The WhitePaper Reading Club
March 12, 2024 [Session 12]
Key Points:
- Observation: An application, DApp, chain is only as secure as its weakest link. Most applications, for instance, that use Oracles, reduce their security to the security of the Oracle. Eigenlayer wants to become this “weakest” link.
- Outsourcing Trust/Security: Eigenlayer allows applications or chains (AVS) to use Ethereum’s staked ETH to secure themselves instead of building a network of stakers/miners from scratch. This will enable applications to “focus” on building their application or service.
- Leverage: It’s a way for stakers to lever up their tokens’ yield. Instead of securing 1 network with X amount in ETH, you secure Y networks with X amount in ETH.
- Consolidates Security/Network Effect: Since all applications will build on Eth, the goal for this is for
- Decentralized Trust Marketplace: EigenLayer introduces a decentralized marketplace for Ethereum stakers to provide security and validation to various chains/AVS.
- B2B: Eigenlayer is still middleware, so developers still need to build staking modules that integrate with the Eigenlayer protocol. It is more optimized for large stakers such as Fabric or the like and Chains like Base.
- Decoupling Innovation and trust allows DApp developers to build faster, as they do not need to build trust before they can build their application.
- Ethereum becomes the “trust machine”?
Questions:
- Does AVS merge the concepts of an L2 chain or DApp? There will no longer be chains, as all DApps will ultimately become their chains and vice-versa.
- What is Superfluid staking (pg5)
- Doesn’t all the LST staking, LP staking, and Restaking (pg 5) create additional leverage, which ultimately weakens Ethereum's security? Isn’t this antithetical to what Eigenlayer proposes to do?
- Solo-Staking (pg 6): I can see a use case for this, as is with Lido. Is it realistic, especially as the complexity of slashing becomes more complicated (@Sam)?
- Pg 10 - Unclear how they are fighting the security vs. centralization dilemma.
- What happens if multiple AVS decide to slash the same group of ETH?
- Single-slot finality: Very cool, but how do we do this?
- Will Eigenlayer grow to be bigger than Ethereum in terms of the value at Stake? And in terms of marketcap?
Thoughts:
- It is different from “merge mining,” as there is no merge mining in Bitcoin miners. Additionally, each miner has a physical limitation on computing resources, while each ETH staked can be reused infinitely. (pg 7, pg 8)
- Light-Node Bridges (pg 11): moving from resource-hard security to economic security. Like moving away from the gold standard and into the money-printing world.
- Principal-agent problem: is a concept from economics and organizational theory that arises when one party (the principal) delegates authority or decision-making responsibilities to another party (the agent) to act on their behalf. However, the interests of the principal and the agent may not always align perfectly, leading to conflicts of interest.
- Eigenlayer develops a lot of power in the network, transaction inclusion and ordering (MEV) as they control the staking nodes (pg 12).