EigenLayer's Mainnet Launch: Potential Risks and Opportunities

According to Blockworks, EigenLayer, with over $12 billion in total value locked (TVL), launched its mainnet last week, bringing its vision of a restaking ecosystem on Ethereum closer to reality. The launch, however, came with slashing and in-protocol payments disabled, as the protocol aims to allow the marketplace to 'develop and stabilize'. This move has left potential restakers, validators, and actively validated service (AVS) operators uncertain about the potential risks the protocol could pose in the future. In a recent report, Ethereum node operator Chorus One attempted to predict some of these risks. The report suggests that EigenLayer could face pressures towards centralization, which could potentially lead to far-reaching black-swan events within Ethereum. The most catastrophic event speculated is a slashing cascade, which occurs when an operator running one of EigenLayer’s AVSs is penalized, leading to a portion of their stake being confiscated. If a significant amount of ether is locked in EigenLayer and a large operator suffers a major slashing event, it could lead to a cascade of slashing damage. In a worst-case scenario, this could compromise the security of the Ethereum network. However, the report also notes that slashing on Ethereum is somewhat rare and most slashing scenarios are caused by human error. Another potential negative outcome of EigenLayer’s launch, according to the Chorus One team, is centralization. On EigenLayer, AVSs can choose which operators to work with. Chorus One predicts AVSs will pick the operators with the largest amount of pooled security to offer, which will be professional node operators and liquid restaking projects. This could lead to big operators benefiting from economies of scale to achieve higher margins, causing their portion of the total supply to grow further. The report also highlights the unpredictable nature of the yield generated by AVSs. While running AVSs on testnet, Chorus One found hidden costs from things like data storage or cloud computing, which could make margins slim for running some AVSs. Despite these potential risks, Chorus One continues to draw delegations as it grows its presence as an EigenLayer operator.