Evolution of the Trust and EigenLayer

“Trust is a fundamental aspect of human relationships and society, rooted in the belief in the reliability, truth, ability, or strength of someone or something.”

ChatGPT's answer to"What is Trust"
ChatGPT's answer to"What is Trust"

Since the beginning of human history, trust has been a concept that forms the foundation of societies and shapes the core of human relationships. Trust was necessary first for survival, then for hunting and gathering activities, and later for the structure of society. As we approach today, trust has become the main element of our modern society, mostly provided by governments, especially in the economy and law.

Dall-E — Evolution of Trust
Dall-E — Evolution of Trust

From the earliest days of trade, trust has been at the very heart of commerce. People initially trusted that the other party in barter transactions was not selling fake goods and that the value of the goods was equal to their own. Later, they trusted in gold and the fact that the supply of gold could not be arbitrarily increased, using it as the primary currency. Nowadays, we trust in government-issued currencies. Governments give us a piece of paper (or a few increasing numbers on our phone app), and we assign value to these, using them in our daily payment systems.

Evolution of Money-Dall-E
Evolution of Money-Dall-E

Digital Age Trust: Blockchain and Game Theory

It's an undeniable fact that governments have been the main authority providing trust for centuries. "Anarchists," who reject this authority and do not acknowledge the existence of governments, have always tried to deny this authority and create different concepts of trust. In the digital age, both our diminishing privacy and increasing authority power have activated a series of activists, leading to the birth of "crypto-anarchism."

The Crypto Anarchist Manifesto
The Crypto Anarchist Manifesto

Crypto-anarchism says that it's now possible for people to communicate via systems that rely on mathematics and computers without revealing their identities, and this could completely change our known social structure. Crypto-anarchists propose certain ideas to ensure society, not central actors, benefits from this changing social structure.

Crypto-anarchists have worked for years on systems that don't require trust in humans but weren't successful until Bitcoin. Then, a brilliant engineer named Satoshi, whose name, identity, location, and even gender we don't know, developed Bitcoin and the concept of blockchain, presenting it to the digital age. Since then, our concept of trust has never been the same.

Banks vs Bitcoin-Dall-E
Banks vs Bitcoin-Dall-E

Bitcoin created an infrastructure that took trust away from a central authority or group and gave it to mathematics and game theory. Simply put, this infrastructure works as follows: Alice wants to send BTC (Bitcoin's native currency) to Bob. She sends a transaction to the network, including a commission in BTC.

In this network, miners who will be rewarded with the commission for the BTC transfer and extra BTC if they "act honestly" see this transaction. They include this transaction in a block and broadcast it to other participants in the network. If everyone agrees, our miner receives the reward and continues to work on finding a new block.

The main point here is not how Bitcoin works, but how its trust mechanism works. Miners solve difficult mathematical problems on their computers, and the first to solve a problem finds the block. If a miner includes an invalid transaction in a block or acts "maliciously," the rest of the network sees this, and the dishonest miner cannot receive the block reward. Bitcoin's trust is based on the game theory that miners will act honestly to get this block reward.

While Bitcoin opened the way for decentralized trust and payment systems, it had one problem: it was only usable for payment systems and had limited programmability.

With Ethereum, a different game is at play. Actors validating the network receive a certain amount of Ether upfront and are rewarded with Ether provided they act honestly. Unlike Bitcoin, bad behavior (Note: the types of bad behavior are very different and I chose this as the most appropriate translation for malicious behavior in Turkish. I apologize if it created confusion) results not only in not receiving rewards but also in burning the Ether locked by validators.

Both Bitcoin and Ethereum's trust mechanisms give rise to a new concept of trust in the digital age: "crypto-economic trust."

Programmable Crypto-Economic Trust: EigenLayer

PoS (Proof of Stake) systems like Ethereum basically provide trust as follows: validators stake a certain amount of assets, are rewarded as long as they act honestly, and are punished by burning their locked assets if they do not.

The biggest problem with these systems is that every application needing crypto-economic trust must build its security from scratch. This leads to some problems:

  • The problem of "fragmentation of economic security" due to each application creating its own economic security.

  • The impossibility of every application issuing tokens and poorly designed or useless tokens making it impossible to construct the game theory of the network.

EigenLayer offers an infrastructure that allows partially renting Ethereum's crypto-economic security by re-staking staked tokens. (I'll explain why this is partial in the next sections) With this infrastructure, developers can build their applications by renting security from Ethereum without issuing new tokens. This can be used for securely storing data in any database, for decentralized ordering, for a bridge project, or for developing a new chain…

3.2 What Exactly is EigenLayer?
EigenLayer is just a series of smart contracts living on Ethereum. These smart contracts support token deposit, withdrawal, and slashing. The point I want to emphasize here is that everything is done entirely off-chain and by actors called operators.

So, when you re-stake your token in EigenLayer, you are trusting that your delegated operator will act honestly because bad behavior by your operator will result in the burning of your Ether. This is actually a problem with the delegation system in most dPoS (Delegated Proof of Stake) systems, but it introduces an additional risk not present in Ethereum's main protocol. The same is true for LSTs.

Blockchains Are More Than Crypto-Economic Security, and You Can't Rent It With Money: Autonomous Communities.
In Ethereum and Bitcoin, what actually provides security is not just crypto-economic security, but the dominance of the community outside the chain over the chain. Even if the majority of validators or miners behave dishonest, or there is a problem with the chain's software, the community can fork the chain and invalidate previous transactions. What EigenLayer can't rent from Ethereum and take over is this security provided by the community outside the chain.

Vitalik mentioned this in his article "Don't overload Ethereum's consensus." He advised that your double staking & restaking applications should not be dependent on Ethereum for slashing and should not add extra complexity to Ethereum's simplified consensus.

It's important to be aware of the trade-off in security (not being able to rent the community outside the chain) and that the rented security is crypto-economic security. Besides, EigenLayer opens a big door of innovation and innovation for Ethereum. Many applications have already started developing on EigenLayer.

I won't explain Rollups and Blockchains from scratch here, but I will talk about Data Availability layers, their market strategies, "which is better (!)", and their differences.

Blockchains are stronger than you think. Even if all participants validating the chain approve an invalid transaction, your own full node can realize that this transaction is invalid and confirm what's right in the chain "without needing trust."

My Node vs Malicious Actors
My Node vs Malicious Actors

Although full nodes are very powerful, setting up a full node from scratch is both very cumbersome and expensive for the end user. Therefore, we have Light Clients. However, they trust that the majority of full nodes are honest, so unfortunately, there is a trust-based situation.

DAS (Data Availability Sampling) is a method that allows users to confirm that data on the chain is available and valid without downloading all the blockchain data. Celestia is currently trying to make this possible with fraud proofs, and Avail with zero-knowledge proofs. They are trying to produce larger blocks and increase the data capacity of blocks with DAS and powerful light clients.

This is especially visible in the context of Sovereign Rollups on Celestia. Users can participate in the blockchain without trusting anyone by running the rollup's and Celestia's light node. Sounds very nice, doesn't it? But how many Sovereign Rollups are currently operating on Celestia? 0.

So where is Celestia currently used? Celestia's main use is to provide cheap data availability to rollups on Ethereum. Although this sounds nice, there is a big drawback: Ethereum L2s using Celestia cannot directly benefit from Celestia DAS. The main reason is that it's impossible to validate DAS on Ethereum. The bridge that proves Celestia to Ethereum only checks whether 66% of Celestia validators have signed the transaction, so any Ethereum Rollup cannot benefit from Celestia's innovative technology.

The same problem applies to Avail, but I know they have plans for this issue, which I won't discuss here as they haven't shared them openly yet.

EigenDA: EigenDA is an application that utilizes EigenLayer and provides Data Availability (DA) services to Ethereum rollups. Yes, I called EigenDA as an applications because it is not a blockchain, but rather an efficient database. This database serves by providing Data Availability oracle to rollups and to all applications that need data availability on Ethereum. Since it's not a blockchain, concepts like a light client don't apply to EigenDA. I won't delve into the technical details, but it offers higher efficiency and cost-effectiveness compared to its competitors. As mentioned earlier, EigenLayer provides only crypto-economic security to applications. In this regard, EigenDA might seem equivalent in crypto-economic security to Celestia and Avail; however, EigenDA could potentially offer higher security through restaking, but there's an important nuance to consider:

Users running Sovereign Rollups and light clients on Celestia can penalize the validators of Celestia for their (potential) misconduct, whereas in EigenDA, this penalty depends solely on the operators. Thus, penalizing misconduct is easier in Celestia. :) whereas I don’t see this improvement in EigenDA.

Each of these three projects has significant advantages in its own right, and I am trying to understand and develop further on the innovations they bring.

The new concept of trust introduced by the crypto-anarchist world: EigenLayer. I believe that the importance of EigenLayer in advancing crypto-economic trust will become increasingly apparent in the future.

Thank you for reading!

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