Quick Recap

Can you imagine a sandwich without bread? 🍞

That's just meat-ing your expectations halfway! 🥲

Well, the Crypto space without Restaking is like that.

Restaking is the process/concept wherein users receive LSTs for staking their native ETH. These LSTs can then be restaked in order to secure other protocols/networks as well. And yeah, higher rewards too. 💰

EigenLayer is the restaking platform facilitating this, acting as a bridge between the stakers and the AVSs (Actively Validated Services).

The Need?

Not all establishing protocols can have their own validator set to validate transactions. 🤨

Establishing one's own validator set is capital-intensive. 😵

In order to solve this, EigenLayer introduced the concept of pooled security, wherein the networks can be secured by restaked ETH rather than their own tokens.

Staking of Assets

The Concept Of Pooled Security

Carpooling involves the use of the same car for transport by multiple people.

Similarly, pooled security involves the use of staked ETH to provide security across multiple protocols. Users can deposit ETH or LSTs like stETH, rETH, etc., across multiple protocols for higher rewards and increased liquidity.

The Technical Aspect

In order to facilitate this, Validators need to download an additional node software for these modules.

As the validators gain additional revenue, there is also the risk of slashing for any wrong behaviour.

Securing Multiple Protocols

Once the users are in the EigenLayer ecosystem, they can choose from a wide variety of protocols to restake their ETH. Either they can delegate this to Validators through Native Restaking method or do this themselves.

Smart Contract Utilization

These contracts do hold some power! 💪🏻

In EigenLayer, the withdrawal key is mapped to the EigenPod smart contract. Rewards are received by the EigenPod and can be slashed if an AVS being secured misbehaves.

The StrategyManager is the primary entry and exit point for funds into and out of EigenLayer.