Nearly one 12 months to the day after Ethereum protocol EigenLayer launched its “restaking” community to unprecedented business fanfare, the community is lastly including a core function that was, till now, manifestly absent: “slashing.”
Eigen Labs hopes slashing — EigenLayer’s system for protecting “restakers” sincere by revoking collateral in the event that they act maliciously — will lastly understand the year-old protocol’s authentic pitch.
“We’re comfortable to say now that the entire promise has been delivered,” stated EigenLayer founder Sreeram Kannan.
EigenLayer turned one of many buzziest protocols in Ethereum historical past when it launched traders to the idea of restaking, an evolution of “proof-of-stake” on Ethereum.
Ethereum’s “proof-of-stake” system lets customers “stake” ether (ETH) collateral with the chain to assist run and safe it in change for curiosity. EigenLayer lets customers stake ETH on Ethereum after which restake it once more with different protocols for much more curiosity.
Regardless of launching its fundamental community final 12 months, slashing, a major part of EigenLayer’s shared safety know-how, was lacking till Thursday. This led to criticism that EigenLayer’s bold pitch didn’t match its technical actuality.
As we speak, EigenLayer boasts greater than $7 billion in restaked property, making it one of many largest decentralized finance (DeFi) apps. It additionally helps an ecosystem of 39 actively validated companies (AVSs) that use its safety mannequin.
The brand new slashing system will roll out on Thursday, however AVS groups might want to opt-in, that means it might take a while earlier than slashing is dwell in any purposes. Eigen Labs introduced April 17 because the launch date for slashing earlier this month.
Redesigning for Security
EigenLayer customers restake ether (ETH) and different tokens via third-party “operators” — infrastructure suppliers who delegate their pooled EigenLayer deposits throughout totally different AVSs.
Operators that delegate stake to an AVS assist run it in change for rewards: the extra they stake, the upper the rewards.
In principle, slashing ensures these operators are working AVSs appropriately. If operators “are confirmed to be malicious in line with an on-chain Ethereum contract, then they might lose their stake or a portion of their stake,” defined Kannan.
When slashing goes dwell on Thursday, AVSs may have the choice to set slashing circumstances and start penalizing dangerous actors.
“Aside from Ethereum and Cosmos, most proof-of-stake programs, together with Solana, are working dwell with none slashing,” stated Kannan. “Despite the fact that it’s the core accountability mechanism, it’s not like each proof of stake system already has this—that’s not true. That’s what we’re constructing.”
As for why EigenLayer obtained a lot blowback in comparison with different incomplete proof-of-stake programs: “We’ve talked lots about slashing, so we’re held to that bar,” stated Kannan.
Eradicating leverage
EigenLayer’s slashing system was redesigned final 12 months to deal with fears that the protocol launched an unsafe type of leverage to the Ethereum ecosystem.
“I feel we fully cured that downside with this redesign,” stated Kannan.
The complete concept behind EigenLayer is to permit new protocols to instantly faucet into a big safety pool — the entire pool of restaked property.
In proof-of-stake programs, the quantity of property staked with a protocol roughly corresponds to how safe it’s. On the whole, attacking a protocol like Ethereum requires controlling half or extra of the property staked, which may run into billions of {dollars}.
EigenLayer’s pooling mannequin has led to fears {that a} poorly constructed slashing system may expose all the protocol to new dangers, the place a single dangerous actor on one AVS may hurt each operator.
The model of EigenLayer going dwell Thursday, which has been examined on Ethereum’s developer networks since December, was designed so operators can restrict their publicity to a given AVS, that means dangerous actors on one gained’t essentially influence one other.
“You could have distinctive attributability of stake to a specific AVS,” defined Kannan. “As an AVS, I do know I’ve, like, 10 million of ‘slashable’ stake that’s not double counted — so there isn’t a leverage.”
Moreover, the system has been configured in order that “even when my AVS has a small quantity of slashable stake, it’s nonetheless protected in some sense, by the massive quantity of capital,” stated Kannan, since there are nonetheless programs in place to make sure the price of attacking a system will increase with the entire worth of the pool of restaked property.
