With this newly launched protocol, stakers and validators at Ethereum can re-stake the assets on the Eigen testnet. However, the mainnet of the protocol is not expected to be launched till the third quarter of 2023. The testing should be in three stages and welcome multiple participants into the ecosystem.
Ethereum’s EigenLayer Protocol
The proposed first stage of EigenLayer Protocol will use Ethereum’s Goerli testing network. The project announced receiving $50 million in a Series A funding round held in late March 2023 by multiple crypto ventures like Blockchain Capital, Polychain Capital, Electric Capital, Coinbase Ventures and Finality Capital Partner. All these names show a serious backing behind the project.
The EigenLayer wishes to be a decentralized marketplace for the node operators and validators in the Ethereum ecosystem, providing a chance to earn fees on additional services. When one stake Ether on platforms like RocketPool (rETH) and Lido (stETH), some assets are received in exchange; these assets can be re-staked on EigenLayer. These assets could be used again to secure other networks, validation, sidechains, and non-EVM blockchain.
After the Shapella upgrade, which is scheduled to go live on April 12, EigenLayer plans to allow the re-staking of ETH withdrawn from Beacon Chain. Ethereum validators will have to set the withdrawal credentials of the Beacon Chain to the smart contract of EigenLayer and accept their new modules.
EigenLayer Protocol’s Vision
EigenLayer Protocol wishes to solve the incentives issues with the validators. Its founder Sreeram Kannan argues that allowing the movement and re-staking of ETH on other networks shall incentivize stakers and validators by extra yields and facilitate the secure growth of smaller networks.
Ethereum co-founder Joseph Lubin said in March 2023 that the tea at Eigen Labs is working hard and at the precipice of some exciting and innovative work currently underway in Ethereum. Adding to the statement, he said that the EigenLayer is a new paradigm and could fuel protocol-centric innovations across programmatic, decentralized trust marketplaces.
As per the current scenario, around 17.9 million ETH are staked on Beacon Chain, as current prices value it to be around $33.6 billion. This amount is greater than the entire market cap of USDC and represents nearly 15% of Ethereum’s total supply.
The upcoming Shapella upgrade intelligently combines the features of the Shanghai Ethereum Virtual Machine and the consensus layer – Capella. Also includes the changes made in Engine API that links two layers. After the previous transitions like Sepolia and Goerli, the Shapella upgrade will be scheduled for mainnet activation.
According to Ethereum developers, the upgrade would finally enable end-to-end un-staking flow and allow the withdrawals of staked ETH activated on the mainnet. Apart from withdrawals, the upgrade brings new components for the execution and consensus layer, thereby instilling the Ethereum Improvement Proposals like
- EIP-3651
- EIP-3855
- EIP-3860
- EIP-9049, and
- EIP-44895.
These are the standard designating exciting features and new processes for Ethereum.
Shapella network upgrade is scheduled to activate on the Ethereum network and epoch 194048 at 22:27:35 on April 12. It aims to reduce gas fees, improve the network’s scalability, and increase Ethereum’s fees.
Source: https://www.thecoinrepublic.com/2023/04/07/ethereum-brings-re-staking-eigenlayer-protocol-on-the-testnet/