously providing crypto-economic security to additional applications and protocols for additional fees and rewards. Such protocols are called Actively Validated Services (AVS).

Eigen Layer not only provides better capital efficiency for Ethereum stakers, new applications and protocols gain robust crypto-economic trust guarantees without the heavy lifting of building their own validator sets. It's a win-win: capital efficiency for validators, trust on tap for innovators.

Flavours of restaking

Eigen Layer supports restaking via natively staked ETH as well as through Liquid Staking Tokens (LSTs like stETH, rETH, and cbETH). These restaked assets are used as a bond for performing validation tasks for different AVSes. Entities performing validation tasks for AVS are called AVS Operators. Let's break down the difference between Native restaking and Liquid restaking.

Native restaking

Ethereum validators who have staked their 32 ETH to validate Ethereum PoS network can restake this ETH as collateral for validating Actively Validated Services (AVS) and earn additional rewards. For context, there are 955602 active Ethereum validators today**.**

Validators have to create a secure zone within the Eigen Layer smart contract called an EigenPod and set their staked ETH withdrawal credentials to the EigenPod. Setting withdrawal credentials to EigenPod allows for potential slashing of a validator's staked ETH if they break the rules of validation in any AVS. Once enrolled, validators are considered "re-staked" and can opt in to validate new AVS. Validators maintain full control over their staked ETH and rewards, as withdrawal credentials from the EigenPod is set to their wallet.