Restaking and EigenLayer: a new wave of opportunities

In the wake of the liquid staking explosion, a new innovation has emerged and is already attracting attention in the ecosystem: restaking. Put simply, this makes it possible to secure blockchains by relying on the robustness of Ethereum, in particular via the use of liquid staking tokens, such as Lido's stETH.

For stakers, this makes it possible to earn rewards from Ethereum staking, but also from all the other blockchains they are helping to secure. The end result is substantial gains from the same value immobilised. For some, this can be described as leveraged staking. "All the specialists have identified restaking as a major innovation," says Laszlo Szabo, CEO of Kiln, a French start-up offering staking services to institutional investors. For Stanislas Barthélémi, crypto expert for KPMG, "it's more of an economic innovation than a technological one, but it's a proposition that makes sense".

‍EigenLayer, flagship restaking project

EigenLayer is the biggest representative of this segment. The project published its white paper in February 2023 and closed a $50 million Series A the following month led by Blockchain Capital. Launched on the Ethereum mainnet this summer, the protocol has already managed to attract more than $1 billion in assets. And that's despite the fact that, for the time being, the infrastructure is still in the development phase. The project was started in 2021 under the impetus of Sreeram Kannan, a former assistant professor at Washington State University where he worked on blockchain issues in particular.

"What EigenLayer is proposing could change the way we think about security on Ethereum and blockchains in general," explains Barnabé Monnot, a researcher at the Ethereum Foundation, the main structure supporting the protocol's development. "The team's reputation speaks for itself, it has long been identified by the community", notes this specialist who works directly on this subject.

Its potential goes beyond securing other blockchains: EigenLayer could also help secure other infrastructure projects, dApps as well as layer 2s. Theoretically, this would make it easier to innovate, since the project team would not have to worry about all the security aspects in order to get started.

And EigenLayer has no intention of stopping there: the project also plans to launch Eigen DA (a blockchain specialising in data availability), operating on the same narrative as modular blockchains such as Celestia. The latter offer to store data from other blockchains, which would then only have to manage the execution of transactions, allowing for greater scalability and lower transaction costs.

‍The heavyweights of the sector are falling into place

For the moment, investors already have the option of staking their ETH or liquid staking tokens at EigenLayer. However, it is not yet possible to collect the associated rewards, but rather "Eigenlayer points", which holders hope will give access to an airdrop in the coming months. In the meantime, staking heavyweights such as Lido are taking steps to facilitate access to EigenLayer for their users, which would make restaking more accessible to the uninitiated, according to Barnabé Monnot: "We have noticed that many users staking their ethers do not use their liquid staking token because of the complexity that optimising capital can represent. EigenLayer could simplify this procedure". In this way, Lido users could be directly connected to EigenLayer's restaking services.

‍An Ethereum security risk?

In a blog post, Ethereum icon Vitalik Buterin nevertheless warned of the dangers of restaking for Ethereum's security and economy. The first would be the risk of chain slashing (a penalty if the validator does not do its job properly, editor's note): "If there is a problem on one of the networks, this could have cascading repercussions on all the networks it helps to secure and on Ethereum first and foremost," warns Laszlo Szabo. "In the event of malicious action, not all of Ethereum would be directly threatened, but economic losses and the network's reputation could suffer", analyses Barnabé Monnot. The entire ecosystem created by EigenLayer's security could then be directly threatened. But Laszlo Szabo wants to be reassuring: "I have no doubt that there will be barriers put in place to the use of EigenLayer by the community to limit these systematic risks to Ethereum."