With $50 million in financing, how does the re-pledging protocol EigenLayer reshape the Ethereum ecosystem?

Original source: BitpushNews

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Announcing a $50 million funding round led by Blockchain Capital, EigenLabs stands out amidst a slowdown in VC funding for crypto startups during the bear market. It had raised a $14.5 million seed round led by Polychain Capital and Ethereal Ventures last year.

EigenLayer seeks to extend cryptoeconomic security to applications built on the Ethereum network through restaking (Restaking), and has been hailed as one of the most novel innovations in the Ethereum ecosystem in 2023. In EigenLayer's own words, it is a "universal marketplace for decentralized trust," which means that applications on Ethereum are responsible for generating their own trust mechanisms.

first level titlewhite paperWhat is Eigen?

According to EigenLayer's

, Eigen enables users to re-hypothecate their ETH and extend cryptoeconomic security to other applications on the network. The Eigen smart contract layer will automatically re-mortgage users' ETH by setting withdrawal permissions, and enhance security by validating new applications built on Ethereum.

The protocol benefits from the security of the Ethereum blockchain, as the staked collateral secures both Ethereum and the protocol. Users benefit from double staking yields, one from Ethereum and the other from a secured side protocol. This is a new mechanism in cryptoeconomic security. Previously, it was impossible to gain more than one layer of trust with a single collateral, this restaking primitive overcomes the challenge of trust faults across the Ethereum blockchain.

As with any innovation, new opportunities come with new risks. A new risk of slashing is also assumed when users receive additional rewards in exchange for obtaining additional agreements. EigenLayer is opt-in (opt-in), that is, users can choose whether to participate in the protection additional agreement. When a user opts in, the smart contract manages withdrawal credentials for staked ETH. In the event of malicious on-chain activity, slashing will occur and stakers will not be able to withdraw their originally deposited principal. Under the current design of Ethereum, up to 50% of the mortgaged ETH can be Slashed. Therefore, when a withdrawal is triggered, at least 50% of the ETH remains available, and EigenLayer can slash the remaining 50% on the protocol, so EigenLayer's remortgage mechanism enhances security by significantly increasing the cost of malicious attacks.

first level titleWhat are the advantages of EigenLayer?

EigenLayer, which provides Oracles and Bridges with services such as data availability on the same network, has launched a data availability layer for Ethereum called EigenDA. It offers cheaper and higher bandwidth for data availability than the Ethereum base layer: Ethereum currently processes 80 KB per second, but EigenLayer will allow up to 15 MB per second. EigenLayer founder Sreeram Kannan emphasized that the expected processing efficiency of EigenDA will reach 1 GB/s in the future. This will drive better programmability on top of Ethereum's base layer, increasing development velocity. When protocols interact with each other more quickly and easily, the rate of innovation increases.

Middleware services and DApps can be built on EigenLayer, and users can enjoy higher returns on mortgaged ETH. Since EigenLayer is opt-in, it enforces its mechanism through the right to obtain pledged ETH withdrawal credentials.

Screenshot 2023-03-29 pm 2.54.34.pngconsensusIt poses a challenge to other modular blockchains such as Celestia: EigenLayer can create a sizable network of validators much faster; since it is not an independent

consensus

• layer, so it will be less costly and more efficient to process; EigenDA's use case is specifically for rollup proofs, allowing for a decentralized rollup sequencer.

• secondary title

• Summary of advantages:

• EigenLayer provides cheaper and higher bandwidth than Ethereum mainnet.

• More money should flow into the Ethereum ecosystem to take advantage of the additional gains.

It improves the security of protocols that can utilize the mainnet by using EigenLayer.

It is cheaper than other modular blockchain solutions like Celestia.

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Potential use cases for Eigenlayer

Some use cases have emerged with the comprehensive development of Eigenlayer. According to the summary of LlamaCollege, they mainly include the following aspects:

1. Cross-chain bridge

2. Layer 2 Rollups

The best use cases for Eigenlayer are protocols that have a low chance of being slashed. For example, a protocol that goes live very often might not be a good fit, since there is always a high probability that the server will crash and eventually get the stake slashed.

3. Oracles

On the other hand, Bridges may be more suitable, and cross-chain bridges such as Hyperlane are less likely to be cut due to their flexibility and no requirements for node liveness. This provides Eigenlayer with an environment conducive to its development.

Other protocols include Succinct, Axelar Network, and Squid.

When multiple layer 2s flood the market, Eigenlayer will run the Rollup sequencer, enabling L2 sequencers such as Optimism and Arbitrum to be decentralized and secure.

4. RPC node

A remote procedure call (RPC node) is a computer server that allows users to read data on the blockchain and send transactions to different networks.

Eigenlayer will enable truly decentralized RPC nodes. Existing solutions, such as the POKT network and centralized providers like Infura, are likely to move to Eigenlayer. Decentralized RPC is essential to avoid client-level censorship.

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The future of EigenLayer