Overview of Eigenlayer Operation Mechanism

• Restaking refers to the process of using ETH staked for validating the Ethereum network to perform restaking, sharing security with other protocols while earning additional interest. Eigenlayer can accept native ETH participating in Ethereum PoS, as well as wrapped LST.

• On EigenLayer, restakers can choose to delegate their restaked assets to Operators. Specifically, after restakers delegate their assets to an Operator, the Operator will provide validation services for AVS (Actively Validated Services). Operators participate in the AVS validation process by installing the necessary software to ensure the correct and secure operation of AVS. In return, Operators receive validation rewards provided by AVS and return them to the restakers.

Image source: DeSpread Research

• LRP (Liquid Restaking Protocol) is based on the principle of restaking, replacing user participation in Eigenlayer (for example, users do not need to participate in choosing Operators), while also issuing a layer of LRT (Liquid Restaking Token) of the same value to users.

Image source: DeSpread Research

In-depth Understanding of Operators & AVS

How to Become an Operator? What Services Are Operated? What Functions Are Available?

• An Operator can be an individual or an organization, and by registering in EigenLayer, any Ethereum address can act as an Operator. An address can serve as both a Restaker and an Operator simultaneously (this dual role is not mandatory). Operators enable ETH stakers to delegate their staked assets (native ETH or LST). Operators can participate in the EigenLayer network without needing to re-stake any tokens. Most Operators will receive token delegations from other restakers in the network; otherwise, Operators can choose to self-delegate by allocating their restaked token balance.

• Specifically, Operator nodes are based on Docker and Linux. After completing configuration and registration in eigenlayer-CLI (with a step requiring at least 1 ETH), they can run the AVS software service as long as they meet the standardized requirements for the corresponding node type.

How to Become an AVS? What Services Are Operated by AVS?

• AVS is any system that requires its own distributed validation semantics for verification, such as sidechains, data availability layers, new virtual machines, guardian networks, oracle networks, bridges, threshold encryption schemes, trusted execution environments, etc.

• Each AVS can design and implement contracts that they deem appropriate, as long as their entry point (referred to as 'ServiceManager') implements the interfaces expected by the EigenLayer protocol.

How Do Operators Run Multiple AVS Services? Is There Choice on the AVS Side?

• Quorums are a set of policies used by AVS for shared security measures.

• Specifically, after an Operator completes the tasks given by AVS, they sign the results using BLS signatures and send the signatures to an aggregator entity. The aggregator uses BLS signature aggregation to combine these signatures into a single aggregated signature. Once Operators reach the quorum threshold, the aggregator sends the aggregated signature back to the AVS contract. The AVS contract then verifies whether the results meet the arbitration threshold and whether the aggregated signature is valid. Through this design, AVS aggregates the computations of multiple Operators to enhance security.

• Conversely, Operators can choose to join the validation of one or more AVS (multi-benefit), depending on their preferences and the design of the AVS operation, as long as they have sufficient TVL.

• Currently, the Eigenlayer official website shows which AVS different Operators are participating in. Most run multiple AVS services, while a few only join one AVS (such as ether.fi-8, which only joined EigenDA), and some, like Puffer, have not yet joined any AVS validation.

• The AVS side provides standardized descriptions of workload levels (e.g., lightweight, heavyweight), designs for the minimum work unit, and conditions for Slash (penalties), which do not allow for reverse selection of Operators.

Underlying Logic of the Business Model: Can Operators Obtain AVS Token Incentives? Why Would Operators Help AVS with Security Validation?

• When Operators run the software required for AVS and participate in validation tasks, they ensure the security and correct operation of AVS. These validation tasks may include executing consensus protocols, verifying data availability, etc. Upon successful completion of tasks, the AVS contract pays the Operators corresponding validation rewards, which include the restaking earnings of users.

• Operators also face the risk of being penalized for misconduct or failing to fulfill their validation duties. The core contract of EigenLayer contains strict penalty mechanisms; if an Operator exhibits malicious behavior or fails to validate as required during participation in AVS, their staked ETH may be slashed.

• In terms of returns for ordinary users, neither the Eigen official website nor PoS explorers like StakeRewards provide a clear APY that Operators can offer. Therefore, for ordinary users, there is no single authoritative metric to choose an Operator. The data available includes restake concentration, AVS participated by the operator, restaked value, stakers, and some other dimensions of reputation evaluation. Users need to judge and choose Operators themselves. If users use other LRP protocols, they can skip this step, as the protocol has already handled it.

Participation Opportunities

Operators with Token Issuance Expectations:

• Puffer: 100 $Eigen can earn 1000 Puffer points, but Puffer has not yet joined any AVS validation.

• InfStones: Raised $110M, currently the second-largest Operator on Eigenlayer (by number of stakers), has joined 11 AVS already available on the official website. Can earn Infstones loyalty points. Highly recommended. Currently, points can be earned through staking delegation, referrals, and early bird bonuses. Additionally, there are milestone bonuses distributed based on loyalty points ranking.

  Delegated Earnings: All delegators who delegate to InfStones on EigenLayer will accumulate loyalty points from day one. Each delegated ETH can accumulate 1,000 loyalty points per day. Example: 10 ETH delegated for 90 days can accumulate 900,000 loyalty points.

  Early Bird: Users who delegate to InfStones on EigenLayer within the first 4 weeks will receive an additional 15% boost in overall loyalty points. Example: If 10 ETH is delegated to InfStones on EigenLayer in the first 4 weeks and held for 90 days. Early bird reward: 10 * 1,000 * 90 * 15% = 135,000 loyalty points.

  Referral Bonus: Increase points by introducing InfStones to friends, earning an additional 10% loyalty points. Example: If there are 3 referrers, each receiving 10,000 loyalty points. Loyalty points from referrals: 10,000 * 3 * 10% = 3,000 loyalty points.

How to Obtain Tokens from AVS Projects

• From the already issued AVS project Omni, the number of tokens allocated to Eigenlayer Restakers is 400k, accounting for about 4% of the TGE unlocked tokens.

• Omni tokens are not allocated based on Operators but are airdropped based on Eigen points, with the top 15,000 accounts ranked from high to low eligible for the Omni airdrop.

Cross-Connections Among Investors

• The investors of Eigenlayer and those of AVS projects that have completed financing in the ecosystem generally have little overlap, but some projects do have intersections. For instance, Polychain Capital and Hack VC, which invested in AltLayer, are also investors in Eigenlayer; a16z and Polychain Capital, which invested in Espresso, are also investors in Eigenlayer; other AVS (Omni, Lagrange, Hyperlane) have no intersection with Eigenlayer's investors.

Latest Developments

• On April 10, EigenLayer and EigenDA launched their mainnet.

• On April 30, the Eigenlayer GitHub repository updated the $EIGEN Whitepaper.

• On May 10, token claims began, with the newly established independent nonprofit Eigen Foundation becoming the entity issuing the tokens. The total supply of Eigen tokens at issuance is 1.67 billion, with 45% of the tokens allocated to its community, further divided into equity contributions (15%), community initiatives (15%), and ecosystem development (15%). Additionally, 29.5% of the tokens will be allocated to investors, while early contributors will receive 25.5%. It is reported that the total lock-up period for investors and early contributors is three years, with the first year fully locked, followed by a gradual release of their holdings at a rate of 4% per month over the next two years.

• In the first quarter, a total of 113 million EIGEN tokens, 6.05% initial supply allocation for the first phase, and 0.7% token allocation for the second phase; the remaining 8.25% of tokens will be allocated for future airdrop seasons (the first quarter and second phase are expected to start in mid-June).

Overview of AVS Ecosystem Projects

EigenDA

• EigenDA is the first DA (Data Availability) service launched by Eigen, currently live on the mainnet. EigenDA closely follows Ethereum's Danksharding scaling path, so the DA layer technology path it adopts is also highly related to Ethereum's Danksharding scaling technology path. Furthermore, EigenDA employs erasure coding, KZG commitments, ACeD (Authenticated Coded Dispersal), etc., and achieves decoupling of DA and consensus, performing excellently in transaction throughput, node load, and DA costs. Rollups publish data to EigenDA to achieve lower transaction costs, higher transaction throughput, and secure composability within the EigenLayer ecosystem.

• As of May 8, the TVL of EigenDA's mainnet has reached 3.2M ETH, with a market cap of 9.7B, accounting for about 4% of ETH's total market cap. Currently, projects such as AltLayer, Caldera, Celo, Layer N, Mantle, Movement, Polymer Labs, and Versatus have partnered with EigenDA to plan to use EigenDA's DA services.

• The technical route of EigenDA is based on three components: operators, dispersers (untrusted), and retrievers (untrusted). Operators run EigenDA node software, responsible for storing blobs associated with valid storage requests. Dispersers are hosted by EigenLabs, responsible for Reed-Solomon encoding the blobs, calculating KZG commitments for the encoded blobs, and generating KZG proofs for each block. The dispersers then send the blocks, KZG commitments, and KZG proofs to the operators, who return signatures. The dispersers aggregate these signatures and upload them to Ethereum in the form of calldata for the EigenDA contract to penalize misbehaving operators. Retrievers are used to query blob blocks and verify their accuracy to reconstruct the original blobs. The specific implementation process includes: Rollup Sequencer creates data blobs and requests dispersers to split them, dispersers encode the data blobs and generate KZG proofs, sending the data blocks, KZG commitments, and KZG proofs to EigenDA nodes for verification and signing, and finally aggregating the signatures to upload to the EigenDA contract on the Ethereum mainnet.

AltLayer

• AltLayer is a provider of Rollups as a Service (RaaS), specializing in deploying and managing Rollups customized according to different application needs. AltLayer has launched and supports over 30 application-specific Rollups, covering blockchain stacks such as OP Stack, Arbitrum Orbit, Polygon CDK, ZKStack, many of which integrate EigenDA's DA services.

• AltLayer employs Restaked Rollup technology, combining restaking and Rollup technology to enhance the security, decentralization, and performance of the blockchain. AltLayer introduces three modular components for decentralized ordering, state correctness verification, and rapid finality: VITAL, MACH, and SQUAD, used for decentralized validation of aggregated states, rapid finality, and decentralized ordering, respectively. MACH is AltLayer's AVS (Eigenlayer's AVS interface shows AltLayer MACH), providing rapid confirmation of rollup transactions, cryptoeconomic security (detecting malicious network participants), and decentralized validation of rollup states.

• AltLayer has raised $21.6M, with participation from Binance Labs, and strategic financing led by Polychain Capital and Hack VC on February 19. Currently, AltLayer's market cap is $420M, with an FDV of $3.8B.

Brevis

• Brevis is a ZK co-processor implemented through AVS, featuring a modular architecture and proposing a coChain solution to reduce the costs of ZK co-processors fully based on smart contracts and zero-knowledge proof technology. Brevis coChain is a PoS chain secured by ETH staking, combining OP mechanisms and ZK mechanisms, allowing challenges to be initiated and malicious parties to be penalized through ZKP generation.

• Brevis's architecture includes three components: zkFabric, zkQueryNet, and zkAggregatorRollup. zkFabric collects block headers from all connected blockchains, generates consensus proofs after proving their validity through ZK light client circuits, and provides access to block headers and blockchain states for dApps. zkQueryNet is an open market for ZK query engines, accepting data queries from on-chain smart contracts and generating query results and ZK query proofs. zkAggregatorRollup acts as the aggregation and storage layer for zkFabric and zkQueryNet, verifying and storing proof data and submitting zk proof state roots. Brevis has demonstrated its strong performance in ZK light client circuits in proof of concept, supporting Ethereum PoS, Cosmos, and BNB Chain, allowing EVM and non-EVM chains to access the states of these three chains in a trustless manner.

• The following table summarizes some key circuit performance benchmark data (data obtained from a Linux server with 20 cores, 2.3 GHz, and 384 GB of memory, testing without GPU acceleration). Using these ZK light client circuits, a user-facing zkBridge supporting cross-chain transactions between Ethereum Goeril and BNB Chain has been implemented.

Eoracle

Eoracle is a modular and programmable oracle network, whose security is guaranteed by native ETH rather than using external tokens like LINK. Eoracle's tech stack uses eBF, consisting of a consensus engine (IBFT) and an external validator set configuration protocol (Aegis). eBFT seals blocks using the IBFT consensus engine, provides network capabilities, and governs the network. Eoracle's smart contracts on Ethereum work in conjunction with the Tendermint-based consensus engine to fully implement the Aegis protocol. The validator set configured by eBFT's Aegis uses the restaking feature to configure the validator set and record commitments of the eoracle state. Its features include: instant block finality, proposing only one block at each chain height to avoid forks and uncle blocks; reducing the time between blocks, increasing the block production rate; high data integrity and fault tolerance, ensuring that each block proposal is validated by approximately 66% of validators, thus ensuring the security and performance of the chain.

Lagrange

Lagrange is a parallel ZK co-processor focused on cross-chain interoperability. The project completed a funding round in May 2023, raising $4M, led by 1kx, with participation from CMT Digital, Maven 11 Capital, Lattice, and Daedalus. Lagrange's distinguishing feature is its "parallel" architecture, which differs from Brevis. By mid-2023, Lagrange had launched testnets on Base, Arbitrum, and Optimism. Each node joining the Lagrange cross-chain state committee must stake over 32 ETH.

Witness Chain

Witness Chain is a DEPIN network designed specifically for decentralized IoT devices. The network includes multiple components, such as the DCL (DePIN Coordination Layer), which provides the basic services required for the DePIN ecosystem, such as the security of the chain itself, node bandwidth, and physical location, etc. These basic services are referred to as Watchtowers, used to measure the above data and generate valid proofs in the DCL layer for use. The Watchtower mechanism of Witness Chain achieves super-scaling by verifying transactions on another chain and publicly publishing transaction data for anyone to view. If erroneous transactions are detected, Ethereum validators can use fraud proofs for arbitration. The Rollup Watchtower Network acts as the internal DEPIN of Witness Chain, serving as the first line of defense for L2 Op-Rollups like Optimism and Base, enabling operators to actively validate aggregated transactions and ensure any fraudulent behavior is detected.

AETHOS

AETHOS is a decentralized strategy engine that can execute customizable rules and conditions for on-chain transactions. Utilizing off-chain computation and cryptoeconomic consensus enabled by EigenLayer, it provides a flexible and secure policy layer for blockchain applications. The network authority of AETHOS includes pre-trade strategies set at the smart contract level, executing transactions only when the corresponding smart contract rules are adhered to. It can access both on-chain and off-chain data (e.g., historical fund flows, blockchain analytics, verifiable credentials, dynamic allowlists, etc.) to enforce policies. AETHOS offers a trust-minimized rule-making system for application developers to implement policies executed by economically incentivized operator networks, which can be published and modified by specific individuals, groups, or communities.

Blockless Network

Blockless Network is a modular network architecture with dynamic resource matching and random distribution capabilities. Blockless employs a random allocation algorithm for task distribution to reduce the risk of malicious behavior on the network. It also features a WASM secure runtime, enabling it to support applications built on various mainstream programming languages (including Python, JavaScript, Go, and Rust), expanding accessibility and allowing developers to easily integrate their applications. The dynamic validation mechanism of Blockless further enhances its security and performance.

Drosera

Drosera is a security protocol that utilizes hidden security intentions to curb and mitigate attacks through a decentralized event response protocol. This protocol enhances the overall security of blockchain networks by detecting and responding to potential network threats and attacks through covert security operations.

Espresso

• Espresso provides a decentralized ordering solution for connecting L2 solutions (shared sequencing market and finality tools). Espresso is building a shared sequencing market that allows rollups to auction the rights to build their blocks. Its core technologies include Espresso's sequencing market and HotShot shared finality layer. Compared to Metis, Espresso offers modular Sequencer shared components to handle transaction ordering needs for all Rollups.

• On March 22, 2024, Espresso Systems completed a $28 million Series B funding round, led by a16z. The latest round of funding has brought Espresso's total funding to over $60 million.

• User transaction requests first go through Espresso's shared Sequencer center, then are batch processed and returned to layer 2. Using the Hotshot proof-of-stake system ensures the decentralization of the Sequencer and the reward and punishment mechanism. Utilizing the Ethereum security consensus provided by Eigenlayer.

• Espresso's sequencing market allows L2 Rollups to sell their sequencing rights in a combined lottery operation, with a simple version of the market planned for launch in Q2 2024. The HotShot shared finality layer is Espresso's consensus protocol and shared finality layer, completing the results of the combined lottery and L2 transactions. Nodes participating in HotShot consensus also constitute Tiramisu (Espresso's data availability layer). L2 applications (including Rollups) interact with Espresso and with L1 chains to facilitate trustless state checkpoints. Espresso runs smart contracts on Ethereum to track HotShot state commitments and allows other projects to reuse these state commitments on other chains.

Ethos

Ethos is a security layer that enables Cosmos chains to leverage the economic security of restaked ETH to guide the validator network. ETH stakers can restake their ETH on EigenLayer by delegating tokens to Operators that support Ethos. These Operators delegate equity distribution to a selected group of guardians, who validate the Ethos Layer 1 chain (referred to as the "guardian chain"). By opting into a shared security mechanism, these guardians can collectively validate or delegate to protect any combination of L1 chains, extending the security of restaked ETH beyond the Ethereum ecosystem. The Ethos ecosystem consists of three layers: AVS contracts deployed on EigenLayer can securely delegate restaked ETH to Ethos Guardians; using restaked ETH to jointly validate or delegate to other L1 Guardian chains; and chains powered by Ethos, utilizing guardians to easily guide decentralized trust networks and/or enhance their economic security.

Hyperlane

Hyperlane is a universal and permissionless interoperability layer (application building platform) built for modular blockchain stacks. In September 2022, Hyperlane completed a $18.5 million funding round, led by Crypto Investor Variant, with participation from Galaxy Digital, CoinFund, Circle, Figment, Blockdaemon, Kraken Ventures, and NFX. In September 2023, Hyperlane launched its V3 mainnet.

Near

NEAR is a chain abstraction stack, adopting sharding and PoS as an L1 blockchain. NEAR's current main narratives include three aspects: chain abstraction (CA), data availability (DA), and artificial intelligence (AI). These narratives showcase NEAR's technical diversity and innovation capabilities, positioning it significantly within the blockchain ecosystem and providing developers and users with rich functionalities and application scenarios.

Omni

• Omni is an integrated Rollup layer for Ethereum, addressing the L1 interoperability of Rollups. Omni's narrative is to solve the fragmentation caused by Rollups (which Omni considers the greatest existential threat facing Ethereum). As Rollups become increasingly popular, Ethereum's users and their capital are becoming more dispersed across isolated ecosystems, reducing the global network effect. Omni addresses this issue by integrating all Rollups into a cohesive, interoperable network. Omni features include: a dual staking model (ETH + OMNI), fast verification using Tendermint and CometBFT, support for diverse Rollups, and backward compatibility.

• The TGE was completed on April 17, 2024, with a current market cap of $149M and an FDV of $1.42B.

Silence Laboratories

Silence Laboratories provides a multifunctional toolkit for MPC-TSS and privacy-preserving computing, characterized by speed, versatility, and scalability. Although there is limited information about the project on Twitter and in documentation, its MPC library has demonstrated strong potential and practicality in the fields of multi-party computation and privacy-preserving computing.

Xterio

Xterio is an Alt derivative chain, focusing on an L2 blockchain for the gaming ecosystem. Xterio utilizes AltLayer's RaaS to issue a layer 2 blockchain based on EigenDA and OP Stack, focusing on AI and Web3 gaming-related scenarios. Xterio L2 employs AltLayer MACH (AVS for fast finality), and AltLayer also provides MACH services to Optimism's mainnet. Through these technologies, Xterio offers a highly efficient and powerful blockchain platform for game developers and users.

Aligned Layer

• Aligned Layer is based on ETH, aiming to provide cost-effective zero-knowledge proof validation.

• On April 25, 2024, it was announced that Aligned Layer completed a $20 million Series A funding round, led by Hack VC, with participation from dao 5, L2 IV, Nomad Capital, and others. Ten days prior to the Series A funding, on April 15, 2024, it completed a $2.6 million seed round led by Lemniscap, with participation from Bankless Ventures, Paper Ventures, Sreeram Kannan, Brandon Kase, Daniel Lubarov, DCbuilder, Chainyoda, Weikeng Chen, Sami BENYAKOUB (samnode_), Peter Fittin (SizeChad), and Lucas Kozinski, as well as strategic investments from StarkWare and O(1)Labs.

• AlignedLayer aims to become a universal validation layer that is no longer limited by the speed and cost of EVM. AlignedLayer receives proofs from different sources, varying in size and verification time, and has dedicated validators that can quickly check the validity of each proof and publish the results to Ethereum. Users can choose to obtain rapid soft finality on AlignedLayer or wait for hard finality on Ethereum. The current progress expectation is to launch the Eigenlayer public testnet in May and the mainnet in September.

Automata Network 2.0

• Automata is a modular proof layer proposing TEE (Trusted Execution Environment) co-processors (a new concept within EigenLayer AVS), with the narrative of helping Rollups become open, modular, and verifiable. In its launched machine proof (Proof of Machinehood), it utilizes Op Rollup and zero-knowledge proofs to achieve hardware authentication on-chain, ensuring the authenticity and uniqueness of machines. It is positioned as a Multi-Prover AVS, allowing decentralized networks to securely execute and verify computations using TEEs from multiple heterogeneous vendors. AltLayer supports one-click deployment of Automata Network's modular framework.

• As early as February 2022, Automata Network received strategic investment from Binance Labs. In August 2023, Automata Network announced that the Automata 2.0 testnet has officially launched (in collaboration with AltLayer), extending machine-level trust to Ethereum.

Openlayer

• Openlayer's narrative is a modular data layer. In implementation, it uses OVC (Optimistic Verifiable Computing) and modular verification components. The project is building an AVS called OpenOracle, allowing user-operated nodes to provide and verify external data sources for smart contracts in an optimistic and cryptographically provable manner.

• Endorsed by a16z CSX, Geometry Ventures, LongHash Ventures, and others.

Dodo

• DODOchain is positioned as Omni Trade Layer 3, supported by Arbitrum Orbit, EigenLayer, and AltLayer (built on AltLayer MACH). DODOchain will leverage EigenDA to provide consensus and security features for Ethereum. It connects Ethereum rollups and the Bitcoin network, integrating liquidity into a single platform for seamless cross-chain trading.

• Tokens have been issued, with a market cap of $103M and an FDV of $168M.