Actively Validated Services (AVS) harness restaked ETH for cryptoeconomic security, giving restakers the opportunity to earn more yield.
In our latest Space, we were joined by Amrit from AltLayer, Ismael from LAGRANGE, Tommy from Mangata Finance, Matt from Omni Network and Ranvir from Witness Chain to discuss restaked rollups, Actively Validated Services and the role these key protocols are set to play as EigenLayer develops.
In case you missed it, here are some highlights from the event!
How would you describe an AVS to someone who isn’t familiar with EigenLayer?
"When we look at Ethereum, there are already a number of roles that a validator takes on as part of constructing Ethereum consensus. The task of a validator is already split between multiple responsibilities; however with an AVS you give tertiary responsibility to an Ethereum validator with the expectation that their stake in some way is not tied to that tertiary commission. This lets you take the security of Ethereum and repurpose it for applications that might not have the same requirements for full consensus, but have more expressivity in what they can independently do."
— Ismael, LAGRANGE
"Imagine a middleware service that you have in the space that serves a certain purpose in a decentralized manner — this is known as an AVS. To put it simply, consider an AVS as a sidechain that not only requires a certain SDK to run but also validators to come and operate the network. EigenLayer and restaking allows you to borrow security from Ethereum in the form of assets that are already there i.e. ETH or an LST. Once you have that asset, you can use it to bootstrap and provide security for the middleware service."
— Amrit, AltLayer
What led you to build an EigenLayer AVS?
"At AltLayer we originally wanted to build our own network using one of the SDKs that allows you to build app chains. We quickly realized that it came with the problem of having to find our own validators as well as ensure that the token that secures that network is priced correctly so that the security of the system cannot be compromised. The good thing about EigenLayer is that it allows dual staking, so you can use your own token that can be split. This gives us flexibility and the risk is mitigated by having Ethereum or any other LST restaked."
— Amrit, AltLayer
"When you look at the cost of capital that a chain has to pay for a validator set, it is an order of magnitude higher than what is likely required for rehypothecated Ethereum. This means that you can build networks that are leveraging restaking that have far better underlying tokenomics, and you don't have to leverage the same degree of inflation or ponzinomic mechanisms that we’ve seen in certain chains. You can build things that are much more substantive, last longer, add more value to the ecosystem, and don’t require you to infinitely dilute existing holders."
— Ismael, LAGRANGE
"Omni Network started working with EigenLayer and looking into the key architecture about a year ago. After our initial conversations with EigenLayer, it became clear that building an AVS is the best way to inherit security from Ethereum, and on top of that security we realised that it gives us the foundation to build the fastest cross—rollup interoperability much faster than we could we ZK solutions. Securing the network with restaked ETH helps us become the most scalable interoperability platform because if we just went with a token, we would not be able to scale beyond the market cap of that staked token. This is potentially cheaper than bootstrapping our own network.
— Matt, Omni Network
"It comes down to shared security, which is a property that is not yet very common and it separates the roles of different providers. Every player can go into their role and fulfill that purpose which makes the ecosystem work together beautifully. At Mangata, we are looking for security properties that are much better acquired through EigenLayer as opposed to just building a rollup."
— Tommi, Mangata Finance
"Witness Chain started building out our own validator set, but as soon as EigenLayer launched it was clear we should move our network services there as we would have access to a wide range of validators and it reduced our capital cost."
— Ranvir, Witness Chain
What risks and rewards do restakers take on in helping to secure your protocol?
"AVS’s are fantastic because they have an agency that AVS developers use to design slashing conditions that are reflective of the requirements of that protocol. This lets you have different slashing conditions and risk profiles across a number of different AVS providers, which allows operators to stack the AVS they use based on their risk appetite. You can take an AVS that has low risk associated with them and stack these with other AVS’ that might have more complicated mechanisms that require experienced operators. LAGRANGE stake committees are meant to be as straightforward and simple as possible for providing an attestation to the state of an optimistic rollup."
— Ismael, LAGRANGE
"The operators on Omni Network will have the responsibility of running a validator on the network. We use L1 finalized call data so that we can compute the rollup state route before the seven day optimistic window, with full confidence that the output state route is finalised. Most of our validators will be running L2 nodes as well and thanks to that, validators will be able to compute the output of the seven day function faster. The risk is extremely limited if you're running the nodes for those L2s between which two transactions you’re attesting to."
When it comes to rewards it's still to be decided on the specific value. We work closely with our validator partners to better understand their costs and what margins are expected. There will be a payout function depending on the number of roll ups that the validator is running nodes for — the more rollups they run, the more they will make. We don't force every operator to run every rollup, so they will be the ones that choose which nodes to add to the network. That is how we can get permissionless interoperability."
— Matt, Omni Network
"Witness Chain’s reward structure looks very similar to that of Ethereum, i.e. you are rewarded for constantly watching and executing transactions. Given these rewards, the risks are very minimal because as long as the L2 node is performing EVM executions correctly, there is no other risk that is undertaken."
— Ranvir, Witness Chain
What are you most excited about in terms of restaking in the next year and what can we expect from your AVS in the future?
"The restaking initiative has just started and there is a lot more to see in how things play out. It's going to be an exciting year for people building in the EigenLayer ecosystem. We are very excited for the restaking framework we are building with, in collaboration with EigenLayer and some of the people building the rollup stacks. By Q2, we will have everything ready for validators to come onboard."
— Amrit, AltLayer
"We are very excited about the community that is being created around AVS’s. We are seeing this acceleration of brain power moving into building applications that inherit security from Ethereum. At LAGRANGE, we are also very excited about the concept of pooled security, which we believe plays well on top of shared security. With pooled security, you are taking a function that may have been distributed across a series of different protocols that were historically monolithic. When you pool that into a single layer that focuses on one function, you can get very powerful super linear security benefits."
— Ismael, LAGRANGE
"At Omni Network we are very excited to work with other AVS’s on making sure that the Ethereum ecosystem keeps growing in a way that is aligned with Ethereum's values. We have just launched the open liquidity network which promotes open standards for the modular Ethereum ecosystem. The goal here is to ensure that this multi-rollup Ethereum provides the same UX as a single chain while preserving those core values of Ethereum. This quarter we will be launching our final testnet and we have a lot of exciting innovative cross rollup applications helping us battle test the network. You can expect us to launch on mainnet later this year."
— Matt, Omni Network
Thanks to everyone who attended the event!
Listen to the recording.
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