Staked ETH finds new purpose with Eigenlayer’s whitepaper

• The Eigen­Lay­er team was prepar­ing for a phased main­net launch.
• ETH staked on the net­work saw a 16% growth since the Shapel­la Upgrade.

Secu­ri­ty has been a fun­da­men­tal chal­lenge of Web3 since its incep­tion. Ethereum’s [ETH] tran­si­tion to a proof-of-stake mech­a­nism was a sig­nif­i­cant advance­ment as it enhanced decen­tral­iza­tion and secu­ri­ty while reduc­ing the ener­gy con­sump­tion asso­ci­at­ed with min­ing activities.

The net­work is secured by eco­nom­ic incen­tives and val­ida­tors have to lock up 32 ETH. This is done to ensure that val­ida­tors don’t go rogue and indulge in mali­cious activ­i­ties like the 51% attack.

While this strat­e­gy con­tributes to the secu­ri­ty of the base lay­er, the ben­e­fits are not passed on to oth­er appli­ca­tions devel­oped on top of Ethereum. These include sidechains, bridges, and ora­cles and leav­ing them to devel­op their own secu­ri­ty might not be as efficient.

Addi­tion­al­ly, the sharp rise in the num­ber of bridge hacks in 2022 exposed the vulnerabilities.

A game changer for Web3 security?

Eigen­Lay­er is pro­to­col built on Ethereum that allows ETH stak­ers to par­tic­i­pate in val­i­dat­ing new soft­ware mod­ules devel­oped on top of the Ethereum ecosys­tem, accord­ing to its white paper.

The pro­to­col intro­duces what it calls “restak­ing” i.e, staked ETH will be repur­posed to extend secu­ri­ty to oth­er appli­ca­tions. And the secu­ri­ty gets shared across the ecosystem.

Eigen­Lay­er will func­tion as a mid­dle lay­er giv­ing users the right to choose which mod­ule they wish to secure using their staked ETH. Val­ida­tors will earn extra yield in return as the staked ETH is used for secur­ing addi­tion­al applications.

More­over, apart from stak­ing ETH native­ly, val­ida­tors will have an option of stak­ing the liq­uid deriv­a­tives of their staked assets such as Lido Staked ETH [stETH].

Since the pub­li­ca­tion of its white paper, the project received great atten­tion, with many experts prais­ing its nov­el idea. The pro­to­col was suc­cess­ful­ly launched on test­net in April and the team was prepar­ing for a phased main­net launch.

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The stakes are high

As per the Nansen dash­board, the amount of ETH staked on the Bea­con chain has surged to 22.36 mil­lion at the time of writ­ing. The move showed a sig­nif­i­cant 16% growth from what it was dur­ing the Shapel­la Upgrade on 12 April.

Even dur­ing the last 24 hours, there was a net deposit of 182k ETH. This sug­gest­ed that users had more con­fi­dence in the stak­ing mechanism.

Source: Nansen

At the time of writ­ing, ETH exchanged hands at $1,905.35, a mar­gin­al increase in the 24-hour peri­od, as per Coin­Mar­ket­Cap.