Community Erupts as Key Players From Ethereum Foundation Become Advisors to Eigenlayer

Ethereum Foundation researchers Dankrad Feist and Justin Drake are catching flak for their multimillion-dollar deals with the restaking protocol. Some defend them, however.

By: Pedro Solimano Loading...

two opposing figures pulling at an Ethereum logo

A pair of Ethereum’s top researchers are at the center of a widespread controversy surrounding their recent involvement as advisors to restaking protocol EigenLayer – in no small part due to their lucrative compensation.

Justin Drake was the first to disclose his new role – although Dankard Feist pointed out that his deal with Eigenlayer has the same conditions – outlining the details in a lengthy May 19 X post.

He began his 11-point post by saying the “community deserves transparency” and then dove straight into the meatier aspects of his deal.

According to Drake, the advisorship comes with a significant financial incentive in the form of EIGEN tokens that have the potential to exceed any of his other holdings, including ETH, and lands well into the millions of dollars.

That first point alone immediately set the house on fire.

EigenLayer is the industry’s largest restaking protocol, commanding more than 95% of the sector’s total value locked (TVL). According to DefiLlama, the protocol has experienced a 25% increase in TVL, now holding more than $18 billion. It is followed from afar by Karak, which showcases a similar weekly trend but only holds $739 million in TVL.

EigenLayer TVL chart
EigenLayer TVL

Credible Neutrality

Many members of the Ethereum community are complaining about a concept dubbed credible neutrality, which has been a longstanding point of contention.

Essentially, people are asking that if Drake and Feist take these million-dollar advisorships, how are they going to remain neutral regarding the direction of the Ethereum network? Might they subtly favor EigenLayer above competing protocols?

Now, it’s important to note that both Drake and Feist have signaled that they will be advising in a personal capacity, independent of the work they do at the Ethereum Foundation. But will that be enough? For some, the conflict of interest – thereby tearing down credible neutrality – is simply too big to ignore.

“I am appalled that we have EF researchers, the people who guide the protocol development, take 6-7 figure compensation packages from protocols,” wrote Lefteris Karapetsas, founder of Rotkiapp, a privacy-focused portfolio tracker.

He added, “this is a clear-as-day conflict of interest of key decision makers of Ethereum protocol development and should absolutely not be tolerated.”

Karapetsas isn’t alone in his view. “What is a core EF contributor doing when he accepts roles on projects that have conflicted incentives with Ethereum? Where’s the credible neutrality?” quipped the pseudonymous eMon.

Questions also surfaced from the pseudonymous safetyth1rd, who asked, “You’re seriously stating that taking huge compensation from an organization with different incentives than Ethereum will not influence your decision-making? You realize we’re not five-year-olds, right?”

However, the community remains divided over the issue.

Not Everyone Is Against The Advisorship

For Hudson Jameson, VP of Polygon Labs, disclosing advisor roles when working on Ethereum should be a requirement. That said, he isn’t against the deals struck by Drake and Feist.

Jameson voiced concerns about Karapetsas’ view.

“I am concerned that this type of pure idealism could result in good, honest core developers and researchers leaving Ethereum protocol development because they aren't allowed to partake in the same advising situations that others, including many devs on L2 and MEV projects, commonly do,” he said.

And along with Jameson, there were dozens of other Ethereum community members that congratulated both Drake and Feist for their transparency.

“Best disclosure I’ve ever seen. Should be a model for the industry going forward,” posted Hart Lambur, co-founder of Across Protocol, an interoperability protocol on the UMA protocol, along with another user who shouted out “full respect for Justin’s transparency.”

Drake Preemptively Addresses Concerns

Within Drake’s disclosure post were a couple of comments regarding potential backlash from the community.

Specifically, point 8 read, “Some people may ask if EigenLayer is trying to systematically "bribe" or "corrupt" the EF, wrote Drake, adding that “EFers are some of the highest integrity people I know, and I don't see the 1% of EFers formally involved with EigenLayer compromising their morals.”

And Drake underscored the potential risks that come with his advisory role.

“I do acknowledge that accepting the EigenFoundation advisorship inevitably comes with downside risk beyond my personal reputation. I hope the above shows that it is at least a considered move with calculated risks.”

Feist Will “Be Expected” To Be Contrarian Regarding Eigenlayer

In another move to assuage the ire in some areas of the Ethereum community, Feist explained that he and Drake live on separate sides of the aisle when it comes to restaking.

And his aisle is one that acknowledges the significant risks involved in this type of protocol.

Even though he pointed out that he wouldn’t have taken the role if he didn’t see clear benefits to restaking when implemented well, Feist listed four threats that come with Eigenlayer. These include the “principal-agent problem,” where two key players in the ecosystem might have countering incentives, and the potential for centralization due to additional load imposed by stakers running restaking services.

Feist pointed out that a third risk is bribing attacks, wherein restaking infrastructure is used to mount attacks on the Ethereum protocol. Feist ended on the fear of what he calls many in the Ethereum community that Eigenlayer will “turn into a dystopia dangerously designed restaking services that stakers will have to opt into because they will provide most of the staking yield.”

However, Feist indicated that his advisory role aims to mitigate the second and third risks.

Justin Drake, Dankard Feist, EigenLayer, and the Ethereum Foundation did not immediately respond to a request for comment from The Defiant.