EigenLayer’s Mainnet Launch: A Glimpse of the Future of Ethereum Staking

EigenLayer, the much-anticipated Ethereum reprocessing protocol, has made its debut on the blockchain's mainnet. Although the construction is not yet fully operational, it is a major milestone for the project which has started to generate more than 13 billion dollars.

TLDR

EigenLayer, an Ethereum recycling protocol with over $13 billion in assets, has launched partially on the Ethereum mainnet. Some key features, such as intra-protocol payments from Actively Authenticated Services (AVS) to operators and throttling, will be introduced later in 2024 after EigenLayer's marketplace stabilizes. EigenDA, a data delivery service and the first AVS launched on EigenLayer, aims to help other blockchain applications store transaction data. Other AVS can be registered with EigenLayer but cannot be fully deployed yet, and redemption of rewards is not currently live. EigenLayer's growth has attracted significant investment from venture capital firms such as Andreessen Horowitz (a16z) and led to the creation of liquidity rebalancing protocols such as Ether.fi and Puffer.

However, the partial launch has led some in the crypto community to question the extent of EigenLayer's current capabilities and the timing of introducing key features.

The main goal of EigenLayer is to enable users to redeem their previously held Ether (ETH) tokens to earn additional rewards. This innovative approach has the potential to change the landscape by helping users maximize returns while simultaneously contributing to the security of the Ethereum network and other blockchain applications.

One of the most notable aspects of EigenLayer's launch is the introduction of the Data Delivery Service (EigenDA), which serves as the first Active Authentication Service (AVS) on the protocol. EigenDA aims to provide a solution for other blockchain applications to store their transaction data securely and efficiently. This service can be useful for developers who want to build on the Ethereum network as it provides a reliable and decentralized storage option.

Despite the excitement surrounding the launch of the main network, Eigenlayer explained that several critical features are still under construction and will not be available until 2024. These features include protocol fees from AVS to operators and a system called fraud, which penalizes verifiers for not performing their duties properly. The decision to delay the implementation of these features is to allow sufficient time to develop and stabilize the EigenLayer marketplace before introducing additional complexity.

The absence of these key features has led some industry experts to question the extent of EigenLayer's current functionality. Kristen Kim, vice president of research at Galaxy Digital, recently highlighted the awards in a post on social media X, also known as Twitter. Kim's comment highlights the importance of these features in realizing the full potential of the EigenLayer protocol.

So still no prizes?

— Christine Kim (@christine_dkim) April 10, 2024

While other AVS can register with EigenLayer, they cannot fully deploy on the protocol at this time. This limitation may temporarily limit the platform's growth and adoption as developers and users look forward to the introduction of more comprehensive features and capabilities.

Despite these challenges, EigenLayer's growth has not gone unnoticed by the venture capital community. The protocol has attracted significant investments from well-known companies such as Andreessen Horowitz (a16z), which contributed to the $150 million raised by Eigen Labs, the development firm behind EigenLayer. This influx of capital shows the high confidence in the potential of the project and its ability to reshape the landscape of stocks and securities in the crypto industry.

The emergence of EigenLayer led to the creation of a new category of protocols called fluid recovery. Projects like Ether.fi and Puffer have fueled the growing interest in EigenLayer by allowing users to deposit their funds and receive liquid tokens in return.

These protocols introduced their own point systems to encourage user participation, further adding billions of dollars to EigenLayer's deposits.