Protocol components

Our protocol is a set of modular building blocks that can be used together or independently.

Strategy vaults

The core of the protocol are strategy vaults - self-contained staking & restaking environments able to run any desired selection of AVSs. Our whole system can be imagined as a very large set of strategy vaults. A strategy vault consists of:

• The strategy vault contract, which controls and administers the flow of assets and connects to the foundational restaking protocols

• If native restaking:

  • An EigenPod

  • A DVT cluster of node operators who validate ETH transactions

• An AVS operator who performs the duties required for the AVSs to be validated

Distributed validator technology

Distributed Validator Technology (DVT) is an exciting new security technology in the restaking space. It decreases slashing and inactivity risks for both stakers and operators.

Essentially, it splits a single validator into a set of pieces called key shards and hands them out to a group of node operators called a cluster. These node operators then create or attest to a block, submit their replies, and if >66% of them agree, put together their key shards to submit their final vote. In this way, if a minority of node operators in a cluster are malicious or inactive, the validator still validates and earns fees.

Advantages:

• Addresses inactivity and slashing risk - makes the whole thing safer

• Enables node operators to join with only a 1ETH bond

• Optimises joint validator performance

Learn more here: Distributed Validator Technology (DVT).

Validation credits (VCs)

In simple terms, a validation credit is the right to run an Ethereum validator as part of a DVT cluster for a day and keep 100% of the rewards.

Operators purchase VCs in auctions and thereby effectively pre-pay the PoS rewards. This way, stakers' returns are completely decoupled from operator performance and operators can keep all the fruits of their labour.

An efficient validator will be able to pay a good price for the VC and make a profit through the proof-of-stake rewards gained, which the validators are allowed to keep (specifically, they are equally shared among the nodes in a DVT cluster).

Advantages:

• Counters lazy validators & MEV theft

• Yields more secure returns for stakers

• Increases performance incentives for operators - the best node operators earn substantially more!

Learn more here: Validation Credits (VCs).

Auction mechanism

The auction mechanism exists to fairly and efficiently match stakers with Ethereum node operators in a framework that is beneficial for both of them.

When joining the protocol, node operators bid what they would be willing to pay to run a validator for a certain number of days. As operators are needed in DVT clusters, the highest-ranked operators are selected in auctions, with the ranking being based on their auction score. Winning bids are paid immediately.

Those node operators are then placed into a DVT cluster and run the validator for the agreed period. They keep 100% of their staking rewards at the end of their term.

Advantages:

• Sets fair and balanced pricing for VCs

• Ensures that node operators never overpay and stakers receive the highest returns

Learn more here: Node operator auction.