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

Starting point is 00:00:12 We are at the Axler Interoperability Series. Next up in this conversation, we're talking to Sri Ram from Egenlayer. I think you probably might not need to know what EGNLayer 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,

Starting point is 00:00:33 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 SriRom right now, all about Eugenlayer, and where EigenLayer is in its development. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Cracken is our strategic sponsor for 2023.

Starting point is 00:00:50 Why? Because Cracken has been around for over 12 years and has proven itself to be deeply aligned with the crypto industry. Trusted centralized crypto platforms are hard to come by these days, which makes the few remaining ones even more valuable. With over 9 million users and not a cent lost, choosing Cracken as our strategic sponsor for 2023 was a no-brainer. We need exchanges like Cracken to provide the on-ramps to get people to go bankless.

Starting point is 00:01:12 And Cracken's emphasis on security and transparency makes us feel good about having them as a sponsor. If you're unsure about your centralized exchange or on-ramp, perhaps open an account with Crackin today. And if you're unsure about the rest of Web3, well, then maybe you should get your learn on with Metamask Learn. Learning about crypto is hard. There's no one out there to hold your hand to get into this industry until now. Metamask Learn is the best place I've ever seen to send someone to learn everything there is to know about Web3. If you're a company trying to onboard employees or you're a son or daughter trying to onboard your boomer parents, Metamask Learn is the place to send them.

Starting point is 00:01:47 Interactive and engaging lessons, making learning about Web3 fun and easy. Now, once you're through the Crackens 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 Defy. 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, making Uniswap some of the best decentralizing trading tech that's out there.

Starting point is 00:02:13 Uniswap's big announcement at Eith Denver is their Uniswop 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, so if you want to use Uniswap,

Starting point is 00:02:27 but with the cheapest possible fees, then use Uniswap on Arbitrum. The Arbitrum layer two is the host of Ethereum's most vibrant defy and NFT communities. Arbitrum is already surpassed the ETH layer one in transaction volume, and it's not even close to full capacity.

Starting point is 00:02:40 With so many vibrant communities on Arbitrum, Arbitrum is a good place to call home for the era of layer 2s. Speaking of settling into new homes, the Phantom wallet is now available on both Ethereum and Polygon. That's right, the number one wallet on Solana is expanding into the Ethereum ecosystem. Phantom is the one wallet for everything.

Starting point is 00:02:56 Displaying NFTs, making NFTs, making NFT trades, swapping tokens, staking tokens. So if you're a multi-chain surfer or an NFT power user, then the Phantom wallet is for you. is for you. It also comes in mobile. Check it out at phantom. Now let's get into the interview. All right, Banko Station, we are back at the Axler Interop Summit

Starting point is 00:03:14 and I'm here with Sri Ram from Eginlayer. Sri Rang, last time we talked at DevCon, not many people knew about Eugenlayer. Now it seems everyone knows about Eigenlayer. How does that feel? It's a little bizarre. It is definitely a more positive outcome than we anticipated. We did expect that over time people will warm up to the ideas. 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 I'm really happy to be here in this position.

Starting point is 00:03:50 Okay, so give us the lay of the land for where we are in the progress of eigenlayer, because everyone starts being able to wrap their heads around it. People are starting to see the use cases. But like, win mainnet. Is that the right question? Mainnet? Yes. We definitely want to be on main net by Q3 this year.

Starting point is 00:04:09 So we are, and, you know, there will be a test net by Q2 this year. So public test net, we already are on private test net as I showed 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 sites like stakers, node operators, you know, new services, roll-ups,

Starting point is 00:04:45 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. So that's what we are hoping for. And so Aikenlayer has just generated a ton of excitement. the concept of restaking has really opened people's brains to new use cases and new ideas. Have people already approached you guys saying, hey, I want to build on eigenlayer? What's that been like?

Starting point is 00:05:10 And what are people trying to build? 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 verification. So some of the major ZK teams are interested in. Can you have like thousands of DAP roll-ups all right to like a kind of intermediate restake layer

Starting point is 00:05:42 where the restate 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 our PC providers, some of the bigger ones as well as new players. 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 open AI servers 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.

Starting point is 00:06:14 It remains to see how much we can support. Right now we are 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. 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. It's the strategy to, I'm assuming the strategy is to be able to allow anyone to permissionlessly build on eigenlayer.

Starting point is 00:06:39 Maybe that's what Mainnet is. What's the strategy to enable anyone who wants to build on AigenLayer to build on AgenLayer? So we're building a set of developer tools so that 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. Aiken layer, maybe the initial launch will be very restricted. But over time, in a year or so,

Starting point is 00:07:06 we want to be in a position where many, many other teams have built something, at least on Dasenade on Aikenlares. So when something like this, so Aiken layer 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 clearly a very big deal. All of a sudden, you really change the game.

Starting point is 00:07:24 Have you seen Eigenlayer competitors start to crop up just to follow in the footsteps? No, I don't know of any. I'm sure there are some which we don't know about. But the 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.

Starting point is 00:07:59 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. Yeah, of course, of course. And bankless listeners who are listening to Sri Ram for the first time might be confused as to what we're talking about.

Starting point is 00:08:15 We did kind of skip forward ahead of what Eigenlayer actually is. But I definitely would encourage you to listen to our talk at DevCon, where we really went through this quite a lot. The metaphor I've been using to explain Eigenlayer is like Skyrim mods. 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 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. I'm assuming that is probably the right mental model to have.

Starting point is 00:08:55 Don't add too many mods because things will start to conflict. Is that the right intuition I've got? 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 these validators to run this for me or this group of stakers. But there will be some services which are core to the Ethereum ecosystem,

Starting point is 00:09:17 like a hyperscale data availability, like a most performant ZK bridge, like a performant light-clan bridge to the Cosmos ecosystem. These, like a super-performing decentralized sequencer and a super-fast settlement layer. There are some services which will be core ecosystem services, which we expect everybody should run. So I will agree to the extent that we are talking about services

Starting point is 00:09:41 that are run by everybody, there will be a few. Sure. But there will be many, many services run by a few people so that there is 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.

Starting point is 00:10:04 It very much is reminiscent of the MEV discovery by the FlashB team early on in 2016-2017 that 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 the 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. So one question I have, and we're

Starting point is 00:10:35 at this interoperability summit, and this is hosted by Axlar, 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 threat 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 train, which is perhaps the ETH-Maths,

Starting point is 00:11:16 or network effects vision that Ryan and I tend toward to lean into. Now, I don't think it's so binary. I think the answer is somewhere in the middle, but I think that eigenlayer pulls towards the Ethereum Central one chain, one dominant chain because of what eigenre can do for e-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? Definitely, to the extent that there were some features that, you know,

Starting point is 00:11:45 some layer ones, the main thing that General Purpose layer one 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 two vision and a deepening of the layer two 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? and there may be other reasons other than technical arbitrage.

Starting point is 00:12:17 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? 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.

Starting point is 00:12:43 You need a way, okay, you know, I'm a DAP and I want my sour nitty. 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, there's 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.

Starting point is 00:13:03 So these are all visions. There is a vision of, like, a chain which could be, like, a proof of personhood chain. 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 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.

Starting point is 00:13:24 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? Right. Whether it is just layer 2s or totally.

Starting point is 00:13:42 hour in 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.

Starting point is 00:13:59 Aigen layer 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. 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 sun of the solar ecosystem,

Starting point is 00:14:45 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? 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.

Starting point is 00:15:14 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 eigen-layer. The reason being, when you try to build an Oracle, how do you create a slashing condition? How do you know Bitcoin to eat is not $1 today? How do you know that in an on-chain,

Starting point is 00:15:30 very fable manner? Are you going to trust a committee for it? That feels like, you know, low-grade. Sure. But eigenlayer trust model is actually very dynamic. For example, there are multiple dimensions of trust that exist, and slashing or economic trust is only one dimension of trust. There are other dimensions of trust,

Starting point is 00:15:48 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. 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. of trust, independent of how much money they've actually put in.

Starting point is 00:16:08 And this is the home staker, eat staker vision, the rocket pool 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 slascible, just the fact that 10,000 independent nodes actually vetted 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?

Starting point is 00:16:40 Each steak is one dimension of it. Another dimension is how do we vet and validate who are the home stakers? 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 liquid staking 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. Oracles were just specialized like a chain analysis, but an analysis of where validators are,

Starting point is 00:17:15 how decentralized they are geographically and agency-wise. Like, are they really independent agents? People coming and vetting this. And we don't want to be the source of 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?

Starting point is 00:17:35 Because some would want economic trust, some would want decentralization trust. And we want the spectrum of decentralized trust to be expressed on eigenlayers. So we imagine that different middlewares will have different subjective decentralization oracles. And once you have that,

Starting point is 00:17:51 there may be additional yield accruing to these decentralized nodes. So these are the two, I would say, major questions. What slashing do you do? How do we get incentivized decentralization on eigenlayers? So those are some of the questions. 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.

Starting point is 00:18:09 Sri Ram, if people have been peaked or they just want to learn about the frontier of EG-E-L-Layer, where should they go? Right now the best place is the EG-I-L-E-L-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.

Starting point is 00:18:48 And I'm assuming you're hiring or just looking for partnerships. What are you looking for on the BED and hiring front? On the hiring front, like distributed systems builders, you know, smart contract engineers always 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

Starting point is 00:19:08 interesting, creative things. So we're looking for that. On the BD and ecosystem growth side, anybody who's creative in growing ecosystems like this, definitely we want to talk to. On the broader ecosystem, we're looking for the various

Starting point is 00:19:25 sides of our market. Stakers who have eat, for staking eat and want to enhance yield. We want to look at node operators, you know, the major node operators, we are talking to them. Service builders, like, whether it is big existing services like Chainlink, who

Starting point is 00:19:40 want to add on an IOTO 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.

Starting point is 00:19:56 Serian, thank you so much. Thank you so much. appreciate.

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

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.