2 months ago 2 min read

Innovative Testnet Launched By EigenLayer Upends Ethereum Staking


Recently, the testnet introduction of a new protocol called EigenLayer allowed Ethereum validators and stakers to "re-stake" their assets onto other new networks.

This is a significant advance since it gives validators the opportunity to increase their rewards and supports the safe expansion of smaller networks. Leading cryptocurrency investment firms including Blockchain Capital, Coinbase Ventures, Polychain Capital, Electric Capital, and Finality Capital Partner have invested $50 million in the protocol.

In order to integrate different participants into the ecosystem, testing will be done in three stages before EigenLayer's mainnet debut in Q3. The Goerli testing network for Ethereum will be used in the first phase.

The goal of EigenLayer is to develop into a decentralized marketplace where Ethereum validators and node operators can charge fees for extra services. The protocol enables validators to validate and secure other networks, like as sidechains or non-EVM blockchains, using the same assets, in addition to allowing them to restake assets they earned in exchange for staking Ether on platforms like Lido (stETH) and RocketPool (rETH).

The protocol includes plans to enable restaking for ETH removed from the Beacon Chain after the Shapella upgrade, according to Eigen Layer's white paper. Validators can opt in to new modules developed on EigenLayer and set their beacon chain withdrawal credentials to EigenLayer smart contracts.

Sreeram Kannan, the founder of EigenLayer, has emphasized the protocol's ability to address problems with validator financial incentives. He thinks that making it easier for ETH to be transferred to and staked again on other networks would reward validators and stakeholders with higher yields and enable smaller networks to expand safely.

Eigen Layer is at the vanguard of some of the most fascinating work now taking place in Ethereum, according to Ethereum co-founder Joseph Lubin, who also lauded the technology. A programmable, decentralized trust marketplace, he continued, called EigenLayer a new paradigm for supporting protocol-centric innovation. It is important to note that EigenLayer has received funding from Lubin's Ethereal Ventures fund.

17.9 million ETH, worth about $33.6 billion, are currently staked on the Beacon Chain. This is more than the total market value of USDC and accounts for about 15% of the entire Ethereum supply.

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