What is EigenLayer?
EigenLayer is a protocol built on Ethereum for restaking, which is a new approach for Web3 builders. It aims to remove a key obstacle faced by many DApps by providing a security framework for developers. This protocol allows validators to make their staked ETH more useful while maintaining security and providing services as secure as the staked ETH network.
Why was EigenLayer developed?
Ethereum is a secure foundation for decentralized applications and has become the best base layer. However, many Web3 builders want to push the boundaries of Ethereum's processing capabilities and offer secure off-chain services to the community.
EigenLayer therefore acts as an add-on that allows developers to build infrastructure without increasing costs, reducing complexity, and enabling them to create their own blockchain networks and services. EigenLayer solves the bootstrapping problem. This allows for the creation of new Web3 services by assembling a network of available operators, rather than starting from scratch.
The main benefits of building Actively Validated Services (AVSs) on EigenLayer are:
Security through Restaking: Leverage Ethereum's staking mechanism to secure your services.
Focus on your core value proposition: Spend less time and resources bootstrapping economic security from scratch.
Rapid bootstrapping: Quickly access a large and experienced network of operators.
Decentralization and trust: Build decentralized infrastructure with trust minimized.
Composability: Seamlessly integrate with the broader Ethereum ecosystem.
What is Restaking?
The relationship between EigenLayer and restaking lies in its ability to reuse locked liquidity, essentially enabling you to earn yields twice from the same capital. This differs from traditional staking, where assets are staked solely for network security. EigenLayer allows staked Ethereum to secure multiple protocols simultaneously in exchange for protocol fees and rewards from various sources, without locking up additional capital. This makes the process more capital efficient and reduces the barrier to entry for new protocols.
Ecosystem of Actively Validated Services
Image Source: EigenLayer Whitepaper
Benefits of Restaking
For protocols: Restaking solves the bootstrapping problem, which refers to the need for new network participants or nodes to join an existing blockchain. This allows new protocols to easily establish shared security through EigenLayer, rather than building and maintaining their own trust networks.
For validators or restakers: Restaking is a key driver in increasing the value derived from staked ETH. It allows validators to re-stake on various protocols, which reduces their operating costs.
For the Ethereum network: Restaking enhances the economic security of Ethereum. By consolidating previously fragmented security, it makes Ethereum more secure and increases the cost of attacks.
Maintaining balance through restaking: Restaking can generate higher returns for ETH. If demand for ETH increases, the supply of ETH decreases as holders stake their ETH and new buyers purchase ETH. This leads to an increase in ETH price and, consequently, an increase in ETH returns.
What is the EIGEN token?
EIGEN, or EigenLayer, is a "Universal Intersubjective Work" token within the EigenLayer ecosystem. It is designed to secure Actively Validated Services (AVSs). Its staking mechanism is designed to address shortcomings in decentralized operations. Unlike traditional tokens that focus on neutral validation, EIGEN handles errors that may not be provable online but can be clearly identified off-chain.
Examples of EIGEN token capabilities beyond blockchain security include:
Staking for intersubjective faults on the EigenLayer platform.
Performing validation across Actively Validated Services (AVSs).
Incentivizing and penalizing operators based on participant performance.
EIGEN Token principles to empower the EigenLayer ecosystem – Image Source: Eigen Foundation
Interesting Price Information for EIGEN
According to data from the CoinMarketCap website on 4 February 2025, EIGEN token has a market capitalization of $440,310,843 USD, equivalent to approximately 14,914,050,735 THB.
At the time of writing this article, the EIGEN token is trading at around $1.87 USD or approximately 63.50 THB per EIGEN. The token reached its all-time high (ATH) of $5.65 USD or approximately 191.44 THB per EIGEN on 17 December 2024.
References: EigenLayer, EigenLayer Documents, Consensys, Hacken, Ben Wee Medium, CoinMarketCap, Cointelegraph
Disclaimer
- Cryptocurrency and digital tokens involve high risks; investors may lose all investment money and should study information carefully and make investments according to their own risk profile.
- Past Returns do not guarantee future returns/performance.
Was this article helpful?
That’s Great!
Thank you for your feedback
Sorry! We couldn't be helpful
Thank you for your feedback
Feedback sent
We appreciate your effort and will try to fix the article