A Guide to EigenLayer: How the ETH Restaking Protocol Attracted $15 Billion TVL

EigenLayer ($EIGEN) is a restaking protocol for ETH. It not only rewards users for staking ETH but also offers additional incentives from projects that utilize staked ETH to enhance their security. Sounds complicated? Let’s break it down.

As you might know, in September 2022, Ethereum transitioned from the Proof-of-Work (PoW) consensus algorithm to the more energy-efficient Proof-of-Stake (PoS). To become a validator in Ethereum's PoS network and earn transaction processing rewards, users must stake a minimum of 32 ETH. This stake serves as collateral to ensure validators behave properly—violations can result in penalties like slashing, where part of the stake is forfeited.

The more ETH staked in the network, the more secure Ethereum becomes because executing a successful attack would require controlling over half of the total staked ETH. In this way, staking plays a critical role in maintaining Ethereum's security.

For regular users, staking often means delegating their ETH to validators in exchange for a share of the rewards—currently around 2.5% annually on platforms like Coinbase. However, 2.5% per year isn’t particularly attractive in the fast-paced crypto industry. To address this, liquid staking protocols like Lido Finance, Rocket Pool, and Frax Ether emerged. These platforms allow users to deposit ETH in exchange for «liquid tokens» that are pegged to the value of ETH. These tokens can then be used in lending protocols, liquidity pools, and other DeFi platforms to generate additional income.
What About Restaking? Restaking is a relatively new mechanism that allows staked ETH to secure not just the Ethereum network but also other protocols, such as blockchain bridges, oracles, and sidechains. The pioneers of this concept? EigenLayer, the main focus of this article.

The primary appeal of restaking lies in its ability to generate additional income. Beyond the standard 2.5% annual staking reward in ETH, users also earn rewards in the tokens of the specific protocols that utilize their staked ETH. The actual yield depends on the protocol; for now, EigenLayer offers about 4.2%.

Importantly, users can deposit liquid staking tokens—such as stETH, rETH, frxETH, and others—as well as EIGEN and select altcoins, but not ETH directly.

For users, the difference between liquid staking and restaking lies in how the additional income is generated:

• Liquid Staking: Earns the standard staking reward for ETH plus income from using liquid tokens in DeFi protocols, typically yielding 3-8% on average.
• Restaking: Combines the standard staking reward for ETH with additional rewards from protocols that leverage staked ETH, providing a return of approximately 4-5%.

Regular applications on Ethereum don't require restaking because their security is ensured by Ethereum's robust network of 1 million validators. To draw an analogy: if you own a café in a shopping mall, where security guards are already stationed at the entrance, you don’t need to hire an additional guard specifically for your café.

However, if your café is in a standalone building, you might need to hire a security guard yourself. Similarly, some blockchain projects operate «independently» of the Ethereum network (though still closely connected to it) and cannot rely on its security infrastructure. These projects have to create and maintain their own validator networks, which is both costly and complex.

Validators need to be recruited, rewarded, and — most importantly — their correct behavior must be ensured. The fewer validators a network has, the easier it is to attack, but increasing their number significantly raises costs — often an unsustainable burden for projects in the early stages of development.

As an alternative, projects frequently rely on small, centralized groups of validators, which comes with significant risks. For example, in 2022, hackers breached the Ronin Bridge, stealing $600 million. The root cause? The bridge relied on just nine validators, and the attackers managed to gain control of private keys for five of them.

EigenLayer’s restaking solution is an innovative and cost-effective way to address this problem. Protocols can leverage the services of Ethereum validators participating in EigenLayer and pay for these services using their own tokens. This approach significantly reduces resource demands while providing a high level of security.

Protocols that might benefit from restaking include:

• Blockchain bridges;
• Data availability (DA) layers, which offer storage and data accessibility services for rollups;
• Oracles, which supply smart contracts with external data (e.g., cryptocurrency prices, real-world event outcomes, etc.);
• Cross-chain solutions;
• Protocols using virtual machines other than the EVM;
• Sidechains, such as Layer 2 scaling solutions for Ethereum;

EigenLayer effectively serves as a shared security layer, benefiting not only the protocols it directly supports but also regular dApps. For example, a dApp might rely on a bridge, an oracle, or other services; a compromise of any of these could negatively impact the dApp. By enhancing the security of these interconnected services, EigenLayer strengthens the entire blockchain ecosystem.

Operators

Let’s start with the validator operators. They take on additional responsibilities toward AVS, and if they violate these commitments, their stake is subject to slashing (partial confiscation). To manage this, the EigenLayer ecosystem uses specialized smart contracts called EigenPods: in addition to slashing, they also handle the redistribution of validator rewards among users participating in restaking.


To join EigenLayer, a validator must change the ETH withdrawal address in their node settings to the address of the EigenPod contract, with many validators able to link to a single EigenPod. Next, the operator needs to connect to the AVS they wish to serve. The same operator can serve multiple AVS as long as they have sufficient ETH on their balance (both their own and delegated via restaking).

The operator receives 10% of all rewards paid out by the AVS protocol. The remaining 90% goes to restakers who delegated ETH and liquid staking tokens to that operator.

Currently, the ecosystem has over 1,700 operators. Some of them serve more than 10 AVS and have over 40,000 restakers (users who have delegated ETH to them).

AVS — Actively Validated Services (Protocols)

Each AVS determines how many validator operators it requires and what requirements they must meet (e.g., whether operators staking stETH are acceptable for the protocol). An AVS can even configure its validation system to use both ETH and the AVS's own tokens. Additionally, the AVS decides the reward distribution schedule and the token types in which rewards will be paid.

Currently, 39 AVS are active, with the most prominent being EigenDA, a data availability solution designed primarily for rollups. These rollups need a cost-effective way to store transaction data so it remains accessible for validation (e.g., by Ethereum network validators).

The issue of data availability became critical after the Ethereum Cancun upgrade, as Ethereum’s main chain now stores data for only seven days and in a highly compressed form (the so-called «blobs»).

It’s also worth mentioning the following AVS protocols:

• Hyperlane: A protocol enabling dApps to send messages across blockchains.
• AltLayer: A platform for launching customizable rollups.
• eOracle: A decentralized oracle network.
• Ava Protocol: A system for automating cross-chain transactions.
• Blockless: A decentralized compute network for dApps.
• Witness Chain: A blockchain optimized for the DePIN sector (decentralized physical infrastructure networks).

It’s also worth mentioning the following AVS protocols:

• Hyperlane: A protocol enabling dApps to send messages across blockchains.AltLayer: A platform for launching customizable rollups.
• eOracle: A decentralized oracle network.
• Ava Protocol: A system for automating cross-chain transactions.
• Blockless: A decentralized compute network for dApps.
• Witness Chain: A blockchain optimized for the DePIN sector (decentralized physical infrastructure networks).

The full list of AVS protocols is available here.

Restakers

Both regular users and organizations can act as restakers. Currently, more than 136,000 addresses have joined restaking. The median user deposits approximately 0.2 ETH, or around $680.

The profitability of restaking depends on the total value locked (TVL) in EigenLayer. At the moment, the annual yield is about 4.24% in EIGEN. Additionally, users earn rewards in WETH (ETH wrapped in ERC-20 format) and a variety of tokens from ecosystem protocols, primarily ARPA (Arpa Network).

EigenLayer first launched restaking on the Ethereum mainnet in June 2023, but the protocol became fully operational in April 2024. At that time, 70% of new Ethereum validators immediately joined EigenLayer.

As of late November 2024, over 6,250,000 ETH is locked in restaking, equivalent to $19.3 billion. Native ETH accounts for 83.7% of the tokens in restaking, while the remaining 16.3% consists of various liquid staking tokens, primarily stETH (Lido Finance) and mETH (Mantle Network).

The $EIGEN token was officially launched in May 2024, although it wasn’t listed on exchanges until October. By early May, the protocol’s TVL had surged to $15 billion, making EigenLayer the third-largest DeFi project. What drove such a massive inflow of funds? The answer is simple: everyone was anticipating the airdrop.

Allocations for the airdrop were based on a points system. Users earned points depending on the amount they restaked and the duration of their participation. Over several months, users actively «farmed» points by restaking liquid staking tokens from various protocols. However, when the airdrop was finally distributed, the community was deeply dissatisfied for the following reasons.

1. It turned out that liquid staking tokens (stETH, mETH, ETHx, etc.) didn’t count. The airdrop primarily went to validators who staked ETH.
2. The size of the airdrop was only 5% of the total token supply (for comparison: Jito distributed 10%, and Arbitrum — 12.75%). However, EigenLayer has promised a second season of airdrops.
3. Users from the US and Canada were completely excluded from the airdrop, even though they made up a significant portion of restakers. This jurisdictional restriction was not announced in advance.
4. The tokens couldn’t be sold or transferred until the listing, which took place in October.

After listing, the token immediately entered the top 100 cryptocurrencies by market cap, thanks to a high starting price of $3.50. However, after a brief «pump» to $4.40 on the first day, the price began to decline steadily and currently stands at around $2.70 (with a daily low of $2.18 in November). As of November 24, $EIGEN ranks 144th among the largest tokens by market cap.

MetaLamp cannot provide investment advice; it’s up to you to decide whether to buy $EIGEN, especially considering that it is currently trading at a 40% discount from its all-time high. However, it’s important to note that a significant portion of the tokens is held by venture capital investors, who collectively invested around $100 million into EigenLayer. This makes the token one of the so-called «VC coins,» meaning its price is heavily influenced by periodic unlocks. Venture investors, often through market makers, may stimulate price growth right before an unlock to sell at maximum profit, followed by a price drop. Therefore, if you are considering purchasing this token, it’s crucial to study the unlock schedule carefully to identify the best entry point.

In addition to dissatisfaction over the airdrop, EigenLayer has been embroiled in two incidents that negatively impacted the token’s price dynamics.

In May, it was announced that two key Ethereum developers, Dankrad Feist and Justin Drake, had joined EigenLayer as advisors. As compensation, they were set to receive a significant amount of EIGEN tokens. Notably, Dankrad Feist is the creator of the danksharding concept (the «dank-» in the name comes from his own name), a key component of the Ethereum Cancun upgrade.
However, many in the Ethereum community criticized Feist and Drake, arguing that their roles as advisors to EigenLayer created a conflict of interest. As advisors, they would have an incentive to steer Ethereum’s development in ways that benefited EigenLayer — for example, allocating grants to projects within its ecosystem.

Faced with mounting public pressure, both developers ultimately stepped down from their advisory roles. Justin Drake issued a statement saying: «I want to apologize to the Ethereum community and my colleagues at the Ethereum Foundation for the drama my actions caused. I realize this was the wrong decision.»

In May 2024, EigenLayer faced another controversy, this time involving its policy toward partner projects, which some claimed bordered on bribery. According to reports on X (Twitter), if a protocol within the EigenLayer ecosystem planned an airdrop, the EigenLayer team allegedly sent wallet addresses belonging to its employees, subtly suggesting that tokens should be sent as a «thank you» for ensuring smooth operation of restaking for their AVS and assistance with exchange listings.

In total, protocols reportedly «thanked» EigenLayer with payments amounting to $5 million, with individual employees receiving up to $80,000 each. EigenLayer responded with a statement denying the allegations, claiming that no pressure was exerted on protocol teams and that no unethical airdrop allocations were received by its employees.

Of course, these incidents do not diminish the value of EigenLayer’s products. However, they serve as a reminder that large-budget projects backed by venture capital often face criticism from the Web3 community, which upholds the ideals of decentralization and transparency. Such criticism can inflict real damage on a project’s capitalization if not addressed properly.

So, you’re interested in earning passive income with EigenLayer. How can you join restaking?

1. Go to the Restaking section in the EigenLayer app and explore the list of available tokens for restaking. There are many options: EIGEN, various liquid staking tokens (stETH, mETH, ETHx, swETH, etc.), some altcoins, and even PEPE. Rewards are distributed in several tokens, primarily WETH, EIGEN, and ARPA. A crucial point: regular ETH cannot be restaked!

Unfortunately, the app doesn’t display the current yield for each token. For EIGEN, the APR is currently about 4.24%, and you’ll need to add rewards in WETH and ARPA to this figure.

2. If you already hold one of the supported assets in your wallet, it makes sense to restake that token. If not, you can purchase stETH, mETH, etc., on a centralized exchange (ByBit, BitGet, OKX, etc.) or on a DEX, primarily Curve. For EIGEN, it is traded on all major exchanges, including Binance.

3. Make sure your MetaMask wallet has enough ETH to cover gas fees for purchasing tokens on a DEX (if you choose that route) and for the restaking transaction, as well as for future reward withdrawals and selling them on a DEX or transferring to a CEX — at least $30–40 in ETH. If you don’t yet have ETH in your on-chain wallet, you’ll need to buy some on a centralized exchange and transfer it to MetaMask.

4. Connect your Ethereum wallet to the EigenLayer app and select the token you want -> Restake.

5. Enter the desired token amount and click Next. Then, choose an operator from the list (any of the largest ones will do). MetaMask will prompt you to approve the use of tokens.

6. Sign two transactions in MetaMask: one for depositing tokens and the other for delegation.

7. You can withdraw funds from restaking at any time, but note that it will take 7 days for the tokens to be returned to your wallet after initiating the withdrawal.

Some centralized platforms (e.g., Crypto.com) also allow you to join restaking using your account balance. This might be more convenient than using MetaMask, but you’ll need to give up 10-15% of the rewards as a platform fee.

How Attractive is Restaking Compared to Other Passive Income Strategies in DeFi? It all depends on your risk appetite and experience in Web3.

Pros:

• EigenLayer is one of the largest projects in DeFi, with a TVL exceeding $15 billion;
• As cross-chain services expand, demand for EigenLayer’s products is likely to grow significantly;
• There’s no reason to expect the protocol to be hacked or for funds in restaking to be lost in any other way;
• The price of reward tokens (EIGEN, ARPA, etc.) could increase substantially as narratives around rollups, data availability (DA), cross-chain solutions, and similar innovations gain traction.

Cons:

• The returns, ranging from 5-8%, are not particularly high for DeFi;
• It’s difficult to calculate exact yields in advance, as different AVS protocols set their own reward levels;
• You’ll incur network fees for each delegation, deposit, and withdrawal transaction, which can add up to several dollars;
• After initiating a withdrawal, you’ll have to wait seven days to access your funds;
• If the validator you delegate tokens to is slashed, a portion of your funds will also be confiscated.

Restaking can be considered a more conservative strategy compared to options like staking liquid tokens in DeFi yield farms, participating in IDOs, and similar high-risk activities. However, to make restaking worthwhile, you need to invest a sufficiently large amount to offset gas fees and ensure meaningful rewards. If you’re aiming to build a diversified portfolio, are drawn to «set it and forget it» strategies, and are working with sums of $1,000 or more, restaking is definitely worth considering.

To reiterate: regular dApps and protocols using EVM don’t necessarily need EigenLayer’s solutions. However, they can still indirectly benefit from EigenLayer’s growing popularity in the following ways

• Launch an application on a rollup that uses EigenDA or EigenLayer;
• Integrate with Hyperlane, eOracle, and other projects from the EigenLayer ecosystem;
• And Most Importantly – promote your integrations with these projects in the media to associate your project’s name with EigenLayer. This will have a positive impact on SEO.