What is EigenLayer ETH Restaking?
ETH Restaking allows your staked ETH to be used as crypto-economic security for protocols other than Ethereum and potentially earn additional rewards.
EigenLayer is a protocol built on top of Ethereum and acts as a middle layer that extends the staked ETH’s reach to provide security and validating service for middlewares thereby enhancing the utility of staked ETH. In this way, applications benefit from enhanced security without needing to manage their validation infrastructure, and validators can leverage their staked ETH for additional rewards (i.e. fees paid by protocols). For ETH stakers this enables them to delegate their staked ETH to EigenLayer and the Operators to earn multiple rewards: one layer from the main Ethereum network, and additionally from the Actively Validated Services (AVS) they are restaked to (by allowing additional slashing risks).
Key benefits of EigenLayer Restaking are improved capital efficiency and higher rewards*: Stakers could earn additional rewards by securing more networks without needing to stake more tokens. Key risks of EigenLayer Restaking include additional slashing risks and liquidity risk -the potential to lose some or all of your staked tokens and a longer unbonding period, which is detailed further below.
Learn more about EigenLayer and Restaking here.
*For EigenLayer Restaking, there will be no additional yield except for the regular ETH On-chain staking yield nor slashing until Q4 2024 or otherwise announced by Eigenlayer. You will be able to earn Restaked Points instead. See section below on “What reward can I get” for more information.
What is an EigenLayer Operator and Actively Validated Services (AVSs)?
In the context of EigenLayer, Operators register with Eigenlayer and enable stakers to delegate their staked assets to them. They provide validation services similar to validators on Ethereum, and use the restaked assets to provide economic security. Operators opt-in to provide services and perform validation tasks for Actively Validated Services (AVSs).
AVSs are services built on EigenLayer and leverage on Ethereum’s shared security. They deliver services to AVS consumers and the broader Web3 ecosystem.
Risks of EigenLayer ETH Restaking
The key risks of EigenLayer ETH Restaking are:
Additional Slashing Risk*: Restaking introduces additional slashing conditions since your staked Ether will be securing and validating additional protocols. Depending on the protocol’s terms, slashing poses the risk of significant asset loss for validators who may breach the rules. Stakers opting into restaking are bound by the smart contract rules of the relevant protocol and face additional slash penalties for malicious behavior. The slashing risk for EigenLayer ETH Restaking may be higher than that for normal ETH staking. This means that you could possibly lose all of your staked ETH if there is a slashing event.
Liquidity Risk: Users should take note of the Activation Period for staking ETH on EigenLayer, as unstaking can only take place after the end of the Activation Period. In addition to the unbonding period for Ethereum, there is a minimum of 7-day lock-up when exiting from EigenLayer restaking.
Technical Risk: There are technical risks associated with participating in restaking, which include risks associated with error or security failures (including smart contract failure, hacks, network critical delays or exploits), whether or not related to blockchain protocols. This may result in a loss of data or access to your staked Ether.
The risks listed above are non-exhaustive. As with new concepts and innovation in the blockchain space, there may be potential risks including smart contract risk, regulatory compliance risks, concentration risk, user adoption uncertainty risks and other unanticipated risks. Please read the EigenLayer Risk FAQ from their official website here and the EigenLayer ETH Restaking Terms and Conditions here carefully, which apply to all users of EigenLayer and do your own research and due diligence before making any decisions.
*As of the EigenLayer Mainnet launch announcement on 9 Apr 2024, there is no slashing in this phase. Nonetheless, EigenLayer is expected to introduce slashing in the later half of 2024 and users restaking ETH on EigenLayer should keep abreast of the developments in this space.
Participate in EigenLayer ETH Restaking via Crypto.com
Crypto.com offers a simple and easy way for you to participate in EigenLayer’s ETH Native Restaking. You must first be eligible for EigenLayer ETH Restaking and have available ETH in your Wallet. Choose “EigenLayer ETH Restaking” from the Staking page, input the amount of ETH you wish to commit, and agree to the relevant risks and terms and conditions. After confirmation, Crypto.com will act on your instructions to facilitate the staking of your ETH to an Operator in the EigenLayer ecosystem which will perform validation tasks.
IMPORTANT: Crypto.com provides a pass-through service (with your ETH passed to Kiln as the Operator) for you to participate in EigenLayer ETH Restaking. Please do your own research on EigenLayer and the Operator, and read through all terms and conditions carefully before participating in EigenLayer ETH Restaking.
Learn more about Kiln here.
Learn more about details (including the types of actively validated services) in Kiln’s EigenLayer ETH Restaking service here. Please also note that the registered AVS supported by Kiln are subject to change, users can find the list here.
What rewards can I get?
You can expect regular ETH staking reward payouts as a result of successful validations and Eigen Points from EigenLayer. As all withdrawals, including rewards, go through a 7-day withdrawal delay on EigenLayer, your Estimated First Reward will take longer than regular ETH staking.
Eigen Points are seen as users’ contributions to the EigenLayer ecosystem, which qualifies users for an anticipated (but unconfirmed) airdrop allocation which will be determined and announced by EigenLayer at a later date. Crypto.com does not have control over and is not responsible for the timeline, certainty or commercial value of any EigenLayer airdrops. Restaked Points are non-guaranteed, non-withdrawable and non-transferable. You will receive the Restaked Points after deducting Crypto.com’s Service fee.
EigenLayer Restaked Points may not result in any actual rewards, benefits, or returns and are fully dependent on EigenLayer and/or its related protocols. By participating in EigenLayer ETH Restaking, you acknowledge and accept the inherent risks associated with holding or using EigenLayer Restaked Points.
The reward rates listed in the App are estimates only based on data provided to us from the operator excluding platform fees charged by Crypto.com and are subject to change.
Do note that as native restaking of ETH on EigenLayer requires periodic proofing of reward skimming events to confirm the ETH rewards comes from a consensus-layer activity of the validators, there are passthrough gas fees associated with the proof submission for partial and full withdrawals. Therefore you may observe that the reward rates differ from regular ETH staking due to pass through costs. EigenLayer has announced plans to redesign checkpoint proofs to address this issue, though there is no concrete release date.
How often do I receive the rewards in the Crypto.com App?
You will receive rewards up to three times a week, depending on the relevant blockchain protocols. Rewards must exceed 0.00000001 ETH to be credited. Restaked Points (if any) and any airdrops in connection with the Restaked Points (if any) will only be disbursed to you after they have been received from the EigenLayer protocol.
Can I use my Staked ETH in Crypto.com App to participate?
At this stage, you are not able to participate in ETH Restaking by using your staked ETH directly. If you have staked ETH, you first have to unstake your ETH and wait for the unbonding period to be completed, before staking your available ETH to EigenLayer ETH Restaking.
Who can participate in the EigenLayer ETH Restaking?
All verified Crypto.com approved App users who are not citizens or residents of the following jurisdictions*:
The United States of America and its territories
Canada
Australia
Hong Kong SAR
Seychelles
South Korea
Singapore
Thailand
*Crypto.com reserves the sole discretion to amend or update this list at any time.
Fees charged by Crypto.com
A flat service fee of 15% charged by Crypto.com will be deducted from your Eigenlayer ETH Restaking rewards and Eigen Points.
Where can I find more information about EigenLayer?
Crypto.com offers a pass-through service for EigenLayer ETH Restaking, and we engage Kiln as our third-party service provider. Please read through the materials below carefully and ensure you are aware of the risks and terms and conditions which may apply to you before participating in EigenLayer ETH Restaking.