The AVS Ecosystem: Powering Innovations with EigenLayer

Introduction

EigenLayer Mainnet has officially launched, attracting a significant number of restakers and Actively Validated Services (AVS), eager to leverage the crypto-economic security provided by Ethereum. In this article, we will delve into what AVSs are, how they function, and how to support them. By clarifying the basics of AVSs, our goal is to cultivate a well-informed community of restakers who can benefit from this innovative technology.

EigenLayer Quick Recap

In our previous explainer article, we explored the rapid ascent of EigenLayer within the Ethereum ecosystem, highlighting its position as a middleware platform that enables the re-staking of staked ETH. This innovative process allows users to secure additional projects beyond Ethereum itself, thus earning extra rewards.

EigenLayer’s architecture, featuring smart contracts known as EigenPods, facilitates this by allowing stakers to pledge their staked assets to Actively Validated Services (AVSs), enhancing security and reward possibilities.

In this article, we take a deeper dive into the specific functions and benefits of EigenLayer AVSs in this evolving landscape.

EigenLayer-AVS Ecosystem Mapped

AVS

An Actively Validated Service (AVS) is an external program that operates independently of EigenLayer but uses its protocol to validate its services. Unlike typical components within the Ethereum ecosystem, an AVS can be written in various programming languages such as Rust, Go, or C++ and does not inherently run on EigenLayer.

Validation Process

Validation ensures that a service operates correctly. In blockchain technology, validation involves verifying that the blocks added are correct. Similarly, an AVS uses the EigenLayer protocol to validate its functionality by leveraging the consensus power and security of the Ethereum network.

Interaction with EigenLayer

The AVS communicates with the Ethereum and EigenLayer ecosystem through an AVS smart contract. This contract acts as a single point of contact, handling service validations and the distribution of rewards.

Stakeholders

• AVS: Validates its services to run applications.
• ETH Stakers: Choose an operator to restake and validate supported AVSs.
• Operators (e.g., Luganodes): Connect the AVS with stakers and facilitate the restaking process, by handling the technicalities.

Operators like Luganodes support specific AVS through a dedicated smart contract. ETH stakers looking to support AVSs can select Luganodes based on the availability of the AVS in their offerings. AVS currently supported by Luganodes are listed on the EigenLayer page of our website.

Flowchart

Now that we have established a clearer understanding of what an AVS is, let’s look at the process flow of how the whole ecosystem with AVSs functions.

Initial Step: Restaking Ethereum

In EigenLayer, users can either directly restake Ethereum (Native Restaking) or use liquid-staked ETH tokens such as stETH.

The first part of the process involves utilising a staking service provider, such as Luganodes - who will restake ETH tokens by setting up a validator. This validator has its withdrawal address mapped to the EigenPod.

Users' total EigenLayer wallet balance reflects the total amount of ETH directly (native) or indirectly (liquid staking) pledged to EigenLayer. Users must first choose a staking method: direct restaking of Ethereum or using liquid-staked ETH tokens like stETH.

For restaking, users have to utilise a restaking service provider/operator. This operator sets up a validator with its withdrawal address linked to the EigenPod address.

Once restaked, the total balance of pledged ETH (both native and liquid) is updated in the EigenLayer wallet.

Participation in the Ecosystem:

Post-restaking, users are now active in the EigenLayer ecosystem. Their allocated ETH will be used to provide security to the AVSs. This interaction is actively managed through an AVS Operator, like Luganodes, which offers tailored AVS operation services.

Communication and Validation by Operator:

Operators are integral to the infrastructure of EigenLayer, facilitating the necessary communication and validation between Ethereum and AVSs. Each AVS sets up a dedicated smart contract, which serves as the exclusive communication link between the operator and the AVS.

Operator Registration:

Operators start their involvement by submitting their unique identifier key to the AVS. The AVS, in turn, triggers its specific smart contract, inputs the operator’s private key, and executes required RPC calls to initiate a transaction. This formally registers the operator to validate the AVS, ensuring they can fulfil their role effectively.

This way the process of restaking is complete. The reward distribution methodology is yet to be defined, but a smart contract-based non-custodial solution is expected soon.

The restakers have the option to unstake anytime, without the need for any operator intervention.

The AVS Smart Contract is the only way in which the AVS interacts with the EigenLayer

Visualizing all this in our diagram, we can identify multiple operators (Operators 1 to 6) and several AVSs (AVS1, AVS2, and AVS3), each with their respective smart contracts (AVSSC 1, 2, and 3).

For the Restakers

The process, as previously explained, is intriguing yet intricate. However, it's straightforward for those restaking. For earning extra yields on their staked ETH, users just have to make a few choices.

• Native ETH or LST: Users have flexible options—they can either directly restake their own ETH or delegate it to a Liquid Staking protocol and then restake the resulting LST. Importantly, the choice between these options does not impact profits, as the crucial factor is the total amount of ETH pledged, whether directly or indirectly. Previously, there were caps on how much LST could be pledged, but these have now been removed.
• AVS : Restaking is an excellent way to support projects simply by pledging staked ETH. While currently there is no provision to select specific AVSs, if a delegator wants to support a specific AVS, they can go to that AVS's page and pick an operator from that AVS's operator set.
• Operators: Choosing an operator is similar to selecting a staking provider. It’s crucial to opt for one with a strong track record and robust security. Each operator supports a specific range of AVSs. If you have a preferred AVS in mind, finding a compatible operator is crucial. Luganodes regularly updates its list of supported AVSs, providing a variety of investment opportunities.

Users can navigate between the AVSs they want to invest in and the operator(s) they trust. Operators may use different addresses or mechanisms to represent the combinations of AVSs they support. This modular approach allows stakers to tailor their choices to their specific risk and reward preferences.

At the moment one can only delegate their whole restaked amount to one operator, which adds to the necessity of choosing a reliable operator.

EigenLayer Smart Contract Architecture

We explained how the whole AVS workflow takes place, from your ETH to the AVS. And as in PoS blockchains, these intricate flows are enabled by smart contracts. Let’s take a look at the three major smart contracts which form the backbone of the architecture.

TokenManager: This is the initial point of interaction for staking activities within EigenLayer. It receives tokens from stakers and manages the allocation to various TokenPools based on the token type. The TokenManager ensures that each pool receives the correct tokens and updates the accounting records to reflect shares and stakeholder interests.

DelegationManager: Following the staking process, the DelegationManager takes over to manage the relationships between stakers and operators. It is responsible for tracking which operators manage which TokenPools and handles the distribution of operator shares. Additionally, it manages the enrollment and tracking of Actively Validated Services (AVS), allowing operators to support various services and providing stakers with options to select from, based on their preferences for risk and reward.

SlasherManager: As the final critical component, the SlasherManager maintains the integrity of the system. It interfaces with AVS developers to establish and enforce slashing rules tailored to specific security needs. This component also processes proofs against operators who fail to fulfil their obligations or act maliciously, ensuring that the system remains secure and trustworthy.

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EigenLayer is now live on Mainnet along with @eigen_da and 5 other AVSs, opening delegation to operators!

In this thread, we 'll dive into the architecture of @EigenLayer & what happens when you're restaking, while understanding the basics of its core smart contracts🧵👇 pic.twitter.com/qQAIHCNvK6— Yanshu | Luganodes (@0xyanshu) April 11, 2024

AVS Landscape

AVSs are remarkably diverse, each with its unique ethos, operational framework, and use case. For example, one AVS might be designed as a social media platform, while another could serve security needs. This variety demonstrates the broad applicability of AVS, positioning them as independent services akin to today's applications. They utilize Ethereum through EigenLayer to validate their services, integrating blockchain technology into their core functionality. Here’s our list of live and upcoming AVSs which we shall keep updating for your reference!

Polyhedra

Polyhedra is pioneering an innovative zk proof-based infrastructure designed to facilitate trustless and efficient cross-chain interoperability. It employs parallel and distributed computation technologies and integrates restaking through EigenLayer, aimed at augmenting the security and operational efficiency of both Layer-1 and Layer-2 chains. By leveraging zkBridge, Polyhedra significantly reduces verification costs on EVM-compatible networks.

Partners/Backers: Polychain, Binance Labs

Ethos

Ethos offers a transformative solution for blockchain security by allowing Cosmos appchains to tap into Ethereum's staked ETH. This integration dramatically lowers the barriers to entry for new chains by reducing security costs and simplifying validator setup. Ethos enhances interoperability and economic stability, enabling developers to focus more on innovation and less on complex stakeholder management.

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Aethos

Aethos is focused on creating the first decentralized policy engine. This platform enables developers to establish unique transaction-specific policies for smart contracts while maintaining control through a decentralized, trust-minimized network. Node operators are incentivized both reputationally and economically through EigenLayer.

Partners/Backers: Information not available

Drosera

Drosera introduces a trustless and decentralized approach to exploit detection and loss mitigation, featuring the world’s first decentralized automated responder collective (DARC) native to the Ethereum ecosystem. This automation protocol simplifies the complexities involved in monitoring systems.

Partners/Backers: Anagram, Arrington Capital, Zeal Capital, Everstake, 01Node, Marin Ventures, Infinite Capital, Mike Silagadze (Co-Founder of Ether.fi), Rok Kopp (Co-Founder of Ether.fi)

Witness Chain

Witness Chain implements watchtower networks for rollups, utilizing re-pledge to enforce Proof of Diligence and Proof of Location to ensure rollup security and physical node decentralization.

Partners/Backers: Ethereal Ventures, Polychain Capital, Robot Ventures, Frontier Capital, dao5

Blockless

Blockless serves as an infrastructure platform for launching, integrating, and securing Network Neutral Applications (nnApps). Its network-neutral application allows users to support these applications merely by using them.

Lagrange

Lagrange utilizes restaking to establish secure and scalable light client solutions for optimistic rollups, known as Lagrange State Committees.

Partners/Backers: 1KX

Hyperlane

Hyperlane empowers developers to secure interchain application messages using restaked economic security provided by EigenLayer, enhancing the safety and reliability of cross-chain communications.

Partners/Backers: Galaxy Digital, Figment, Blockdaemon

Omni

Omni is a low-latency interoperability network that securely connects all Ethereum rollups. It uses restaking to ensure robust and speedy communications across various platforms.

Partners/Backers: Pantera Capital, Two Sigma Ventures, plus two other entities

Silence Labs

Silence Labs is dedicated to building MPC-based authentication libraries and SDKs that are stack and device-agnostic, catering to a wide range of web applications.

Partners/Backers: Pi Ventures

Mangata (Now Gasp)

Mangata/Gasp is developing infrastructure that facilitates native swaps between Ethereum and other blockchains through the use of multi-chain ZK rollup technology, enhancing interoperability and transaction efficiency.

Partners/Backers: IOSG, Polychain, TRGC, Signum Capital, CMS

OpenDB

OpenDB allows users to access their favourite databases from Ethereum smart contracts, ensuring cryptoeconomic integrity and seamless integration.

Espresso

Espresso is creating a shared sequencer solution that promotes rollup decentralization, interoperability, and a robust, highly scalable data availability layer. It leverages restaking through EigenLayer to optimize node usage, capital efficiency, and ensure credible neutrality and security.

Eoracle (Lightblocks)

Eoracle is a decentralized oracle network that enhances the reliability and security of blockchain-based information by incentivizing operators with restaked ETH and Eoracle tokens.

Partners/Backers: Pillar VC, Zero Knowledge, Big Brain Holdings

Brevis coChain

Brevis coChain is a Zero-Knowledge (ZK) coprocessor that enhances smart contracts by enabling them to access and compute across extensive historical on-chain data in a trustless environment. It utilizes a propose-challenge model to optimize data verification and cost efficiency, significantly reducing the necessity for frequent ZK proof generations.

AltLayer MACH AVS (Restaked Rollup)

AltLayer MACH AVS, operational on the EigenLayer mainnet for Optimism mainnet, provides fast transaction pre-confirmations with economic backing. It offers crypto-economic security and decentralized validation of rollup states, enhancing transaction reliability for applications requiring immediate confirmations.

Xterio MACH AVS (AltLayer-powered) (Restaked Rollup)

Serving the Xterio rollup, Xterio MACH AVS focuses on improving gameplay on the XterioGames platform by allowing faster transaction processing. This AVS facilitates the development of new on-chain gaming genres by reducing delays associated with Ethereum’s transaction finalizations.

Partners/Backers: Binance Labs

EigenDA

Part of the EigenLabs ecosystem, EigenDA serves as a Data Availability (DA) Layer on EigenLayer, exemplifying the potential of actively validated services (AVS). It enhances Ethereum's scalability by ensuring reliable and accessible data storage for rollups, distributing the workload across a network of node operators and focusing on decentralization.

Automata

Automata is a modular attestation layer that establishes trust in computing machines by verifying their authenticity on-chain. Using TEE Coprocessors within EigenLayer’s AVS framework, Automata enhances rollups with secure, verified computing, aligning them with Ethereum’s future vision of open, modular, and verifiable innovation.

Luganodes AVS Offering

Luganodes has consistently supported new technologies and has been an early adopter of the latest in Web3. EigenLayer is no exception, with its novel and useful idea being an important focal point.

Building partnerships and close collaborations with AVSs is crucial for establishing EigenLayer as a strong offering. As a restaking provider and AVS operator, Luganodes is already actively working with many first movers. The list of supported AVS networks increases every month. Here are some of the first AVSs to join the Luganodes list.

• Eoracle
• Lagrange State Committees
• EigenDA
• Brevis coChain
• Witness Chain
• Omni
• Automata Network

Conclusion

The AVS method is revolutionary in creating unique services that require validation. By leveraging the large security pool of Ethereum through EigenLayer, even newly developed ideas can attain industry-standard security. Bridging EigenLayer, the AVSs, and users will be the role of Luganodes' infrastructure. Stay tuned as we continue to make strides on this exciting new journey.

Maximize your Ethereum investments by restaking with EigenLayer through Luganodes. Benefit from supporting innovative Actively Validated Services (AVS) and earn rewards. Restaking is simple with our detailed guide available here.

Explore the list of AVSs we currently support, on our dedicated EigenLayer page. Learn more about staking and restaking on our website, and feel free to contact us for any queries!

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 45+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.