Welcome to our comprehensive FAQ on EigenLayer and the innovative concept of restaking for Ethereum stakers. This guide serves as a resource for institutional clients considering opportunities to enhance efficiency on existing collateral through EigenLayer's restaking protocol.
What is Restaking?
Restaking enables staked ETH to be used as crypto economic security for protocols other than Ethereum, in exchange for protocol fees and rewards (Source: EigenLayer). Restaking allows staked ETH to secure new projects, known as Actively Validated Services (AVSs), in exchange for rewards. AVS Operators (like Blockdaemon) run infrastructure for the AVSs and the staker chooses a node operator to delegate collateral to.
Protocol on Ethereum that made restaking prominent. EigenDA is the first live AVS on EigenLayer, scheduled to launch on Mainnet in March/April 2024.
How Can Staking Clients Get Involved in Restaking?
Blockdaemon’s recommended route for traditional institutions is via. “Native Restaking” by setting up a validator with an “EigenPod Withdrawal Address”. This route does not involve co-mingling of funds and you can do this now while there are hardly any queues for Ethereum validators.
Existing validators will have to be exited and reactivated with the EigenPod as Withdrawal Address.
Other Restaking Options:
- Staking Liquid Staking Receipt Tokens such as stETH, rETH, cbETH (already commingling in this process; and LST restaking currently paused by EigenLayer on Mainnet)
- Legal Structures like account control agreements (ACA) - contact us to learn more!
What is important regarding compliance risks?
Blockdaemon will not take custody of your funds. Rather, they will be committed into the EigenLayer restaking protocol. You choose to delegate your staking collateral to Blockdaemon either on our node, or define a set of AVSs you want to support specifically that we will host for you. We can also provide white-label solutions if you want to offer restaking to your customers.
If you delegate to our node, rest assured there will be no surprises! We’ll always publicly disclose which AVSs we currently support and give notice before adding or removing any.
Why Should Customers Get Involved?
Higher efficiency for existing collateral as customers’ staked assets generate more rewards. Customers can allocate part of their funds to re-staking and part to normal ETH staking (within the same Blockdaemon staking configuration).
Details on the additional rewards are unknown. When customers collect rewards, those rewards could be ETH token or AVS token or both - this is unclear at the moment.
Stakers benefit from early involvement by accruing points for potential airdrops and facing minimal wait times for validator activation and exit, thanks to currently low queues. However, the risk / reward profile for the additional smart contract risk is to be kept in mind at this stage.
Important Reminder for Customers: Manual Withdrawal of ETH Staking Rewards Required
In standard ETH Staking, you have the option to direct all rewards to one address by setting both the FeeRecipient and Withdrawal address identically. However, when setting up validators on EigenLayer, you must distinguish between two addresses: your own for the FeeRecipient and the EigenPod address for withdrawals, configurable via the Blockdaemon app. Rewards accumulate at the EigenPod address and require manual transfer to your preferred wallet or custodian address. This process involves an additional step and incurs gas fees.
On Airdrop Farming
- Airdrops are speculative at this point in time; EigenLayer has not confirmed any plans/details for a token airdrop.
- Some AVSs might also airdrop tokens but with unspecified distribution criteria. Staker should do their own research.
- Blockdaemon will not be operationally involved in airdrops, in the planning or any other element of the airdrops. Airdrops are determined by EigenLayer and the AVSs in their discretion. The airdrop will most likely go to the wallet addresses that put in the restaking collateral.
Steps for customer on Airdrop Farming
In the EigenLayer ecosystem, users engaging in restaking are accumulating, "restaked points," which could potentially be used as criteria for any future airdrops, but the exact token distribution criteria is unknown right now.
To gather EigenLayer Points, users need to restake their ETH or LSTs within the EigenLayer system. The points earned depend on both the quantity of tokens restaked and the duration of staking, and can be seen in the EigenLayer UI.
Due to the high demand, gaining significant percentages of points when starting now requires a lot of collateral.
To learn more about Blockdaemon's EigenLayer offerings, click here, or simply fill out the form at the bottom of this page.
