# What is EigenLayer?

By [novie](https://paragraph.com/@novie) · 2024-10-14

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EigenLayer introduces a **restaking model**, aiming to resolve the fragmented security landscape in blockchain networks. Restaking allows **staked ETH** to be reused, providing additional security for other protocols while maintaining Ethereum’s base security. Through EigenLayer, participants can earn **additional rewards** by securing multiple protocols but must also accept the risks of potential **slashing penalties** from those protocols.

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### **Challenges and Solution Offered by EigenLayer**

Ethereum’s security is decentralized across middleware applications and non-EVM-compatible solutions, making it expensive to build and maintain secure networks. EigenLayer simplifies this by enabling protocols to **reuse Ethereum’s security**. Validators can **restake ETH** to protect new applications or protocols, like data bridges or data availability layers, without requiring separate security infrastructures.

EigenLayer **extends slashing conditions** to staked ETH, ensuring that validators act honestly across protocols. This design enables protocols to utilize Ethereum’s robust security while benefiting from validators’ services on the **EigenLayer market**.

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### **Restaking Mechanism**

EigenLayer’s restaking model is built on two principles:

1.  **Pooled Security:**
    
    *   Allows multiple protocols to leverage Ethereum’s security, raising the cost of attacking individual applications.
        
    *   Validators agree to additional slashing conditions, making their ETH collateral subject to penalties if they misbehave on other protocols.
        
2.  **Free-Market Governance:**
    
    *   Protocols can control how much pooled security they consume based on supply and demand.
        
    *   Validators have the freedom to **choose risk-reward parameters** and determine which protocols they want to serve, fostering competition and efficiency in the market.
        

Protocols benefit from **reduced costs** since they can buy security from EigenLayer’s open market instead of creating their own security networks. Restakers, in turn, can **reinvest their capital** across multiple protocols for higher profits.

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### **Applications of EigenLayer**

The first project built on EigenLayer is **EigenDA**, a **data availability layer** for offloading data security from Ethereum. Using a **dual quorum model**—with Ethereum stakers and Rocket Pool participants—EigenDA achieves **15 MB/s throughput**, which is **176 times higher than Ethereum’s current capacity** without Danksharding. Future upgrades could push throughput to **1 GB/s**.

Other potential applications include:

*   **MEV Boost**: Maximizing miner extractable value.
    
*   **Oracles**: Providing real-time data feeds for smart contracts.
    
*   **Bridges**: Securing cross-chain transactions.
    

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### **Restaking Options on EigenLayer**

1.  **Solo Staking:**
    
    *   Validators can independently provide validation services for protocols or delegate operations to other operators while continuing to validate Ethereum’s network.
        
2.  **Trust Model:**
    
    *   Validators delegate operations to a trusted operator. If the operator violates agreements, they face **slashing penalties**.
        

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### **Advantages of EigenLayer**

*   **Cost-Efficiency:**  
    Developers leverage Ethereum’s security without maintaining their own infrastructure.
    
*   **Customizability:**  
    Protocols can choose to prioritize decentralization, scalability, or other features.
    
*   **Validator Flexibility:**  
    Validators control which protocols they secure and under what conditions.
    

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### **Risks of EigenLayer**

Using EigenLayer introduces risks, as restaked ETH is exposed to **multiple protocols’ slashing rules**. If a protocol secured by EigenLayer is compromised, it could result in **collateral loss**, impacting both the validator and Ethereum’s network stability.

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### **Current Status of EigenLayer**

After two airdrops, EigenLayer experienced **a 40% decline** in Total Value Locked (TVL), dropping from **$20 billion to $11.93 billion** as users began withdrawing assets. Among the liquid staking tokens, **stETH from Lido** dominates, accounting for **66.1% of all assets** deposited in the protocol.

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*Originally published on [novie](https://paragraph.com/@novie/what-is-eigenlayer)*