The modern on-chain economy can be described as follows: The blockchain provides trust to DApps and, in return, receives fees.
This enables an ecosystem where startups don’t need reputation or trust. Anyone who trusts the blockchain and verifies the DApp code can use it.
Optimistic and ZK rollups outsource execution while proving computation to Ethereum through EVM contracts. They pool security from Ethereum.
At the same time, sidechains, data availability layers, and oracle networks cannot absorb the pooled trust of Ethereum.
These modules present certain challenges that require their own trust networks and validation services.
These challenges include:
• The bootstrapping problem;
• Value leakage;
• Capital costs for validators;
• Lower trust model for DApps.
On the other hand, Ethereum has already established itself as the most secure and decentralized smart contract platform in Web3.
Among all PoS chains, Ethereum stands out with the highest security budget. With 24M ETH staked, the chain is backed by over $45B in value.
In order to gain control of the Ethereum chain, an attacker would need to control at least 51% of its value. This is no small task, considering the immense numbers involved.
One way to enhance Ethereum security is by increasing the percentage of ETH staked.
The EigenLayer aims to bolster Ethereum’s security and tackle the inefficiencies of current governance models.
It introduces two core concepts:
• Restaking;
• Free-market governance.
EigenLayer allows modules such as sidechains, oracles, and data availability layers to be secured using restaked ETH instead of relying on their own tokens.
EigenLayer creates a marketplace where validators can opt in or out of each module built on EigenLayer. Validators decide which modules are worth allocating their restaked ETH to, based on incentives and potential slashing risks.
Eigenlayer enables a marketplace for AVS (Alternative Validator Services) to buy decentralization. Restakers find themselves in the role of lenders and are entitled to receive rewards.
While users can currently deposit their assets to EigenLayer, the ‘restaking’ functionality is scheduled to be launched in Q4 2024. Also note that restaking ETH in EigenLayer requires the investor to lock-up their ETH tokens for a period of 270 days.