Overview
EigenLayer is a restaking protocol built on Ethereum that allows staked ETH (including LSTs like stETH, rETH, and cbETH) to be "restaked" to provide economic security for additional decentralized services called Actively Validated Services (AVSs). Launched by Eigen Labs and founded by Sreeram Kannan, EigenLayer extends Ethereum's security model to a broader set of protocols — oracles, bridges, data availability layers, and more.
The core innovation is pooled security: rather than each new protocol bootstrapping its own validator set and economic security, AVSs can leverage Ethereum's existing staked capital. This creates capital efficiency for restakers (who earn additional yield) and security bootstrapping for AVSs. However, it also introduces compounded risk — restaked ETH can be slashed by multiple AVSs simultaneously.
As of early 2026, EigenLayer has attracted over $10 billion in restaked assets, making it one of the largest protocols in DeFi. The EIGEN token launched in 2024, introducing a novel "intersubjective staking" model for governance and slashing disputes.
Smart Contracts
Architecture
EigenLayer's architecture consists of the StrategyManager (handling deposits), DelegationManager (operator delegation), and individual AVS contracts that define slashing conditions. The system is extraordinarily complex, with multiple contract interactions required for each restaking and slashing flow. Each AVS introduces its own smart contract risk layer on top of EigenLayer's core contracts. The slashing mechanism — critical for security — was activated in stages, with full slashing going live in 2025.
Code Quality
The core contracts have been audited by Sigma Prime, Trail of Bits, and OpenZeppelin. However, the system's complexity means that the interaction between EigenLayer core contracts and individual AVS contracts creates emergent risk that is difficult to audit comprehensively. Each new AVS effectively adds unaudited slashing conditions to the system. The codebase is open source with active development.
Upgradeability
Core contracts are upgradeable via a multisig-controlled proxy pattern. Given the protocol's complexity and evolving design, upgradeability is necessary but introduces risk. The Operations Multisig (a community multisig) controls upgrades, with plans to transition to more decentralized governance. Pausing functionality exists for emergencies.
Security
Validator Security
EigenLayer operators are entities that run AVS software and validate for multiple services simultaneously. Operators must opt in to each AVS's slashing conditions. The risk model is novel — an operator slashed by one AVS may affect all delegators across all AVSs that operator serves. This "correlated slashing" risk is theoretically understood but has not been tested in a live crisis.
Operational Safety
The protocol maintains emergency pausing capabilities controlled by a multisig. Withdrawal delays (currently 7 days) provide a buffer against exploits. However, the attack surface is substantially larger than traditional staking — each AVS is an additional vector for slashing or smart contract exploitation. Operator behavior across multiple AVSs creates complex game-theoretic dynamics.
Track Record
EigenLayer has not experienced a critical exploit as of early 2026. However, the protocol is still relatively young, full slashing has only been active since 2025, and the system has not been stress-tested in extreme market conditions. A September 2024 incident involving a compromised investor wallet (unrelated to protocol security) briefly caused concern but did not affect user funds.
Decentralization
Validator Set
EigenLayer has attracted hundreds of operators, though stake is heavily concentrated among a handful of large professional operators. The top 10 operators control a disproportionate share of restaked assets. Permissionless operator registration is available, but the practical barrier to running AVS software for multiple services is high.
Market Share Risk
EigenLayer's systemic importance to Ethereum is debated. If a large amount of restaked ETH is slashed due to AVS failures, it could cascade into LST depegs and DeFi liquidations. The protocol's size ($10B+ in TVL) means a systemic failure would have far-reaching consequences. This is a novel risk category that Ethereum has not previously faced.
Governance
The EIGEN token introduces "intersubjective staking" — a mechanism where EIGEN holders can fork the token to resolve disputes that are observable but not provable on-chain. Governance is still maturing, with significant control remaining with the Eigen Labs team and the Operations Multisig. Full decentralization is a stated long-term goal.
Adoption
TVL & Growth
EigenLayer has accumulated over $10 billion in restaked assets, driven by initial points campaigns, EIGEN token expectations, and genuine demand from AVSs seeking security. Growth was explosive in 2024, driven by speculative interest. Retention post-airdrop has been strong, suggesting organic demand.
DeFi Integrations
EigenLayer's restaking model has spawned an ecosystem of Liquid Restaking Tokens (LRTs) including EtherFi's eETH, Renzo's ezETH, Puffer's pufETH, and Kelp's rsETH. These LRTs provide liquidity for restaked positions and are integrated across DeFi. The AVS ecosystem includes EigenDA, Lagrange, Witness Chain, and dozens of others.
Market Position
EigenLayer created and dominates the restaking category. No serious competitor exists at comparable scale on Ethereum. The protocol's influence extends beyond its own TVL through the LRT ecosystem and AVS network effects.
Tokenomics
Token Overview
EIGEN has a total supply of approximately 1.67 billion tokens. Distribution includes allocations to investors (Andreessen Horowitz led a $100M Series B), the Eigen Labs team, community (stakedrop), and ecosystem development. EIGEN's novel "intersubjective" utility means it can be forked to resolve disputes, creating unique token dynamics.
Fee Structure
EigenLayer takes a percentage of AVS payments to operators and restakers. The exact fee structure varies by AVS and is still evolving as the marketplace matures. Restakers earn additional yield from AVS payments on top of base staking rewards. Early yield was primarily driven by point speculation rather than actual AVS revenue.
Yield Sustainability
Restaking yield comes from AVS payments for security — analogous to how Ethereum pays validators for consensus. The sustainability depends on AVS willingness and ability to pay for security. As of early 2026, actual AVS-generated revenue is growing but still modest relative to the capital restaked. The yield premium over base staking is currently thin for most AVSs.
Risk Factors
- Compounded Slashing Risk: Restaked ETH can be slashed by multiple AVSs simultaneously. A correlated failure across AVSs could result in catastrophic losses for restakers.
- Smart Contract Complexity: The layered architecture (base staking + EigenLayer + AVS contracts) creates an enormous attack surface that is difficult to audit comprehensively.
- Systemic Risk to Ethereum: A large-scale slashing event could cascade into LST depegs, DeFi liquidations, and broader market instability.
- Immature Yield Model: Actual AVS revenue remains modest; much of the TVL was attracted by speculative incentives (points, airdrops) rather than sustainable economics.
- Governance Immaturity: The EIGEN token's intersubjective model is untested. Real governance power remains with Eigen Labs and the operations multisig.
- Regulatory Uncertainty: Restaking and AVS security services occupy uncharted regulatory territory.
Conclusion
EigenLayer represents one of the most ambitious innovations in crypto infrastructure — extending Ethereum's economic security to a universe of additional services. The vision of pooled security and capital efficiency is compelling, and the protocol's rapid growth to $10B+ in TVL demonstrates strong market interest.
However, EigenLayer also introduces unprecedented risk to the Ethereum ecosystem. Compounded slashing across multiple AVSs, extraordinary smart contract complexity, and an unproven economic model create a risk profile unlike any existing DeFi protocol. The system has not been tested under extreme stress, and the consequences of a systemic failure could extend well beyond EigenLayer itself.
EigenLayer earns a lower overall score not because of poor execution — the team is world-class — but because the inherent risk profile of restaking is fundamentally higher than traditional liquid staking. Users should approach restaking as a distinct risk category with potentially asymmetric downside.