EigenLayer Redistribution: A New Frontier.
EigenLayer is soon turning on the ability for the slashed funds to be distributed to the AVS building on top, as opposed to burning the slashed funds (which is what L1s that have slashing do today).
This enables whole new categories of applications to be built on top of EigenLayer: categories of financial applications we had not designed it for.
EigenLayer was originally designed with the intent to build verifiable services to augment the crypto developer ecosystem. We invented a new model for PoS security: StakeSure which is a mechanism for redistributing slashed funds for an L1 to its harmed users. Redistribution in EigenLayer is a mechanism to achieve this property. When staking to an operator, slashing is usually for malicious behavior of the operator - thus the stakers are underwriting "operator risk".
The market is inventing new mechanisms for utilizing the stake in EigenLayer and using it to underwrite other "financial risks": slashing if an operator does not meet a financial target. With these newer risks come higher rewards.
On this new frontier, there are new rewards to be earned along with new risks. We strongly encourage every staker and operator to clearly understand and evaluate their risk profile to see if any specific AVS meets their risk / reward tradeoffs. EigenLayer is a permissionless protocol, which means the protocol does not have agency; instead the protocol passes on this agency to the stakers and operators.
Excited for this new emergent frontier in EigenLayer! I cannot help but feel this is what Ethereum devs must have felt when restaking emerged on top allowing validators to do other things. With this feature, EigenLayer stakers can do more than serve "actively validated services" they can serve any financial use case - an unexpected and emergent frontier.
@capmoney_ is pioneering a radically innovative design in this category and pushing the frontier. We are excited they chose to build their product on @eigenlayer. Happy exploration to the pioneers and delighted to have @capmoney_ lead the charge!
x.com/sreeramkannan/…
EigenLayer is soon turning on the ability for the slashed funds to be distributed to the AVS building on top, as opposed to burning the slashed funds (which is what L1s that have slashing do today).
This enables whole new categories of applications to be built on top of EigenLayer: categories of financial applications we had not designed it for.
EigenLayer was originally designed with the intent to build verifiable services to augment the crypto developer ecosystem. We invented a new model for PoS security: StakeSure which is a mechanism for redistributing slashed funds for an L1 to its harmed users. Redistribution in EigenLayer is a mechanism to achieve this property. When staking to an operator, slashing is usually for malicious behavior of the operator - thus the stakers are underwriting "operator risk".
The market is inventing new mechanisms for utilizing the stake in EigenLayer and using it to underwrite other "financial risks": slashing if an operator does not meet a financial target. With these newer risks come higher rewards.
On this new frontier, there are new rewards to be earned along with new risks. We strongly encourage every staker and operator to clearly understand and evaluate their risk profile to see if any specific AVS meets their risk / reward tradeoffs. EigenLayer is a permissionless protocol, which means the protocol does not have agency; instead the protocol passes on this agency to the stakers and operators.
Excited for this new emergent frontier in EigenLayer! I cannot help but feel this is what Ethereum devs must have felt when restaking emerged on top allowing validators to do other things. With this feature, EigenLayer stakers can do more than serve "actively validated services" they can serve any financial use case - an unexpected and emergent frontier.
@capmoney_ is pioneering a radically innovative design in this category and pushing the frontier. We are excited they chose to build their product on @eigenlayer. Happy exploration to the pioneers and delighted to have @capmoney_ lead the charge!
x.com/sreeramkannan/…
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