EigenLayer’s $13bn ready to delegate — but yield on hold until ‘market stabilises’

Promising to revolutionise Ethereum with a novel concept dubbed “restaking,” EigenLayer has quickly become the second largest protocol in decentralised finance, with more than $13 billion in user deposits. Expectation of an EigenLayer airdrop as well as a new source of yield for Ether have contributed to the hype.

On Tuesday, it launched in earnest.

Investors who have deposited crypto in EigenLayer — or the protocols that have done so on users’ behalf — can begin using that crypto to secure EigenDA, the first of many protocols expected to benefit from restaking on Ethereum.

Additional protocols are expected to come online “over the next few weeks,” according to Eigen Labs, the company behind the EigenLayer protocol.

But the profits they’re expected to generate will have to wait a little while longer.

“We are allowing the EigenLayer marketplace to develop and stabilise before introducing in-protocol payments and slashing to mainnet later this year,” Eigen Labs said on its blog Tuesday.

This means that although restakers can delegate their crypto to node operators, they won’t receive any reward for doing so — yet.

Restaking is one of the most anticipated features coming to Ethereum this year. It is expected to reduce the cost and effort of launching protocols that would otherwise run on bespoke blockchains, by letting those protocols use the staked Ether and hardware that secures Ethereum itself. Eigen Labs calls these protocols “actively validated services,” or AVSs.

AVSs’ payments to hardware operators and the “restakers” who provide their already-staked Ether are expected to supplement the slowly declining yield on Ether. That yield was just over 3.5% Tuesday.

Some, including Ethereum founder Vitalik Buterin, have warned that EigenLayer could introduce new risks to the Ethereum ecosystem. Earlier this year, however, founder Sreeram Kannan detailed changes to the protocol’s security model that could quell some sceptics’ fears.

Users have rushed into EigenLayer since the protocol began accepting user deposits last June. The value of crypto deposited in EigenLayer has skyrocketed from less than $300 million in December to more than $13.3 billion on Tuesday, according to data from DefiLlama.

Venture capital has joined the frenzy. In February, Eigen Labs raised $100 million from Andreessen Horowitz’s crypto arm. And in March, billion-dollar liquid restaking protocol Ether.Fi said it had raised $27 million from more than 95 investors.

“Anybody that has the word AVS or restaking is just getting money shoved down their throat,” Ether.Fi CEO Mike Silagadze told DL News at the time.

The first AVS, EigenDA, is also built by Eigen Labs. EigenDA is launching in “beta,” according to the company.

“It is intended to be the endgame for data availability, and the key to eliminating Ethereum blockspace constraints,” according to Eigen Labs.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.