Ethereum ‘Restaking’ Protocol EigenLayer Launches On Mainnet

EigenLayer, a highly anticipated “restaking" protocol for Ethereum, successfully completed the initial guarded stage of its mainnet launch on Wednesday.

Users can now deposit liquid staking tokens (LSTs) into the protocol, or set up and configure an EigenPod to natively restake ETH. The protocol supports Lido’s stETH, Rocket Pool’s rETH, and Coinbase’s cbETH tokens, with plans to onboard other LSTs in the future.

Once its rollout is complete, EigenLayer will allow Ethereum stakers to validate third-party services for a yield while simultaneously earning staking rewards for securing the network.

“EigenLayer aims to empower the ecosystem stakeholders and innovate on both the future of shared security, as well as the future of decentralization,” the project said in a blog post.

EigenLayer’s liquid staking pools are currently capped at 3,200 tokens each, with individual deposits limited to 32 tokens per transaction. The creation of new EigenPods will pause once native staking exceeds 9,600 ETH. Withdrawal requests will execute after a seven-day delay.

$32B Market

EigenLayer is seeking to harness Ethereum’s staking ecosystem as a shared security layer, but its success may hinge on its ability to compete with DeFi protocols as a source of additional yield for stakers.

Popular LSTs like stETH and rETH enjoy integrations with a wide range of DeFi protocols, offering holders a variety of strategies for generating yield or accessing liquidity while continuing to accumulate staking rewards.

Although Ethereum’s staked capitalization is already $32.5B, only 16% of circulating Ether is staked, suggesting the sector may still have significant room to grow.

Restaking

The Ethereum network validates code written in its native Solidity programming language that is compatible with the Ethereum Virtual Machine (EVM), Ethereum’s core smart contract engine.

EigenLayer allows stakers to also opt-in to validate modules containing non-EVM code, also called “Actively Validated Services (AVSs),” by harnessing Ethereum’s staking ecosystem as a shared security layer.

EigenLayer said the second phase of its launch would introduce “Operators,” which perform validation tasks for AVSs built on the EigenLayer protocol. AVSs will come online later, completing EigenLayer’s mainnet launch.

“Restakers have the flexibility to delegate their staked ETH to Operators or run validation services themselves, effectively becoming an Operator,” EigenLayer said. “Restakers retain agency over their stake and choose which AVSs they opt-in to validate for.”

Operators and restakers face additional penalties if an AVS they secure misbehaves or if they fail to perform validation duties, on top of the regular slashing risks associated with staking.

Vitalik Buterin recently warned against protocols seeking to leverage Ethereum’s social consensus mechanism for purposes other than securing the Ethereum network.

“We should be wary of application-layer projects taking actions that risk increasing the ‘scope’ of blockchain consensus to anything other than verifying the core Ethereum protocol rules,” Buterin said in a blog post last month.

Sreeram Kannan, EigenLayer’s founder, described Vitalik’s critique as an “excellent analysis,” advocating for restakers to use the protocol for “low-risk” activities.

Governance

The protocol’s contracts are upgradeable and pausable. Three multisig governance wallets oversee contract upgrades, pause functionality, and protocol parameter adjustments respectively.

EigenLayer described the setup as a temporary governance solution and said it intends to decentralize in the future. Its multisig signers include Tim Beiko from the Ethereum Foundation, Swapnil Raj from Nethermind, and Ben Rodriguez from Coinbase Cloud.

“These multisigs represent a rudimentary but working system of transparent initial governance, with appropriate checks and balances,” EigenLayer said.

ConsenSys and Sigma Prime audited EigenLayer’s code. The project is also offering $2M in bug bounties via Immunefi.