The State of EigenLayer with Sreeram Kannan | ETHDenver 2023 Interview #6

Sometimes, the frontier is at a crypto conference. One of the most prestige being, ETHDenver! We’re back with a handful of exclusive interviews with some of the most fascinating minds in crypto. Wish you could make it to all the crypto conferences, but don't have the time? Don't worry, Bankless brings the frontier to you. In this episode, we’re talking to Sreeram Kannan of EigenLayer, a platform to leverage Ethereum security through the innovative method of restaking. Sreeram and David chat about EigenLayer’s evolution, wen mainnet(?!), what the EigenLayer competition looks like, and much more! ‘ ------ 📣 RhinoFi | Makes DeFi Frictionless https://bankless.cc/rhino ------ 🚀 JOIN BANKLESS PREMIUM: https://newsletter.banklesshq.com/subscribe ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap 👻 PHANTOM | #1 SOLANA WALLET https://bankless.cc/phantom-waitlist 🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE https://bankless.cc/MetaMask 🚁 EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi ------ Timestamps: 0:00 Intro 3:10 EigenLayer’s Evolution 3:51 Wen Mainnet? 4:56 What to Build on EigenLayer 6:27 Supporting the Builders 7:13 EigenLayer Competitors 8:10 EigenLayer Mod Analogy 10:33 The EigenLayer Chain Spectrum 14:21 Good Technical EigenLayer Questions 18:02 Action Items, Jobs, & Closing ----- Resources: Sreeram Kannan https://twitter.com/sreeramkannan EigenLayer https://twitter.com/eigenlayer ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:12David Hoffman?

  We are at the Axler Interoperability Series. Next up in this conversation, we're talking to Sreeram from Eigenlayer. I think you probably might not need to know what Eigenlayer is, because it has absolutely swept the Web3 world by swarm, at least the Ethereum world, because it's created this thing called restaking, where you can apply your E stake to more things than just Ethereum staking, getting a lot of the Ethereum community very, very excited. And it's also allowed for new kinds of chains to be interoperable inside of the Ethereum ecosystem. So we're going to go talk to Sreeram right now, all about Eigenlayer and where Eigenlayer is in its development. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Kraken is our strategic sponsor for 2023. Why? Because Kraken has been around for over 12 years and has proven itself to be deeply aligned with the crypto industry.

• 0:56David Hoffman?

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• 1:41David Hoffman?

  or you're a son or daughter trying to onboard your boomer parents, MetaMask Learn is the place to send them. Interactive and engaging lessons making learning about Web3 fun and easy. Now, once you're through Kraken's gates and you've taken the MetaMask course on what's a DEX, you're safe to make your first stop into the world of DeFi. Where better to start other than Uniswap? Uniswap is, of course, a decentralized exchange for crypto asset trades and swaps, but it's now also an NFT aggregator as well. Can Uniswap some of the best decentralizing trading tech that's out there? Uniswap's big announcement at ETH Denver is their Uniswap Wallet, which is waiting to get released to the public as soon as Apple stops being a big old bully about crypto apps in the App Store. Uniswap is basically on every chain that's relevant in the crypto ecosystem.

• 2:25David Hoffman?

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• 3:09David Hoffman?

  Now, let's get into the interview. All right, Bank of Station, we are back at the Axler Interop Summit, and I'm here with Sreeram from Eigenlayer. Sreeram, last time we talked at DevCon, not many people knew about Eigenlayer. Now it seems everyone knows about Eigenlayer. How does that feel?

• 3:25Speaker 01

  It's a little bizarre. It was definitely a more positive outcome than we anticipated. We did expect that over time, people will warm up to the idea that actually Ethereum can serve as the security layer for pretty much anything. But the speed at which the community has gotten there, maybe partly thanks to you and the episode we did earlier, but really happy to be here in this position.

• 3:50David Hoffman?

  Okay, so give us the lay of the land for where we are in the progress of Eigenlayer, because everyone starts to being able to wrap their heads around it. People are starting to see the use cases, but like, win main net. Is that the right question, mainnet?

• 4:04Speaker 01

  Yes. We definitely want to be on mainnet by Q3 this year.

• 4:09David Hoffman?

  Okay.

• 4:09Speaker 01

  So we are, and you know, there'll be a testnet by Q2 this year. So, public testnet, we already are on private testnet as I told you before. And on the team side, we've been growing our team quite a bit. So if any of you out there are builders or, you know, want to grow the ecosystem, any of these things, do ping me at the Eigenlayer handle. On the product side, we've been continuing to build the core platform. And the way we are thinking of doing the launch is because it's such a complicated platform with many sides, like stakers, node operators, you know, new services, rollups, you know, all these different sides. So we want to onboard one side at a time. So we may start with stakers, operators, services, do a phased launch.

• 4:54Speaker 01

  So that's what we are hoping for.

• 4:56David Hoffman?

  And so Eigenlayer has just generated a ton of excitement. The concept of restaking has really opened people's brains to new use cases and new ideas. Has people already approached you guys saying, hey, I want to build on Eigenlayer? What's that been like and what are people trying to build?

• 5:12Speaker 01

  Yeah, that's been really, again, very, very enthusiastic response. We have people interested in building decentralized sequences, people interested in building oracles, bridges, you know, because you can move data in and out of Ethereum using the restaking layer. You can have IBC bridges or other kind of light client bridges. You can have like fast ZK proof verifications. So some of the major ZK teams are interested in, can you have like thousands of DAP rollups all right to like a kind of intermediate restake layer, where the restake layer just checks the ZK proofs very, very fast and reports that back to Ethereum. So those are some examples. We're also seeing interest from RPC providers, some of the bigger ones, as well as new players.

• 5:55Speaker 01

  We're seeing interest on AI on like Ethereum, like, you know, can we get a chat GPT type thing to be built instead of having a single central party like the OpenAI server serving it? Can we have the Ethereum decentralized nodes serving open source versions of AI on Eigenlayer? So that's the range of interest we are seeing. It remains to see how much we can support. Like, right now, we are like constrained by engineering bandwidth and the ability to support these. We want to support all of them, but whether we can support them on day one is the thing that we're trying to figure out.

• 6:27David Hoffman?

  Yeah, and what's the strategy there? Because if you want to support them, that requires resources. There's only so many people at the Eigenlayer team. Is the strategy to, I'm assuming the strategy is to be able to allow anyone to permissionlessly build on Eigenlayer. Maybe that's what mainnet is. What's the strategy to enable anyone who wants to build on Eigenlayer to build on Eigenlayer?

• 6:45Speaker 01

  So we are building a set of developer tools so that like when you're developing a middleware, what is the specification to which that should comply? And trying to build a series of libraries. I don't expect the day one when we launch on mainnet, it is going to be easy for anybody to build on Eigenlayer. Maybe the initial launch will be very restricted. But over time, in a year or so, we want to be in a position where many, many other teams have built something, at least on testnet on Eigenlayer.

• 7:11David Hoffman?

  So when something like this, so Eigenlayer is raising around at a $500 million valuation, which when something like that happens, a lot of people focus on that. It's like, wow, that's a, that's clearly a very big deal. All of a sudden, you really change the game. Have you seen Eigenlayer competitors start to like crop up just to, you know, follow in the footsteps?

• 7:30Speaker 01

  No, I don't know of any. I'm sure there are some which we don't know about. But the, you know, competition is healthy. So if other people want to build, you know, that's always a possibility. And the way we think about like a marketplace for decentralized trust from Ethereum is the more the amount of stake and the more the validators that opt in, that increases the power of the marketplace.

• 7:58David Hoffman?

  Sure.

• 7:59Speaker 01

  And having a common marketplace is, I think, in general, more beneficial to the ecosystem. So that's our view. But of course, you know, it's a permissionless innovation. We stand by our values.

• 8:09David Hoffman?

  Yeah, of course, of course. And, uh, and being list listeners who are listening to Sreeram for the first time might be confused as to what we're talking about. We did kind of skip forward ahead of what Eigenlayer actually is. Uh, but I definitely would encourage you to listen to our talk at DevCon where we really went through this quite a lot. Sreeram, what I've been, the metaphor I've been using to explain Eigenlayer is like Skyrim mods. Uh, and so like you have the base game, the base Skyrim game, the vanilla game, which is like base vanilla Ethereum staking. But then you add in another mod to add on to that base game to do something else, to do something extra that is beyond staking. That's using the base game as a, as a, as a platform. The cool thing about Skyrim mods, or maybe the bad thing about Skyrim mods, is that you can only add so many before things get really, really weird.

• 8:53David Hoffman?

  I'm assuming that is probably the right mental model to have. Don't add too many mods because things will start to conflict. Is that kind of, is that the right intuition I've got?

• 9:01Speaker 01

  Yes, I think like, you know, if you look at the range of services, several services will be supported by small groups. And you'll have a long tail of services supported by, oh, you know, I got, I got these validators to run this for me, or this group of stakers. But there'll be some services which are core to the Ethereum ecosystem, like a hyperscale data availability, like a most performant ZK bridge, like a performant Litecoin bridge to the Cosmos ecosystem. These like a super performant decentralized sequencer and a super fast element layer. There are some services which will be core ecosystem services, which we expect everybody should run. So I will, I agree to the extent that we are talking about services that are run by everybody, there'll be a few.

• 9:44David Hoffman?

  Sure.

• 9:45Speaker 01

  But there'll be many, many services run by a few people so that there's a possibility for a service to be bootstrapped and emerge up to the system level, rather than the system level being guarded closely. And I would agree also with, this is going to have unpredictable second order effects.

• 10:03David Hoffman?

  Right, yeah.

• 10:04Speaker 01

  It very much is reminiscent of the MEV discovery by the Flashbot's team. Early on in 2016, 2017, that like, this is going to be a force and it is going to happen. And like the only question that we can think of as a community or Ethereum community is how do we channel this energy in the most useful way possible? So that it's a positive sum game for all of us. So that's something we're very much aligned to and always solicit the Ethereum community's inputs on.

• 10:33David Hoffman?

  So one question I have, and we're at this interoperability summit. And this is hosted by Axalar, which is this brand-new blockchain that I've been learning about today, which is an IBC chain that connects Cosmos to Ethereum, but also all the other blockchains. And that's a lot of the main thread of this whole entire event is interoperability between many, many desperate chains away from Ethereum Layer 2s, away from the EVM standard, but still put interoperability between all these chains. Now, this is a conversation, the question I'm about to ask you is a conversation about the push and pull between a horizontal mesh landscape of chains, which is kind of the Cosmos, Polychain, multi-chain vision, versus concentration down onto one single chain,

• 11:14David Hoffman?

  which is perhaps the ETH maxi or network effects vision that Ryan and I tend toward to lean into. Now, I'm not, I don't think it's so binary. I think the answer's somewhere in the middle. But I think that Eigenlayer pulls towards the Ethereum central one chain, one dominant chain, because of what Eigenlayer can do for ETH staking and providing security. And I'm wondering, how does that check with you? Do you think that that pulls forward, pulls the pendulum in the Ethereum favor?

• 11:40Speaker 01

  Definitely, to the extent that there were some features that, you know, some Layer 1s, the main thing that a general purpose Layer 1 was trying to do was to say that there are some technical features not available in Ethereum that we are providing. Be it consensus, be it like scalability, be it, you know, the virtual machine. And what we see with both the Layer 2 vision and a deepening of the Layer 2 vision with the Eigenlayer vision is that pretty much all of those things can be internalized back into the Ethereum ecosystem. So then why would one want a separate chain? There may be other reasons other than technical arbitrage. That's how I view it, is basically any technical innovations can be internalized back into the Ethereum ecosystem. This is analogous to think about companies, right?

• 12:25Speaker 01

  Like when there is one search company and there's another search company, if, you know, good ideas, Google will internalize and run it. And the agile mechanism to do this is what Eigenlayer provides. And so competing purely on technical arbitrage is not going to be feasible. You need other things. You need a way, okay, you know, I'm a DAP and I want my sovereignity. You need some other reason, you know, this is a different kind of community. Cosmos has this vision of a community computer. It's like, you know, my village, my community, like, you know, this is a group of artists and we are running this chain. It's not up to economic security. It's our own like reputation and stuff we are putting on the line. So these are all visions. There is a vision of like a chain which could be like a proof of personhood chain.

• 13:08Speaker 01

  Right? Like there's a vision of like it's a proof of space chain which can be more decent. There are all these visions of possible other L1s, but technical arbitrage or as like, hey, I'm running this proof of stake chain for these features, this is better and that's why I'm a new L1. I think that is going to become less and less plausible with the Eigenlayer view. I also want to add that since we're in the Interop Summit, one important thing we have to think about as the Ethereum community is how does Ethereum position itself to be at the absolute center of the Interop ecosystem?

• 13:39David Hoffman?

  Right.

• 13:40Speaker 01

  Whether it is just Layer 2s or totally sovereign chains, Ethereum is the most secure chain, it is the most liquid chain, it is also the most connected chain. How do we make sure we go from this to provide some of the strongest bridging to all of the other chains? So we retain this position. And that's something that I'm excited about Eigenlayer can do there is to provide high-quality bridging in and out of Ethereum. By running light clients off-chain and having a lot of restakers certified, you can actually get a lot of, you know, very high-quality bridging in and out of Ethereum. So Ethereum can maintain the position as the premium center hub of this multi-chain ecosystem.

• 14:20David Hoffman?

  Right. And I really, I think that's articulated very, very well where, like I said, whether it's a mesh network of many, many chains with no dominant center or a single one-center focal point of one chain and no other chains after that, it's not going to be to the extreme, it's going to be somewhere in between those two binaries. But I do think that this technology about Eigenlayer really does have that that sun of the solar ecosystem where all the other chains kind of gravitate around Ethereum and Eigenlayer allows that Ethereum expression to expand outwards. When people come up to you and ask you questions about the technical questions, the really good questions about Eigenlayer, what are those questions?

• 14:59Speaker 01

  The questions are, one of the most interesting questions on Eigenlayer is it is Everything, the crypto economics that you can import due to Eigenlayer, has to be on-chain and slashable. There are certain things that are on-chain and slashable and certain things that are not. Like, for example, if I want to build an oracle, this is a simple example I give, but if you dig in deeper, the oracle is one of the harder things to build on Eigenlayer. The reason being, when you try to build an oracle, how do you create a slashing condition? How do you know Bitcoin to ETH is not $1 today? How do you know that in an on-chain, verifiable manner? Are you going to trust a committee for it? That feels like, you know, low-grade. But Eigenlayer trust model is actually very dynamic. For example, there are multiple dimensions of trust that exist,

• 15:43Speaker 01

  and slashing or economic trust is only one dimension of trust. There are other dimensions of trust, and in the Ethereum community, we are very passionate about decentralization as a dimension of trust. It doesn't matter how much money you have. Like, if there are thousands or tens of thousands of nodes validating and providing independent inputs, it's very hard for them to collude and attack the system, and that itself is a source of trust, independent of how much money they have actually put in. And this is the home staker, ETH staker vision, the Rocketpool vision, of like, everybody should be able to run a node. And Eigenlayer can supply the trust to things like oracles. Imagine an oracle price feed where like, every home staker just provides a feed. Even if they're not like, slashable,

• 16:26Speaker 01

  just the fact that 10,000 independent nodes actually bet at something is a source of trust. So, when we think about a marketplace for decentralized trust, the most important question is like, what are the ways in which we commoditize decentralized trust? ETH stake is one dimension of it. Another dimension is, how do we vet and validate, what are the home, who are the home stakers? How are we going to identify that? This is another important question that we get. How are you going to identify that? I think it's very hard to identify home stakers. It's very easy to identify the exchanges and the major liquidstaking protocols, and the staking service providers. So the complement of it is already like a pretty decentralized set. But we imagine the emergence of decentralization oracles.

• 17:09Speaker 01

  Oracles would just specialize like a chain analysis, but an analysis of like where validators are, how decentralized they are, you know, geographically and like agency wise. Like, are they really independent agents? People coming and betting this, and we don't want to be the source of like subjectivity. One of the major platform goals of Eigenlayer is to push all agency to the edges. If you're a middleware, you should dictate what kind of nodes want to opt in. Because some would want economic trust, some would want decentralization trust. And we want the spectrum of decentralized trust to be expressed on Eigenlayer. So we imagine that different middlewares will have different subjective decentralization oracles. And once you have that, there may be additional yield accruing to these decentralized nodes.

• 17:54Speaker 01

  So these are the two, I would say, major questions. What slashing do you do? How do we get incentivized decentralization on Eigenlayer? So those are some of the questions.

• 18:03David Hoffman?

  It's not always when the, hey, what question should I ask? Question actually works all that well, but that one works pretty, pretty well. Sreeram, if people have been peaked or they just want to learn about the frontier of Eigenlayer, where should they go?

• 18:13Speaker 01

  Right now, the best place is the Eigenlayer Twitter handle, E I G and L A Y E R. But also the Twitter handle points to our forums, discourse forums, where we are inviting all the Ethereum community members to participate and engage with us on any aspects of Eigenlayer. How that would enhance or deteriorate any aspects of the Ethereum ecosystem. We want to be cognizant of all of it. So please, we want to invite the Ethereum community to come and participate there. And slowly, we'll be rolling out more and more ways to open up the Eigenlayer development to the broader community.

• 18:48David Hoffman?

  And I'm assuming you're hiring or just looking for partnerships. What are you looking for on the B D and hiring front?

• 18:53Speaker 01

  On the hiring front, like distributed systems builders, you know, smart contract engineers, always, you know, we want on a team like this. Especially now that there are a lot of teams who want to build stuff up. On Eigenlayer, we want people internally who can support all of these really interesting, creative things. So we're looking for that. On the BD and ecosystem growth side, you know, anybody who's creative in growing, you know, ecosystems like this, definitely we want to talk to. On the broader ecosystem, we're looking for the various sides of our markets. Stakers who have ETH, who are staking ETH and want to enhance ETH. We want to look at node operators, you know, the major node operators. We are talking to them.

• 19:36Speaker 01

  Service builders, like whether it is big existing services like Chainlink, who want to add on an ITO of, you know, the broader decentralization from the Ethereum community, or it could be services that are new and upcoming, who want to use this as a way for bootstrapping and like differentiating themselves from existing services. We are very interested in talking to all of them. Srinath, thank you so much. Thank you so much. I really appreciate it.