Introduction

Blockchains, while often perceived as a single source of truth that operates as a distributed database, actually encompass a diverse range of components with varied functionalities and complexities that are required to maintain the ledger’s immutability: consensus, data availability, execution, and settlement. While many refer to Bitcoin as digital gold, Ethereum was born with the vision of enabling a decentralized and trustless computer for programmable money. This vision often requires the intervention of software components that leave outside of the main ledger, and for which trustlessness isn’t necessarily inherited from the base layer.

Independent of their nature, blockchains operate in a closed loop, only verifying information within their own system. Developers of a PoS chain like Ethereum can create smart contract protocols, such as decentralized exchanges (DEXs) and lending platforms, benefitting from Ethereum’s robust security network of distributed validators and $ETH stakers. However, it is important to highlight that not all protocols can be built using smart contracts alone. Smart contracts operate within a constrained environment, limited to accessing information only available on that blockchain. As a result, they are fundamentally unaware of any events or data outside of their chain.

For example, to obtain off-chain data such as token prices, applications must rely on oracles. Oracles serve as bridges that make available off-chain external information available on-chain. This dependency on off-chain systems is crucial for integrating real-world data with blockchain applications. Therefore, while Ethereum provides robust economic security for smart contract protocols, it does not extend this security to decentralized infrastructure like bridges, sequencers, data availability layers, co-processors, etc, which often struggle to establish their own security, requiring significant capital and resources (most often with their own native token and crypto-economic incentives to bootstrap and retain a large validator set).

EigenLayer pioneered the concept of restaking, offering the best of shared security and permissionless innovation, critical for simplifying infrastructure development. Operating as a set of smart contracts on Ethereum, it creates a marketplace for decentralized trust, connecting $ETH stakers with infrastructure developers (also known as Actively Validated Services within EigenLayer), allowing the former to offer economic security to the latter in exchange for additional rewards beyond $ETH’s native staking yield. $ETH stakers can opt-in to EigenLayer contracts that extend the crypto-economic security of additional applications called AVS, and they earn AVS-specific yield in return as compensation for their exposure to additional slashing conditions.

Ethereum and $ETH already encompass an extensive security network, which, at the time of writing, includes approximately 33 million staked $ETH and 1 million validators. EigenLayer taps into this large pool of liquidity and allows anyone to build crypto infrastructure without worrying about the source of trust. This ability to rent trust from Ethereum’s security is what unlocks EigenLayer’s value proposition: permissionless innovation. New protocols can leverage Ethereum’s economic security without building it from the ground up. They can programmatically access the necessary level of security based on their specific needs, streamlining the development of decentralized infrastructure.