Introduction

EigenLayer was founded in 2021 and has emerged as one of the most innovative protocols built on top of Ethereum, yet it remains shrouded in mystery for many crypto enthusiasts as everyone complains that it is too difficult and complicated to understand.

This blog post breaks down EigenLayer in three difficulty levels, from beginner to advanced user. Whether you're new to crypto or a seasoned developer, you'll find an explanation that matches your understanding. We'll demystify terms like "restaking," "AVSs," and "intersubjective faults" that often leave people scratching their heads.

Some notable projects in the crypto space - including Mantle, MegaETH, and ZK Sync - are already leveraging EigenLayer's unique capabilities. By the end of this article, you'll understand why.

If you prefer learning from a video instead, go ahead and watch this intentionally overedited and chaotic explainer:

EigenLayer explained for Noobs

The Core Concept: Renting Ethereum’s Security

At its most basic level, EigenLayer is a protocol that allows other projects to "rent" Ethereum's existing security. Think of it as security-as-a-service.

Here's the problem EigenLayer solves: When you want to create a new decentralized network, you face two major challenges:

1. Attracting enough users and capital to make your network secure

2. Preventing bad actors from disrupting your network

Building this security from scratch is extremely difficult. EigenLayer offers a brilliant shortcut - it lets new projects leverage the massive security that Ethereum has already built up over years.

AVSs: The Building Blocks of EigenLayer

The core functionality of EigenLayer revolves around what are called AVSs or Autonomous Verifiable Services. These are essentially hybrid applications that use both on-chain and off-chain components.

Initially they were called "Actively Validated Services," but the name was changed to make it easier to understand. You can think of AVSs as specialized services that can be deployed on EigenLayer and thus make use of Ethereum’s security.

Some real-world examples include data availability services (like EigenDA used by MegaETH), oracle networks, or specialized computation services.
Key Players: Restakers, Operators, and Users

The three main participants

1. Restakers: These are Ethereum stakers who choose to "restake" their ETH in EigenLayer. By doing so, they're essentially saying, "I'm willing to put my staked ETH at risk not just for Ethereum consensus, but also for these additional services." In return, they earn additional rewards.

2. Operators: These are the parties who actually run the AVSs. Restakers can either operate services themselves or delegate their stake to specialized operators who run the technical infrastructure. Operators earn fees for providing these services.

3. Users: These are the people and applications that use the services provided by AVSs built on EigenLayer.

The beauty of this system is that it creates a "trust marketplace" where security is effectively rented out from Ethereum to other protocols. If operators misbehave, they can have their stake slashed, which creates strong economic incentives for good behavior.

A TLDR for someone new would be: EigenLayer allows Ethereum's existing security to be reused for other purposes, making it easier and cheaper to launch new secure services in the crypto ecosystem.

EigenLayer explained for Pros

How does restaking work?

Restaking on EigenLayer can occur through two primary methods: native restaking and via liquid staking tokens.

In native restaking, validators who already run Ethereum nodes with 32 ETH staked specify an EigenLayer contract address in their validator credentials. This gives EigenLayer permission to slash their stake not just for Ethereum consensus violations but also for misbehavior in AVSs they opt into. It's essentially a dual-purpose commitment of their ETH.

For those using liquid staking solutions (like Lido, Rocket Pool, etc.), EigenLayer supports restaking of liquid staking tokens (LSTs). This is crucial because it democratizes access to the system - you don't need the full 32 ETH to participate. When you restake your LSTs, you're similarly putting them at risk for additional services beyond regular Ethereum consensus.

How AVSs Function

AVSs (Autonomous Verifiable Services) operate by creating sets of operators for different tasks and setting specific staking requirements for each. For example, Task A might be assigned to Operators 1, 3, and 4, while Task B is assigned to Operators 1, 5, and 6.

Operators can run multiple AVSs and be part of multiple operator sets simultaneously, as long as they meet the staking requirements for each. This creates a flexible system where operators can run multiple services and services can create custom operator sets for different functions

If an operator misbehaves, their stake gets slashed - but only the portion allocated to the specific task where the misbehavior occurred. This concept is called "unique staking”.

Unique Staking

One of the more sophisticated aspects of EigenLayer is how it handles risk across multiple services through unique staking. This concept allows operators to participate in various AVSs without exposing their entire stake to each one.

Using the example from the previous section, if Operator 1 is part of both Task A (along with Operators 3 and 4) and Task B (with Operators 5 and 6), its stake is divided among these tasks. If Operator 1 misbehaves on Task A, only the amount it staked specifically for Task A can be slashed—the stake allocated for Task B remains safe. This creates a system of risk isolation that encourages participation across multiple services without multiplying the operator's total risk exposure.

EigenLayer Explained for Trenchwarriors

Cryptoeconomic Security

Let's figure out what they mean by cryptoeconomic security. If you were to spin up a new blockchain and use proof-of-stake as a means of security, you'd have to start from scratch - attracting validators, establishing economic incentives, and gradually building security over time.

Let me give you an example: Protocol A is secured by $1 million worth of stake. You create Protocol B and somehow manage to get $100K in stake. If you've ever been within 100 feet of a classroom, you'll realize that A has 10 times more value locked in as stake compared to B. An attacker looking to compromise Protocol B only needs to overcome the $100K security threshold - a relatively low barrier.

However, if Protocol B is built on top of Protocol A, the attacker would need to overcome a combined security threshold of $1.1 million (both A and B combined). This significantly increases the cost of attack, making it economically unfeasible in most scenarios.

In this framework, Ethereum serves as Protocol A, while AVSs on EigenLayer represent Protocol B. The term "cryptoeconomic" is quite literal: "crypto" refers to ETH as the underlying asset, while "economic" refers to the cost calculation that makes corruption financially irrational.

What does “Intersubjective” mean?

Now, you might be wondering about this "intersubjective" concept that appears throughout EigenLayer documentation. To understand it, we need to distinguish between three types of faults:

1. Objective faults: These can be proven on-chain through code. For example, if an operator signs two conflicting blocks, this can be cryptographically proven, and opinions are irrelevant. It's like stating 9 + 10 = 19: it's mathematically verifiable. Sorry to all my Vine fans but it’s not 21.

2. Subjective faults: These cannot be proven on-chain nor verified by external observers in any consistent way. They're purely opinion-based, like claiming Gulab Jamun is the best dessert in the world - entirely dependent on personal preference.

3. Intersubjective faults: These cannot be proven on-chain but would generally have broad agreement among reasonable observers about whether a violation occurred. It's like someone causing a kerfuffle at a formal crypto conference - while not objectively measurable, most reasonable people would agree it's inappropriate behavior.

Where Does Intersubjectivity Come Into Play?

In the context of EigenLayer, the concept of intersubjectivity comes into play with the EIGEN token itself, which is called the "Universal Intersubjective Work Token." This is where things get particularly interesting.

For objective faults, your restaked ETH gets slashed. For intersubjective faults, your EIGEN tokens get slashed. EigenLayer does not cover subjective faults.

The way EIGEN gets slashed is quite different from traditional slashing mechanisms. EIGEN is actually a wrapper token over bEIGEN (backing EIGEN).

If someone disagrees with a decision taken in the system due to an intersubjective fault, they can burn some of their bEIGEN and create a fork of it - let's call it bEIGEN2. Anyone who agrees with their assessment can switch to this fork. Over time, if their judgment was correct, the free and open markets would converge on their fork, effectively devaluing the original bEIGEN. The EIGEN token would then become a wrapper around bEIGEN2 instead of the original bEIGEN. This mechanism is known as "slashing by forking".

Conclusion

In this article, we’ve seen how EigenLayer revolutionizes blockchain security by letting new protocols "rent” Ethereum's established security instead of building from scratch. Through restaking, unique staking, and the EIGEN token's handling of intersubjective faults, it creates a trust marketplace benefiting everyone in the ecosystem.

Thank you so much for reading to the end! I hope you enjoyed this article and learnt something new. Until the next one 🫡