EigenLayer FAQ

Published
February 20, 2024

Welcome to the comprehensive FAQ section dedicated to EigenLayer, an innovative platform enabling restaking on Ethereum. This blog post aims to address common inquiries, providing clear insights into the workings of restaking, the EigenLayer protocol, and the benefits it brings to the Ethereum ecosystem.

What is restaking?

Restaking is the ability to use staked tokens, like Ether (ETH) to earn rewards on additional  protocols. EigenLayer—a marketplace and protocol that connects restakers, operators and builders—makes this possible on Ethereum via a series of smart contracts.

What is the name of the asset being staked?

The name of the asset being staked is “Ether” or “ETH” – Eigenlayer is a protocol that allows users to restake their ETH. Restakers can either engage in direct ETH staking or by depositing Liquid Staking Tokens (LSTs), such as stETH, rETH, lsETH, cbETH

How long does it take to stake?

The direct ETH staking path takes about the same amount of time as non-restaking activation. The only additional time required for restaking is for EigenLayer to confirm that the validator does in fact have its withdrawal credentials pointed at the EigenPod. This process does not add a significant amount of time to the staking process.

What is the escrow period & unbond period to withdraw funds from Eigenpod?

Currently, the “escrow” period to retrieve ETH from an EigenPod is 7 days. The unbond period is currently TBD, but does include the 7-day “escrow” period. In the future this “escrow” period will likely be removed from the unbonding period.

Can I lose staking rewards? Risks of staking? 

There are inherent risks in staking that could lead to potential loss of staking rewards, including the performance and reliability of Actively Validated Service (AVS) operators. However, by carefully selecting AVS operators and adopting Figment’s conservative approach towards AVS selection, these risks can be significantly minimized. Figment’s public offering will run EigenDA only; no new AVSs will be added. Committing to this approach beforehand eliminates the risk of changing the risk/reward parameters by adding AVSs and introducing unknown or unwanted risks to restakers.

How does restaking compare to liquid staking?

There are some similarities between restaking and liquid staking. For instance, both approaches can be seen as offering staking efficiency – you can do more with your stake. With liquid staking you can take your liquid staking token (LST) and engage in other areas of DeFi, for instance. You can loan out your staked ETH or deposit it in an automated market maker pool and earn rewards. With restaking, you can delegate to an operator and earn additional rewards on your stake. Although risk levels could be similar between the two – the form of restaking risk is closer to the base activity – staking; whereas the risks taken in DeFi with your LST, for instance, is a different kind of risk. 

What affects future staking rewards?

From a restaker’s perspective, EigenLayer restaking rewards are driven by the AVSs that you are engaged with (through your delegation to an operator). As the EigenLayer ecosystem matures there will be a growing number of AVSs and operators to choose from, which could push restaking rewards higher. That said, the average rate of rewards will be driven by supply and demand.

Are rewards still earned during the unbonding period?

No rewards are earned during the unbonding period. 

Do I choose the AVSs or does the Operator?

The operator chooses the AVSs.

What is an AVS (actively validated service)? 

An AVS is a protocol built on the EigenLayer platform. They can run the gamut from simple appchains to full-blown protocols, i.e., L1s. Most other characteristics of AVSs vary. For instance, AVSs will likely have penalties for operator faults, but this isn’t necessarily the case, i.e., there will likely be some AVSs that are created that will not have penalties.

Does the staker choose the AVSs or does Figment? 

Operators choose which AVSs to run. Stakers choose which operator to delegate to. That said, there can be off-chain agreements between stakers, typically larger stakers, and operators, where stakers request the operator to run specific AVSs on their behalf.

Do I have to do anything else to choose AVSs when they become available? Or will I automatically be staked in EigenDA when it goes live?

As a staker you should be aware of the AVSs run by the operator you have delegated to and understand their policy for adding more. When new AVSs are launched your operator may or may not add them.

Does Figment control our stake to delegate it to an AVS of Figment’s choice or does the staker have control of it?

The staker always has control of their restaked ETH and makes the decision to delegate to an operator of their choosing. At any time the staker can choose a different operator by redelegating to another operator.

How can I verify the EigenPod address in Figment app is legitimate?

Restakers can view their EigenPod on public explorers such as https://etherscan.io/ as well as verify the address they see in the Figment app. They can also view the transactions from their externally owned account (EOA) creating their EigenPod on such explorers.

How does the reward system work (rewards vs points)?

Rewards are not yet live on EigenLayer but are expected to be launched sometime in the second or third quarter of the year.

Restakers who have earned points are potentially eligible for EIGEN tokens. For more see here.

Where can I learn more about EigenLayer?

Helpful links:

This FAQ has aimed to demystify key aspects of the EigenLayer protocol, restaking mechanics, and the potential it holds for the broader Ethereum ecosystem. As the blockchain landscape continues to evolve, EigenLayer stands as a testament to the innovative spirit driving the future of staking. 

The information herein is being provided to you for general informational purposes only. It is not intended to be, nor should it be relied upon as, legal, business, tax or investment advice. Figment undertakes no obligation to update the information herein.

About Figment
Figment is the leading provider of staking infrastructure. Figment provides the complete staking solution for over 500 institutional clients, including asset managers, exchanges, wallets, foundations, custodians, and large token holders, to earn rewards on their digital assets.

The information herein is being provided to you for general informational purposes only. It is not intended to be, nor should it be relied upon as, legal, business, tax or investment advice. Figment undertakes no obligation to update the information herein.

Share

Related Articles

explore INSIGHTS FROM OUR EXPERTS

With the recent announcement of the $EIGEN token and its transferability,...

River Protocol’s aim is to redefine online community membership through a...

Bitcoin is a proof-of-work blockchain without smart contract capabilities, making it...

Bring the Complete Staking Solution to Your Organization

Meet with us

Hidden

Figment respects your privacy. By submitting this form, you are acknowledging that you have read and agree to our Privacy Policy, which details how we collect and use your information.