Restaking, a new concept taking hold in the crypto landscape, is a way for blockchain developers to set up new projects without having to shoulder the high costs of rallying their own groups of operators or “validators” – and staked tokens – to assure that the new systems are secure. According to EigenLayer founder Sreeram Kannan, “the conversation” about EigenLayer and restaking “became more thoughtful, with an emphasis on managing risk and aligning with the long-term interests of Ethereum.”
EigenLayer, founded in 2021, is credited as a pioneer of restaking. The protocol deployed its “Stage 1” launch on the main Ethereum network in June, after a two-month testing phase. Through EigenLayer’s restaking techniques, the pooled security of ETH stakers extends Ethereum’s decentralized trust to other systems. Bart Stephens, managing partner of lead investor Blockchain Capital, wrote in a blog post in March that “the types of cryptoeconomic protocols that are suitable to be built on EigenLayer are extremely broad and span everything from middleware to brand new blockchains.”
EigenLayer has announced plans to provide data availability services for layer 2 scaling solutions, Celo and Mantle, in addition to teaming up with other entities in the crypto ecosystem like Espresso Systems and Nethermind. Last week, EigenLabs announced that the caps would be raised again on Aug. 22 – with additional deposits of the liquid staking tokens remaining open until any one of them hits 100,000 tokens restaked.
Ethereum co-founder Vitalik Buterin flagged the potential for “high systemic risks to the ecosystem” with restaking, and urged for “preserving the chain’s minimalism, support uses of restaking that do not look like slippery slopes to extending the role of Ethereum consensus.”
Through restaking, protocols can buy pooled security from validators, and validators can sell pooled security to protocols. This process is akin to the practice of “merged mining” on the Bitcoin blockchain, where hashpower – or computational power – is reapplied to another blockchain to provide security.
EigenLayer’s restaking techniques make it easier for anybody to be able to spin up and build their projects, where historically it was extremely difficult to bootstrap your own trust network. Restakers could be subject to “slashing” – penalties assessed against staked deposits – and the dynamic could eventually lead to conflicts of interest that might split the consensus on Ethereum.