Eigenlayer Integration Bounty Challenge

Governance
14

Before I get started, I believe this soft partnership was too big a decision for the GMC imo. The pDAO should have a say, and this will do that. I do wish we could’ve gotten here without contention (eg, the GMC just passing it up to the pDAO for the initial decision).

I will be voting “For” on both votes, which is against EiL work insofar as possible.

I’ll start with practical reasons:

  • Milestone 0 is a payout for pre-signed exit message work
    • There was a time when some folks thought this might be worthwhile to be able to get out the door sooner (vs waiting for EIP-7002)
    • The first AVS has been described as only paying out to the top 200 NOs by delegation; there is no rush to beat EIP-7002
    • Do we have any reason to expect an AVS coming soon will be compatible with smaller home stakers? Having a small set of valuable nodes makes design way easier (see every dPOS chain, eg)
  • Any work will likely need to be redone entirely with megapools, which have a different interface than minipools

I think money/research right now would be essentially meaningless. I see it as primarily a moderate spend to signal “soft partnership interest”.

And a quick thought experiment on yield. Right now EiL has a TVL of $11.2B. Assuming all that stake chooses one or more AVSes, they would need to take in $112M/yr (after any protocol/token/investor share) for each 1% APY they can offer to their delegators/restakers.

Next, I’ll go to value reasons.

Relevant values from the pDAO charter:

  1. The pDAO SHALL prioritize protocol safety
  2. The pDAO SHOULD prioritize the health of the Ethereum network
  3. The pDAO SHOULD prioritize decentralization
  • I believe EigenLayer are a danger to Ethereum right now
    • They’re the 2nd largest protocol without a mainnet release
      • Their contracts are upgradable and allow for a 100% rug; sometimes things need to be upgradable for protocols. That’s ok. But then you try to minimize the honey pot for safety.
      • Current TVL doesn’t map to security - folks have to opt into AVSes; all LST restaking is entirely opt in risk
    • EigenLayer caused the points meta, which is pretty damaging to Ethereum imo. Are we really just a casino?
    • Eigenlayer are a strong centralizing force. They need to bring in hundreds of millions of dollars to have a decent APY at their current size. Do we want to help create another “too big to fail” entity? (they might succeed/fail with or without us – I’m asking if we should be helping)
  • Eigenlayer purposely market LST “restaking” as similar in kind to validator restaking. They are not. The first is just delegating assets. It has nothing to do with staking. DAI, UNI, LDO, Bored Apes, or anything else of value would have worked just as well as LSTs.
  • Rather than respond to my concerns they said “we have full confidence that once you know the people behind the labs and their inspiring vision for the future, your perception of the protocol will change as well”

It’s not realistically possible to support a fraction of the protocol. If we allow them to use our brand for orangewashing, that will apply to all of the above.

In short:

  • I don’t think they’re that likely to succeed in a big way
  • I think they’re extremely dangerous if they do succeed in a big way
  • I think they’re more likely to succeed in a big way with RP support
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