Thread by @theweb3sharma

@eigenlayer unlocks OPEN INNOVATION on Ethereum 🔥🔥

It has the potential to unlock 10-100x capabilities on #ETH ecosystem

Innovation is value add- $$$
#ethereum #eigenlayer #trust #innovation

We all can be early to this! Here is quick summary 👇👇

Blockchains are trust layers. Every new innovation needs a new trust network

🔸First came Bitcoin- which is right now the most secure network

🔸Then came the idea of general purpose trust network, with programmable network like Ethereum

But,

🔸Ethereum also had its limitations by design which could not changed unless a coordinated consensus is achieved

🔸This led to coming of age Layer 1s like Solana, Avalanche which used different design parameters to build new networks

Lets say you are building a new application and you need a different:

🔸1. consensus OR
🔸2. finality

What do you do?

🔸You create a new network!!

One thing that is a cause of contention for every new network.

🔸TRUST LAYER

🔸Protocols need trust layers where participants come together and validate the network in a decentralized way.

But is there a way,

🔸I can use the trust network, borrow decentralized trust to anyone who wants to consume it?

This is what Eigen Layer does:

🔸It is a marketplace for trust layer, trust can be bought and sold.

🔸Eigen layer is a series of smart contracts that allows,

🔸Stakers to participate/opt in to provide security to a protocol

Why would they do that?

🔸Because, you get rewarded EXTRA YIELD for providing security to protocol

🔸Also, you get slashed if the you misbehave in the protocol on Eigen layer

Why is Eigen layer on Ethereum?

🔸Because its POS and Programmable

🔸POS - positive incentives to stakers but negative incentives for misbehaviors (if proven)

🔸Programmable - multiple smart contracts can be written that leverages the ETH trust network

How does it work-How does Eigen layer slash your Eth?

There are 2 ways of restaking:

🔸1. Liquid Restaking:

🔸Stakers take the LSD ETH and lock it in Eigen layer smart contracts, giving permission to Eigen layer to slash it if they misbehave.

🔸2. Native Restaking:

🔸When you stake on ETH, you can set withdrawal credentials/power to Eigen layer smart contracts

How does this impact ETH security?

Lets say there was a smart contract bug:

🔸1. Slashing is then triggered by contract and,

🔸2. Eigen layer currently uses a DAO that reviews slashing

So,

🔸Slashing by Eigen layer can be contested and vetoed by the DAO

🔸It remains to be seen how and when Eigen layer unlocks the Innovation

Eventually

🔸One day there is so much activity that it is as big as Ethereum

You don't want to miss out on that $$$

If you liked the thread, follow and RT @theweb3sharma

https://twitter.com/theweb3sharma/status/1620059276478930944?t=Z3FBKpetjBHNUuZDey1HbQ&s=19

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