EigenLayer ecosystem

EigenLayer opens a new ecosystem of Restaking on Ethereum. Currently, this ecosystem is ranked 2nd in the entire market, only smaller than Lido's Liquid Staking.

EigenLayer system

EigenLayer's system includes 3 different roles: restaker, operator, AVS (Actively Validated Services). In this model, stakers can choose and delegate their ETH/LST to operators. The operator will choose AVS to accumulate more profits and redistribute them to stakeholders, including the operator itself, restaker and EigenLayer.
The EigenLayer system brings together three main roles:
·      Restaker: A person who participates in staking ETH/LST, allowing EigenLayer to impose additional slashing conditions (penalties) on the AVS they intend to participate in providing validation services. In return, the restaker gets an additional revenue stream from the AVS they choose to participate in.
·      Operator: An operator in the system, representing the restaker to operate authentication services for AVS. Restaker will contribute capital (ETH) as collateral, Operator will be in charge of the technical aspect, setting up the necessary hardware and software to provide authentication for the AVS that restaker chooses to participate in. The benefits obtained will be redistributed to related parties including: restaker, operator, EigenLayer.
·      AVS (Actively Validated Services): Infrastructure provisioning components use their own independent validation mechanism. AVS pays to hire security provided by operator & restaker.
Thus, the ecosystem on EigenLayer will include 3 main project groups as above. In particular, Restaker will have 2 staking options:
·      Native restaking: Use ETH on the Ethereum validator's Beacon chain to secure AVSs. In certain cases, the native restaker can also take on the role of operator to operate off-chain hardware and software that provides authentication for AVS.
·      Liquidity staking: Use LSTs as collateral to secure AVSs. Restaker will need to authorize the operator to operate authentication services for AVS on its behalf.
Native Restaking is a more difficult form of network participation that requires participants to directly operate an Ethereum Validator, meaning users need to stake 32 ETH. Therefore, projects have developed native liquid staking token (nLRT) with the aim of overcoming the disadvantages of EigenLayer:
·      Operator selection is challenging due to the different risks/benefits of AVS authentication.
·      Manually pooling rewards will incur high gas fees.
·      Retaken ETH is illiquid because it is locked in EigenLayer and cannot be used elsewhere.
To make it easier for users to access staking, the native liquid staking token project team is growing strongly on EigenLayer. These projects are currently contributing 90% of the total amount of native ETH restaking on EigenLayer, acting as a connector for restakers.

EigenLayer highlights metrics

After launching in June 2023, EigenLayer opened a new concept of Restaking and was quickly welcomed by the community. Each time the project opens the ETH limit to allow retake, this number quickly reaches the limit. Some notable numbers:
·      TVL Restaking reached 14.26 billion USD, ranking 2nd in total TVL in the crypto market. Of which, more than 98% of this TVL comes from EigenLayer.
·      A total of more than 104,037 users participated in the retake, the number of ETH being restaken reached 14.47%.
·      75+ projects are being built around EigenLayer, the majority of which are Operators.
In the near future, when EigenLayer no longer limits the amount of ETH restaking, these numbers may increase further.

Ecosystem of projects on EigenLayer

Restaker

As mentioned above, to participate in EigenLayer, users must participate through Native Restaking. With the aim of eliminating liquidity constraints and minimizing barriers for users to participate in staking on EigenLayer, the native liquid staking (nLRT) project group appeared. Currently, projects in this group are in the phase of focusing on attracting ETH to deposit onto the platform.

There have been many mainnet and testnet projects, but the main contributors to TVL are 4 large projects Ether.fi, Renzo, Puffer and KelpDAO. Etherfi is the leading and fastest growing project, however, after launching the token, the project is showing signs of being caught up by Renzo Protocol.

These 4 projects have different development models and strategies. LRT typically uses 2 models to process and distribute staking rewards:

Rebase model: This model will distribute staking rewards by increasing the amount of LRT to users at a ratio of 1 ETH ~ 1 LRT token.

For example: User stakes 1 ETH, and receives 1 eETH back on Ether.fi with an interest rate of 5%/year. After 1 year, users will receive 1.05 eETH (~1.05 ETH) back.

Reward-bearing model: This model will distribute restaking rewards to users by increasing the conversion rate between ETH and LRT in the system. From there, it helps keep the LRT supply fixed.

For example: User stakes 1 ETH on KelpDAO with an interest rate of 5%/year with an initial rate of 1 rETH ~ 1 ETH. After 1 year this rate will increase to 1 rETH ~ 1.05 ETH.

Ether.fi is a leading project with a different choice of Rebase model compared to other projects. Using the Rebase model will cause the number of eETH in the community to grow more than other projects.

After Ether.fi, Renzo is a project with impressive development thanks to its deployment strategy on Layer 2. This is the first project to implement this strategy on prominent L2s such as Linea, Blast, Arbitrum, Base... This helps users easily access Restaking with cheap transaction fees.

Puffer Finance has technical strengths, providing solutions that increase security and minimize slashing risks for validator nodes through the use of Secure Signer technology. However, the project only operates on Ethereum and no longer counts EigenLayer points, so it is being left behind by Renzo.

Compare LRT projects on EigenLayer.

These projects have mostly been integrated into DeFi protocols to increase the level of adoption for LRT types. Among them, Renzo is the most widely used project due to its presence on many chains and many different dapps. These projects can all optimize the interest rate received through Pendle.

AVS (Actively Validated Services)

When EigenLayer announced mainnet recently, the first 6 AVS projects also mainnet simultaneously. This is a group of services for many areas built on the EigenLayer protocol, used to increase security for Layer 1, Layer 2, Bridge, or any project in need by leveraging security from Ethereum. .

Some service groups may include:

·      Blockchain Layer 1

·      Data Availability Layer*

·      Sequencer on L2s

·      Cross-chain interaction support service

6 AVS projects have mainnet on EigenLayer including: AltLayer MACH, Brevis, Ethereum eoracle, LAGRANGE, Witness Chain and Xterio. Together with this project team, EigenLayer also launched its own AVS solution, EigenDA, a specialized DA* layer solution for rollups that publish transactional data.

*Data availability layer: refers to data availability, serving and ensuring all nodes have the ability to access and download data on Roll up when necessary.

The remaining projects include:

AltLayer MACH

AltLayer MACH is an AVS solution for Retaked Rollups, working with the purpose of supporting Rollup construction to achieve fast transaction processing speed (fast finality) through ETH restaking types. MACH also helps increase security and decentralization in authenticating transactions on Rollup.

Currently, MACH is being used for Rollups of OP Chain's network such as Optimism Mainnet, Xterio Chain using OP Stack.

Brevis

Brevis coChain is a project that combines zero-knowledge proof (ZK Proof) and a security system in crypto through EigenLayer staking. Brevis allows smart contracts to access and fully process on-chain data. This helps the project's ZK data processor optimize security costs.

Eoracle

eoracle is an oracle project that operates natively on Ethereum, the project aims at an oracle solution following the decentralization, transparency and security that Ethereum aims for. Thanks to the combination with EigenLayer staking, eoracle can use diverse, decentralized Ethereum validators on a global scale.

In the future, the project will develop into an eoracle chain, using integrated Rollup technology from major projects such as Optimism OP Stack, Polygon CDK, Arbitrum Nitro, zkSync ZK Stack.

LAGRANGE

LAGRANGE is one of the first projects to develop zero-knowledge proof technology ZK Proof on AVS. Projects and protocols can use this technology to increase security, decentralization, and optimize costs thanks to Light-client (only needs to store part of the data).

Witness Chain

Witness Chain is a layer supporting the development of DePIN*, with the first product introduced being the Watchtowers Network. Watchtowers act as a layer of defense for Rollups, ensuring operators are active, and finding fraudulent activity.

DePIN (Decentralized Physical Infrastructure Network) is a term referring to projects that build blockchain networks that act as intermediaries to connect infrastructure providers such as vehicles, VPN, bandwidth... and customers in need. bridge.

Witness Chain uses EigenLayers Operators in combination with more than 20 DePIN and Rollup projects in the ecosystem, targeting the highly secure crypto community.

Xterio

Xterio MACH is a hybrid version of the project with AltLayer and EigenLayer, also a solution for Retaked Rollup similar to AltLayer MACH. Xterio MACH is also an AVS that helps Rollup achieve fast transaction processing speed and high security.

However, Xterio MACH is a version dedicated to building Xterio L2, a gaming blockchain built on OP Stack. Xterio is a studio specializing in Web3 games combined with AI. This studio's games have raised a total of more than 80 million USD in capital.

In addition, there are a number of projects that are said to be about to mainnet such as:

·      Omni: cross-chain messaging protocol uses staking as a double security mechanism. The project is implementing launchpool on Binance.

·      Espresso: shared sequencer uses staking to increase security for scheduling transactions for multiple Rollups simultaneously.

NO (Node Operator)

NO (Node Operator) plays an important role in authenticating AVS, improving the security and integrity of the network. Currently, anyone can become NO in the ecosystem with the condition of registering with EigenLayer.

Duties of Node Operators.

Professional node infrastructure and operation companies in the crypto market such as Allnodes, Stakefish, Everstake, Nodes.Guru, Node3... will not miss the opportunity to participate in operations with EigenLayer.

Notably, the ecosystem also has the participation of big names from other technology companies such as Coinbase Cloud, Google Cloud Web3, HashKey Cloud, Galaxy... Enough to show the attraction of this ecosystem.

Conclusion

The EigenLayer ecosystem is developing with 3 pillars: Restaker, Operator, AVS. Each piece of the puzzle has made its own progress in recent times. Among them, the LRTs that take on Restaker's tasks receive the most attention from the community. AVS projects gradually mainnet and technology companies interested in Node Operators are also signs of the unmissable development of EigenLayer.