What is EigenLayer (EIGEN)?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 6 min
In short
EigenLayer is a protocol that lets ETH already staked on Ethereum also serve as security for other services — an arrangement called restaking. Those providing the collateral can earn additional rewards, but they also become subject to slashing by multiple services at once.
Key points
- Reuses ETH already staked on Ethereum as collateral for other services
- Services that consume that collateral are called AVSs (actively validated services)
- Collateral providers can participate by delegating to operators who run the workload
- EIGEN is the token distributed in 2024, with roles tied to the protocol
Definition
A restaking protocol that allows assets staked on Ethereum to also back the economic security of other decentralised services.
Launching a new decentralised service — a data availability layer, an oracle, a bridge validation network — requires assembling enough economic collateral that misbehaving costs more than it gains. Bootstrapping that with a new token is hard, and security is thinnest exactly when a project starts.
EigenLayer's answer is to lend out collateral already committed to Ethereum. Deposit staked ETH or its receipt tokens into the protocol, and that collateral is allocated to services (AVSs) that want to use it.
Providers do not have to perform the verification work themselves; they can delegate to entities called operators. Operators run whatever each AVS requires, and if they fail to do so correctly, the delegated collateral can be slashed. AVSs pay rewards, which operators and providers share.
The EIGEN token was distributed in 2024. It is intended to handle categories of misbehaviour that on-chain data alone cannot adjudicate, through community judgement. Protocol features have been enabled in stages, so which are currently live should be checked against official sources.
Watch out for
- · The same collateral backs several services, so overlapping conditions can cause larger slashing than expected
- · When delegating, an operator's mistake becomes your loss directly
- · Going through a liquid staking token stacks risks in layers: Ethereum staking, that protocol, and EigenLayer
Frequently asked questions
Is restaking better than ordinary staking?
It can generate additional rewards, but it also adds conditions under which your collateral can be slashed. Both sides increase, so it is not a matter of one simply being better.