EigenLayer is an exciting new protocol that promises to revolutionise Ethereum. The vault you can find in the SwissBorg app offers you to be the early adopter of restaking. But let’s first make some things clear. Early inevitably means there is risk involved. This is a quick guide to help you understand the risk and potential of EigenLayer.
What is staking and what is restaking?
Staking is the process of validators confirming transactions in a proof-of-stake consensus blockchains. Restaking is EigenLayer’s revolutionary idea that allows these validators to opt-in to transaction mining for other blockchains. To put it simply, restaking will allow users to stake the same ETH on both Ethereum and on other protocols, securing all of these networks simultaneously for an additional yield.
Despite its popularity, restaking remains a complex concept. That's why Kiln one of our partners and the leading enterprise-grade staking platform, is launching a weekly interview series to explore projects within EigenLayer's ecosystem. They kick off with the first episode featuring Sreeram Kannan, EigenLayer's CEO, who unveils his vision for restaking and clarifies the role of AVSs.
Check out all episodes here.
Why does this matter?
Stakers provide security to the protocol. One of the biggest hurdles to overcome for new blockchains is providing trust. Making sure the network is properly secured is as important as the problem it is solving. Trust depends on multiple parameters and providing it requires additional resources. Restaking allows Ethereum to export its trust layer to new protocols which has the potential to accelerate innovation at the infrastructure layer.
Who is the team leading the project?
Developed by EigenLabs, led by University of Washington professor Sreeram Kannan, with team members from AWS, Compound, ConsenSys, Facebook, Microsoft and Protocol Labs.
Important dates and phases of the EigenLayer vault
The EigenLayer vault will be split in multiple phases, as the development of the protocol progresses. In the first phase, the ETH will be deposited on Lido Finance to receive stETH. The stETH collected will be deposited to the EigenLayer smart contract. The dates you need to be aware of are:
Subscription period begins: July 7th, 2023, 2 pm CEST
Vault begins on: July 11th, 2023
Planned end of lockup: April 6th, 2024
Lockup length: 270 days
According to the best estimates from the EigenLabs team, the first phase will likely conclude somewhere in late Q3 this year. The second phase will begin when restaking will be possible. There are a number of operators already waiting in line for restaking, however they are still in the early stage and performing our internal due diligence on these projects at this point is futile.
The second phase, dubbed the Operator testnet is planned to begin in Q3 this year, will allow operators to familiarise themselves with the EigenLayer infrastructure and prepare for seamless service of AVS validation tasks. It serves as a crucial step towards the operator mainnet launch, scheduled for the end of Q4.
The next phase, dubbed the AVS testnet is planned to begin in Q4 this year. EigenLabs is currently in active development of EigenDA, the first AVS scheduled for launch on the EigenLayer platform. They are also collaborating closely with a variety of rollup teams to leverage this offering. The team is also engaged in partnerships with multiple projects to develop and introduce a wide range of actively validated services (AVSs) on EigenLayer.
During the AVS testnet phase, the partners will have the opportunity to refine their offerings, ensuring the highest standards of security and performance. The anticipated AVS mainnet launch is currently scheduled for Q1'24, providing users with a diverse selection of AVS options to enhance their restaking experience.
To ensure the safety of our users’ assets to the best of our ability, stETH will only be restaked with operators vetted in the course of our due diligence procedure. We reserve the right to discontinue the vault at any moment in case our due diligence standards are not met anymore. If that were to happen, please keep in mind that the APY received by vault participants can be lower than expected, however the users will still receive the yield from liquid staking ETH via Lido.
The structure of yield
The estimated yield for the EigenLayer vault sits at 8%, however it is important that our users understand this is just an estimation and that the end result may differ. The actual yield depends on multiple variables and it cannot be accurately predicted.
Like explained above, the basis for the yield comes from stETH. Nobody can know at this stage when exactly restaking will be launched or what the rewards will be. Please understand that the 8% estimated APY is really just that, our best estimate, so be aware that it can vary to either side.
Conclusion
For more detailed information about the risks, please also read the risk report prepared by our risk team. We hope you are excited about EigenLayer and the potential benefits it brings to the Ethereum ecosystem and hope to see you at the start of the presubscription.
