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the slashed stake is no longer wasted.
the idea behind slashing is simple, punish bad actors.
on eigencloud, operators run services (avs), and in return they get delegated stake from restakers. but that comes with a promise: follow the rules, or get slashed.
until now, when slashing happened, the staked capital was simply burned. it was meant to be punitive.
but it punished everyone equally, even honest restakers who didn’t know what they signed up for. and it left value on the table.
with redistribution live on mainnet, that changes.
redistribution is the next evolution of slashing. instead of sending slashed funds to a burn address, eigenlayer now lets avss choose what to do with that capital.
redistributable operator sets can:
reimburse affected restakers
reward honest operators
route funds to a safety module or insurance pool
even use slashed assets to build native capital buffers for things like lending, stablecoins, or risk hedging
this gives avss fine-grained control over incentives, penalties, and recovery.
avs creates a redistributable operator set
this must be declared at the time of operator set creation
standard operator sets cannot be converted into redistributable ones later
operators opt in
they agree to run the avs under the given slashing rules
slashing conditions are defined offchain in the avs logic
restakers delegate
they choose to back these operators with capital
they must assess the slashing logic and redistribution policy beforehand
if a slash occurs
a slashId is recorded onchain
funds are moved from the slashed operator
instead of burning, they are sent to a predefined redistributionRecipient
downstream contracts can automate how the capital is reused
this adds a programmable layer to slashing, turning a pure penalty into a flexible coordination primitive.
Cap, a stablecoin protocol built on ethereum, is the first avs to adopt redistribution.
here’s what it does:
cap offers yield-bearing stablecoins backed by institutional borrowers
borrowers must stake capital and commit to loan terms
if they default, cap can trigger a slash
redistribution sends the slashed capital to a pool that protects stablecoin holders
this creates one of the first stablecoins with onchain financial guarantees.
lending with native slashing-backed guarantees
protocols can offer unsecured loans with real risk coverage
insurance that isn’t just a promise
slashed funds cover claims directly
cross-chain bridges with actual SLAs
breach an uptime or delivery guarantee? get slashed and pay the user
rwas with fallback logic
missed payments or regulatory issues? use redistribution to compensate
redistribution turns slashing into a source of capital, not just a deterrent.
fully opt-in: redistribution is optional. avss must declare it, operators must opt in, and restakers must delegate with care.
only for erc-20s: native ETH and EIGEN are not yet eligible.
immutable once set: operator sets can’t switch between redistributable and non-redistributable.
security risk goes up: if an avs or operator gets compromised, slashing + redistribution can lead to actual fund theft.
stakers must do due diligence. look for:
clear slashing logic
trusted redistribution recipient
secure governance and key management
read documentation to get started: Redistribution Docs
learn more about what users can expect with Redistribution here.
read the Redistribution ELIP and comment on the Discussion Post
reach out with questions on Discord
track ongoing protocol updates on the Forum
redistribution brings us closer to capital-aware crypto systems. it helps apps enforce guarantees. it creates insurance-like protections. it lets protocols do more with less.
and most of all, it rewards good actors while protecting users from the bad.
this isn’t just a patch. it’s a primitive.
redistribution is live. eigenlayer is now a programmable trust layer for capital.
let the infinite games begin.
the slashed stake is no longer wasted.
the idea behind slashing is simple, punish bad actors.
on eigencloud, operators run services (avs), and in return they get delegated stake from restakers. but that comes with a promise: follow the rules, or get slashed.
until now, when slashing happened, the staked capital was simply burned. it was meant to be punitive.
but it punished everyone equally, even honest restakers who didn’t know what they signed up for. and it left value on the table.
with redistribution live on mainnet, that changes.
redistribution is the next evolution of slashing. instead of sending slashed funds to a burn address, eigenlayer now lets avss choose what to do with that capital.
redistributable operator sets can:
reimburse affected restakers
reward honest operators
route funds to a safety module or insurance pool
even use slashed assets to build native capital buffers for things like lending, stablecoins, or risk hedging
this gives avss fine-grained control over incentives, penalties, and recovery.
avs creates a redistributable operator set
this must be declared at the time of operator set creation
standard operator sets cannot be converted into redistributable ones later
operators opt in
they agree to run the avs under the given slashing rules
slashing conditions are defined offchain in the avs logic
restakers delegate
they choose to back these operators with capital
they must assess the slashing logic and redistribution policy beforehand
if a slash occurs
a slashId is recorded onchain
funds are moved from the slashed operator
instead of burning, they are sent to a predefined redistributionRecipient
downstream contracts can automate how the capital is reused
this adds a programmable layer to slashing, turning a pure penalty into a flexible coordination primitive.
Cap, a stablecoin protocol built on ethereum, is the first avs to adopt redistribution.
here’s what it does:
cap offers yield-bearing stablecoins backed by institutional borrowers
borrowers must stake capital and commit to loan terms
if they default, cap can trigger a slash
redistribution sends the slashed capital to a pool that protects stablecoin holders
this creates one of the first stablecoins with onchain financial guarantees.
lending with native slashing-backed guarantees
protocols can offer unsecured loans with real risk coverage
insurance that isn’t just a promise
slashed funds cover claims directly
cross-chain bridges with actual SLAs
breach an uptime or delivery guarantee? get slashed and pay the user
rwas with fallback logic
missed payments or regulatory issues? use redistribution to compensate
redistribution turns slashing into a source of capital, not just a deterrent.
fully opt-in: redistribution is optional. avss must declare it, operators must opt in, and restakers must delegate with care.
only for erc-20s: native ETH and EIGEN are not yet eligible.
immutable once set: operator sets can’t switch between redistributable and non-redistributable.
security risk goes up: if an avs or operator gets compromised, slashing + redistribution can lead to actual fund theft.
stakers must do due diligence. look for:
clear slashing logic
trusted redistribution recipient
secure governance and key management
read documentation to get started: Redistribution Docs
learn more about what users can expect with Redistribution here.
read the Redistribution ELIP and comment on the Discussion Post
reach out with questions on Discord
track ongoing protocol updates on the Forum
redistribution brings us closer to capital-aware crypto systems. it helps apps enforce guarantees. it creates insurance-like protections. it lets protocols do more with less.
and most of all, it rewards good actors while protecting users from the bad.
this isn’t just a patch. it’s a primitive.
redistribution is live. eigenlayer is now a programmable trust layer for capital.
let the infinite games begin.
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5 comments
Slashing isn’t just a punishment anymore. With redistribution live, AVSs can repurpose slashed funds to reward honest actors, protect users, and build custom logic! Capital-aware coordination just became real 🤝 https://paragraph.com/@coordinated/redistribution-is-live-on-mainnet
mint the article for free on mirror: https://mirror.xyz/0xc4CeE6b5bA826663cf1a41da52541c6Dc0413cEe/-HDygxNHDycnL4qAwrB1lTY74stTG4Dtf8C4rcc-mU0
Redistribution 🫡
redistribution 🤝
good read!