EigenLayer, a protocol on the Ethereum blockchain, introduces the concept of restaking, a new element in crypto-economic security. This functionality allows users who stake ETH directly or through a liquid staking token (LST) to engage with EigenLayer smart contracts voluntarily. By opting in, users can restake their ETH or LST, extending crypto-economic security to additional applications on the network and earning supplementary rewards. ^[1][2][3]

Overview

EigenLayer was founded in July 2021 by Sreeram Kannan^[4]. The platform provides a functionality where Ethereum stakers can enhance security for multiple services by opting to restake their ETH and participating in various services simultaneously, leading to pooled security via restaking. ^[1][5]

The reuse of ETH in securing different services reduces the capital costs for stakers and significantly improves trust guarantees for individual services. In the process of developing a new decentralized service on Ethereum, EigenLayer addresses the common challenge of establishing a new trust network for security, allowing any service, regardless of its composition (e.g., EVM-compatibility), to access the pooled security provided by Ethereum's stakers. This approach encourages an environment conducive to permissionless innovation and free-market governance. ^[1]

EigenLayer launched its Stage 1 mainnet on June 14, 2023. The Stage 1 Mainnet is built on the Ethereum mainnet and was a guarded launch with restaking limits. ^[11]

Funding

EigenLayer raised $14.5M in a seed round of funding in August 2022. The funding round was led by Polychain Capital and Ξthereal Ventures. ^[7][9]

On March 8, 2023, EigenLayer announced it had raised $50 million in a Series A round led by Blockchain Capital. Other firms in the round include Electric Capital, Polychain Capital, Hack VC, Finality Capital Partners, Coinbase Ventures, etc. ^[7][8]

"We are thrilled to work with such a stellar group of investors and individuals, led by Blockchain Capital. We could not have asked for a better group of supporters to help us carry out our mission.

The mission of EigenLabs is to build protocols and infrastructure that increase open innovation. One of the central bottlenecks to innovation today's crypto ecosystem is the requirement for projects to bootstrap trust, or cryptoeconomic security" - founder Sreeram Kannan commented ^[10]

On February 22, 2024, Eigen Labs, the developer behind EigenLayer, raised $100 million from venture capital investor a16z crypto. ^[13]

"We are thrilled to be partners with this incredible community of developers in the EigenLayer ecosystem. They are eager to experiment and build on Ethereum without the security and decentralization barriers that have gated them in the past. We are all here in the shared interest of maximizing open innovation for the benefit of the future of crypto. To further empower this mission we are excited to announce that Eigen Labs, the core development team contributing to EigenLayer and EigenDA, has raised $100 million from a16z crypto." - the team announced ^[14]

Technology

Pooled security via restaking

EigenLayer introduces a streamlined approach to pooled security known as "restaking." This involves Ethereum validators linking their beacon chain withdrawal credentials to EigenLayer smart contracts, opting into various modules on the EigenLayer platform. ^[6]

Validators run additional node software for these modules, allowing them to impose slashing conditions on staked ETH. In return, validators earn extra revenue for providing security to these modules. ^[6]

This restaking mechanism facilitates a robust transfer of cryptoeconomic security, extending beyond traditional smart contract-based DApps to include virtual machines, consensus protocols, and middleware. EigenLayer broadens the scope of open innovation by securing any AVS with an on-chain slashing contract. ^[6]

Open marketplace

EigenLayer establishes an open marketplace to regulate the supply of pooled security by validators and its consumption by AVSs. In this marketplace, validators can decide whether to participate in each module on EigenLayer. ^[6]

To attract restaked ETH, modules must offer adequate incentives to validators, who play a key role in determining the allocation of pooled security based on potential slashing risks. EigenLayer's opt-in dynamics bring two significant advantages: (1) it complements the stable governance of the core blockchain with a dynamic, efficient free-market governance structure for launching new auxiliary capabilities, and (2) the opt-in validation allows new blockchain modules to leverage diverse resources among validators, leading to well-balanced trade-offs between security and performance. ^[6]

Team

• Sreeram Kannan - CEO
• Robert Raynor - Engineering
• Soubhik Deb - Engineering
• Vyas Krishnan - Product
• Chris Dury - COO
• Calvin Liu - CSO
• Sid Sanyal - VP of Engineering
• Brianna Montgomery - Strategy
• Wes Floyd - Solutions Architect
• Tina Haibodi - Product

Introducing New LSTs

On January 24, 2023, EigenLayer announced the addition of restaking support for three new Liquid Staking Tokens (LSTs): Frax Ether (sfrxETH) - a decentralized staking derivative from the Frax Finance ecosystem, Mantle Staked Ether (mETH) - the receipt token for Mantle LSP, and Liquid Staked Ether (LsETH) - a part of Liquid Collective's decentralized staking protocol. In line with this, EigenLayer also reopened for restaking at the existing cap of 200k ETH for each LST. ^[12]