Key Takeaways:
- Discover what EigenLayer is and how it revolutionizes the staking scene through liquid restaking on Ethereum.
- Explore the possibilities EigenDA has brought for data availability on blockchains with its association with EigenLayer.
- Look at how you can become part of the brewing and breakthrough ecosystem as a decentralized business.
The blockchain space never fails to deliver huge surprises, with new subdomains often peeking through the busy markets. EigenLayer has been a revelation in recent times that has sowed the seed to redefine how several underlying aspects of blockchain operations function forever. Ever since its inception in mid-2023, EigenLayer’s reception in the Ethereum ecosystem has been overwhelmingly positive, leading to quick advancements in a short timeframe. Now, EigenLayer and EigenDA (the first of its validated services) have arrived on the Ethereum mainnet, signing a new era of growth for decentralized businesses and Web3 enthusiasts. Our blog will focus on what these novel solutions do and how you can be inspired by them as a restaking platform development business.
A Recap on Staking Cryptocurrencies
As we know, staking in the blockchain space is the process of pledging/locking cryptocurrencies to a blockchain in return for rewards from the network. This process has become a pivotal part of many networks that have adopted the Proof-of-Stake (PoS) consensus mechanism, which has become extremely popular due to its power-efficient nature.
Staking serves as an essential way for PoS blockchains to build a pool of validators who will process and validate transactions. These members will receive rewards for validating transactions and lose staked crypto coins if they are caught processing illegitimate transactions. Apart from directly staking on-chain, there are numerous staking platforms present where retail investors can become part of a pool, earning rewards based on the staked volume.
Restaking Cryptocurrencies: A New Frontier
While staking has become very popular in the blockchain space, it comes with several limitations, as given in the below points:
- Firstly, networks like Ethereum require people to pledge 32 ETH to become a validator. Locking such a large volume of money in return for variable incentives (that depend on how busy the network is) is not a great idea in the long run.
- Secondly, people who become part of staking pools from DeFi applications only gain a small income (although consistent). Also, rewards offered are primarily in the form of liquid staking tokens (LSTs) that tend to have limited functionality, such as in-app payments, leading to wasted cryptos lying idle on wallets.
Hence, comes restaking, a revolutionary concept that lets people pledge staked crypto and liquid staking tokens through exclusive smart contracts, a concept pioneered by EigenLayer’s developers. This process enables people staking their cryptos/LRTs on a PoS blockchain to restake on various DeFi protocols as a way to contribute to their liquidity and earn rewards.
EigenLayer: Inspiring Restaking Platform Development
EigenLayer is essentially a crypto restaking platform built on Ethereum. It enables people to stake their pre-staked Ether or liquid staking tokens received from protocols like Lido or Rocket Pool. The platform enabled restaking on the Ethereum mainnet on June 2023 after immense testing on the Ethereum testnets Goerli and Holesky. Since then, an ecosystem has sprawled quickly, mainly fueled by the reward points provided by the platform for users, which are yet to have a utility.
The platform provides a connecting portal for projects looking to gain crypto-economic security and people looking to perform staking/restaking in an easy way. EigenLayer also provides numerous Actively Validated Services (AVS), which, according to the platform, include sidechains, data availability layers (DAL), virtual machines (VM), oracle networks, keeper networks, and bridges, among others. Operators provide various services to these AVS (including securing applications), to whom investors can delegate their crypto tokens.
Now that EigenLayer has brought its own AVS EigenDA to the Ethereum mainnet, it is vital for us to check out the underlying details of data availability layers on blockchains.
Are You Planning to Launch a Restaking Protocol Like EigenLayer?
Recapping Data Availability Layers (DAL)
Remember that we listed data availability layers (DALs) as one of the Actively Validated Services (AVS) that can benefit from EigenLayer’s restaking protocol? Data availability has become a crucial aspect in the modern-day Web3 space as data stored across blockchains multiplies manifold.
- Basically, data availability layers are protocols that help decentralized applications (dApps) and layer-2 blockchains (especially those based on rollups) store transaction data and other relevant information. They ensure data can be readily accessed by all nodes of a blockchain without any concerns of censorship, ensuring trustlessness is preserved.
- These solutions have become popular among layer-2 blockchains as they let them store transaction data, smart contract details, and other off-chain information easily. By doing so, L2 networks can enjoy increased throughput, transaction speeds, and responsiveness.
The space surrounding DA layers is still nascent, meaning there are not many powerful players making merry in the market. EigenDA promises to be a killer app for the space due to its affiliation with an infrastructural foundation in the reputed EigenLayer protocol.
EigenDA: Bolstering Data Availability on the Ethereum Ecosystem
EigenDA is an AVS (in fact, the first one) built on the EigenLayer, which was launched recently for public use. The data availability solution comes with several jaw-breaking benefits that could pave the way for better experiences for layer-2 networks based on rollup technology and even dApps.
- The EigenDA platform is highly scalable, enabling over five times higher throughput compared to competitors. We have to note that the solution currently has a network of 200 operators who will secure it. The developers of EigenLayer say that the operator count will be increased with time to ensure optimal scalability for clients.
- This data availability protocol is also secured as there will be numerous operators securing it at any time. Such a distributed operational procedure ensures that data security and integrity will remain optimal even if one or multiple nodes failed. Operators cannot willingly commit mistakes, as doing so could result in the slashing of their staked/restaked crypto (the feature is yet to be implemented).
- EigenDA is also decentralized and powered by a design based on Danksharding that can scale Ethereum data availability solutions using data blobs. Using such a design opens the channel for rollup blockchains to become compatible with everyday operations, which could become difficult without sufficient technology support.
Is It Possible to Launch a Restaking Protocol Like EigenLayer?
With EigenLayer becoming a revered platform in the blockchain space for its emphasis on infrastructural facets, you might be wondering about the prospects of launching a similar solution. Well, such lines of thought might have contributed to the launch of restaking platforms like EtherFi and Renzo Protocol.
Both of these applications allow people to restake liquid staking tokens on EigenLayer in an easier manner. These applications reward users for locking cryptos in the form of liquid restaking tokens or points that could have their own use cases.
If you’re looking to launch a restaking protocol like EigenLayer, remember there will be a lot of work to do, which will eventually be worth it. Alternatively, you can opt to create feeder dApps like the ones we mentioned to resonate well with users.
Conclusion
Henceforth, we have seen how the EigenLayer ecosystem has paved the way for refining the foundational aspects of blockchain technology. By enabling restaking to secure various services, the protocol could be the solution large-scale dApps and L2 rollups require in the long run. With its official launch on the mainnet alongside its own data availability solution (EigenDA), EigenLayer promises to address prominent challenges faced in the blockchain industry. If you are inspired by such a novel model and want to create one for your own, it could be the perfect time to begin. Our experienced restaking platform development team at Blockchain App Factory can assist you in converting your ideas into a real-life platform, making your dreams come true. Get in touch with one of our experts now to begin your blockchain business journey!
