EigenLayer and Securing New Middleware

Key Insights

• EigenLayer enables ETH restaking, which lets stakers earn compounded yield while putting their capital to work in securing other networks aside from Ethereum.
• Restakers achieve capital efficiency for their underlying ETH, and protocols that choose to build on EigenLayer get access to pooled security without needing to bootstrap.
• The resulting open marketplace of validated services (middleware) and validators ushers in new approaches for data availability, oracles, MEV management, bridges, and more. EigenLayer has actively proposed and started experimenting with its approach for each.

Ethereum stakers lock in ETH to help secure the network. However, since the locked ETH is solely used to secure the chain, it is inefficient and unable to perform other functions like serving as collateral or securing other networks. Liquid staking derivatives like Lido's stETH have solved this problem for DeFi by issuing wrapped assets that represent the underlying ETH. Networks like Layer-2s, oracle networks, and others are still unable to re-use staked capital to secure their networks. That is until EigenLayer came along, just recently releasing its first public version of their whitepaper.

The Restaking Primitive

EigenLayer is a restaking primitive that enables Ethereum stakers to use their staked ETH to secure additional networks, thus effectively securing multiple services with the same initial capital. It does this through a series of smart contracts that allow ETH stakers to provide their computer resources and capital to "middleware" services.