EigenLayer

EigenLayer is a protocol built on Ethereum that introduces Restaking — allowing users to stake native ETH, Liquid Staking Tokens (LSTs), EIGEN, or other ERC20 tokens to extend Ethereum's cryptoeconomic security to off-chain services called Autonomous Verifiable Services (AVSs). It acts as a "marketplace for trust" connecting Restakers (asset holders seeking yield), Operators (entities running AVS software), and AVS builders (developers of verifiable off-chain applications such as cross-chain messaging, data availability, or AI inference). By pooling staked capital and a ready-to-use Operator network, EigenLayer solves the bootstrapping problem for new Web3 services that need cryptoeconomic security without building a validator set from scratch.

How Yield is Generated on EigenLayer

Yield comes from a system of rewards and penalties that connects several groups. Restakers deposit assets like native ETH, liquid staking tokens (LSTs), EIGEN, or other approved tokens into EigenLayer's smart contracts. They then delegate their deposited balance to a single Operator.

Operators choose to support specific off-chain services called AVSs (Autonomous Verifiable Services). By allocating the delegated stake as security for these services, Operators enable them to run without building their own validator network.

Rewards flow from the AVSs to Operators and the stakers who delegated to them. This happens through a rewards system (called Rewards v2). Each AVS calculates rewards for each Operator based on the work performed off-chain, then submits this information on-chain.

An open-source tool called the EigenLayer Sidecar takes daily snapshots of these rewards. It accounts for each Operator's chosen fee split—the percentage they keep for themselves (typically 10%, with a 7-day delay for changes). The Operator keeps their fee, and the rest is distributed proportionally to all stakers who delegated to that Operator, based on their share of the staked assets.

Separately, Programmatic Incentives managed by the Eigen Foundation use a similar fee-split mechanism.

To collect rewards, stakers use a verification method (merkle proofs) against weekly published data, which can be batched to save on transaction fees.

Penalties for misbehavior exist alongside rewards. If an Operator acts maliciously or fails, a portion of the staked assets can be slashed—either burned or, under certain conditions, redistributed to affected parties. This creates a carrot-and-stick dynamic: good performance earns rewards, while failures result in losses.

Important notes: Users who restake native ETH continue to earn the original Ethereum staking yield. Both liquid and native restaking involve a withdrawal delay period as a security measure.

Eigen Labs, the core development team behind EigenLayer, raised a $100 million Series B round led by a16z crypto in February 2024. In June 2025, a16z crypto purchased an additional $70 million in EIGEN tokens from the Eigen Foundation to support development of the verifiable economy. Other investors include Blockchain Capital, Polychain Capital, and Ethereal Ventures, as indicated on the Eigen Labs website.