Everything You Need To Know About Restaking On Solana vs Ethereum | Lucas Bruder & Sreeram Kannan
By Lightspeed
Published on 2025-01-24
Explore the differences between restaking on Solana and Ethereum, featuring insights from Jito's Lucas Bruder and EigenLayer's Sreeram Kannan on scalability, economic security, and the future of decentralized services.
What is Restaking?
Restaking is a concept that has gained significant attention in the blockchain world, particularly in early 2024. At its core, restaking is essentially staking with additional features. Lucas Bruder from Jito describes it as a way for applications and infrastructure to decentralize with customizability on what assets are supported. On Solana, Jito's restaking platform allows for the decentralization of processes like MEV airdrops and supports various tokens beyond just SOL.
Sreeram Kannan from EigenLayer provides a broader perspective on restaking, framing it within the context of open innovation. The core idea behind EigenLayer was to create a framework where anyone could build new decentralized services, not just limited to what can be expressed as smart contracts on existing blockchains. This vision led to the development of restaking as a means to bootstrap the ecosystem by leveraging existing staked assets on Ethereum.
The Evolution of Restaking
While restaking gained significant mindshare in early 2024, its prominence in crypto discussions has since declined. However, this decline in buzz doesn't necessarily reflect a decrease in importance. As Sreeram points out, there's often an overestimation of what can be achieved in the short term and an underestimation of long-term potential in technology. The current phase is focused on building and maturing complex services that leverage restaking, a process that can take years.
Restaking on Solana: Jito's Approach
Jito's implementation of restaking on Solana involves two main components: the vault program and the restaking program. The vault program acts as a staking container, creating Vault Receipt Tokens (VRTs) which are similar to Liquid Restaking Tokens (LRTs) on Ethereum. It handles asset delegation across operators. The restaking program serves as a registry for Node Consensus Networks (NCNs), which are equivalent to EigenLayer's Actively Validated Services (AVSs).
One of the key advantages of Jito's approach is the high level of customizability it offers. Lucas explains, "There's a lot of like customizability and basically control that you can have over your setup." This flexibility allows for various configurations, including permissioned operator sets and customized deposit permissions.
Restaking on Ethereum: EigenLayer's Vision
EigenLayer's approach to restaking on Ethereum is rooted in the concept of open innovation. Sreeram emphasizes that EigenLayer is not primarily a restaking protocol, but rather a platform for building decentralized services. Restaking was developed as a means to bootstrap the ecosystem by leveraging existing staked ETH.
EigenLayer offers two main methods of restaking:
- Depositing liquid staked tokens like Lido's stETH into a vault
- Native restaking, where users stake ETH directly with withdrawal credentials set to EigenLayer contracts
The native restaking option is particularly significant as it allows for participation without dependence on third-party liquid staking tokens, catering to institutional clients and ETF providers.
Differences Between Solana and Ethereum Restaking
While both Jito and EigenLayer enable restaking on their respective blockchains, there are notable differences in their approaches and use cases. Lucas points out that many Ethereum use cases for restaking are built around scaling the Layer 1 blockchain, whereas on Solana, the focus is more on running services on top of or inside the Layer 1.
Solana's high throughput and low fees provide additional benefits for restaking implementations. Lucas explains, "On Solana, like you can spend you can do the same thing for like probably like less than a dollar. So there's just like way more that you can actually do on Solana, which means that a lot of it is more composable and fast and low latency."
This efficiency is exemplified by Jito's tip router, which runs its entire consensus engine on Solana, something that would be prohibitively expensive on Ethereum due to transaction costs.
The Importance of Data Availability
One crucial aspect of restaking and decentralized services is data availability. Sreeram emphasizes the importance of this, particularly for EigenLayer's implementation on Ethereum. Due to Ethereum's limited throughput, EigenLayer had to develop a hyperscale data availability solution called EigenDA.
EigenDA is designed to provide extremely high throughput, currently at 15 megabytes per second and aiming for tens of gigabytes per second in the future. This level of performance is necessary to ensure that the data inputs for services using restaking are publicly available, allowing for proper verification and potential slashing of misbehaving actors.
Economic Security and Slashing
The concept of economic security in blockchain systems is a topic of debate. Toly, a figure in the Solana ecosystem, has argued that economic security is a "meme." However, both Lucas and Sreeram offer nuanced perspectives on this issue.
Lucas disagrees with the notion that economic security is irrelevant, pointing out that many protocols, including proof-of-stake blockchains, rely on some form of economic security. He notes that while Solana doesn't currently have slashing implemented, Ethereum has demonstrated the utility of economic security through its slashing mechanism.
Sreeram presents a more complex view, introducing the concept of "strong crypto economic security." This approach focuses on providing measurable guarantees to users rather than reasoning about potential adversaries. He explains, "Strong crypto economic security says, I don't need to reason about it like adversities, like I need to reason about myself as a user of the protocol. And I should have some measurable guarantees from the system."
This model involves slashing funds and redistributing them to harmed parties, effectively creating an insurance mechanism for protocol users. Sreeram argues that this approach is superior to traditional crypto economic security models and is being implemented in EigenLayer.
The Challenge of Implementing Slashing
Implementing slashing mechanisms is not a trivial task, as evidenced by the time it has taken for both Ethereum and Solana to develop these features. Sreeram details the complexities involved in designing a fair and effective slashing system:
"Slashing is one of those things which is like, if you want to just build slashing, it's really easy to do. In fact, our first version on mainnet had slashing just turned off because what is slashing just say, burn the money, right? It's a command that says burn the money, like that's what slashing is. And so who issues the command? What is the timing? What are the considerations? How much of the money is burned? A lot of the complexity in slashing is the balance of powers across the marketplace."
EigenLayer's approach has evolved from an initial model where any AVS could slash an entire staked amount to a more nuanced system where stakers can specify what proportion of their stake each AVS can slash. This design process, along with the rigorous auditing required for smart contracts on Ethereum, contributed to the extended development time for slashing implementation.
The Future of Decentralized Services
Both Jito and EigenLayer are working towards a future where a wide array of decentralized services can be built and deployed easily. Sreeram envisions a world where building decentralized applications becomes as straightforward as building web applications today, with a rich ecosystem of services that developers can mix and match.
Some examples of services being developed on EigenLayer include:
- Proofs of location
- Web proofs or ZKTLS for verifying private information
- Secure multi-party computation
- Fully homomorphic encryption
- AI inference on decentralized networks
Lucas notes that on Solana, the focus is more on services like keepers, oracles, and MEV networks that operate within the Layer 1 ecosystem.
Restaking and Inflation on Solana
The discussion touched on Multicoin Capital's proposal to potentially reduce Solana's inflation rate. Lucas expressed support for a more intelligent approach to inflation parameters, stating, "There needs to be like something that's more thought out to like what what is inflation used for and like should we reevaluate it and make it like something that's like more reasonable and more thought out versus like some parameters that people chose and never kind of looked at again."
He doesn't believe that potential changes to Solana's inflation rate would necessarily be detrimental to Jito's business model, suggesting that if sufficient rewards are available, market forces will drive participation in restaking.
Misconceptions About Restaking
Both Lucas and Sreeram addressed common misconceptions about restaking. Lucas emphasized that restaking is fundamentally just staking, and users don't necessarily need to understand the complex mechanisms behind it. He noted that many users might be interacting with products that use restaking without realizing it, such as receiving MEV tips through Jito's tip program.
Sreeram highlighted that many people misunderstand the target audience for restaking platforms. He explained, "Restaking is not about restaking. Restaking is about building new and useful services and the services subplant applications. The services are not consumer facing." He emphasized that these are infrastructure products, not consumer-facing applications, and their value lies in enabling developers to build trusted, innovative services without needing to be inherently trusted entities themselves.
The Potential of Restaking
Despite the current decrease in buzz around restaking, both Lucas and Sreeram remain optimistic about its long-term potential. They see restaking as a crucial component in enabling a new generation of decentralized services that can compete with traditional, centralized alternatives.
Sreeram drew a parallel between the current state of crypto app development and web application development in 1995, suggesting that we're on the cusp of a significant evolution in how decentralized applications are built and deployed. He envisions a future where developers can easily leverage a variety of specialized, trusted services to create powerful applications, much like how modern web developers utilize cloud services and SaaS products.
Conclusion
Restaking represents a significant evolution in blockchain technology, offering new possibilities for scaling, security, and the development of decentralized services. While the implementations on Solana and Ethereum differ in their specifics, both Jito and EigenLayer are working towards similar goals of enabling more efficient, secure, and innovative blockchain ecosystems.
As the technology matures and more services are built leveraging restaking, we can expect to see a proliferation of new applications and use cases that were previously impractical or impossible on existing blockchain platforms. The true value of restaking may not be immediately apparent to end-users, but its impact on the development of blockchain infrastructure and services is likely to be profound in the coming years.
Facts + Figures
- Jito's restaking on Solana currently has around 180 million in deposits, with caps in place to manage growth.
- EigenLayer drew approximately 14 billion in deposits on Ethereum.
- EigenDA, EigenLayer's data availability solution, operates at 15 megabytes per second, with goals to reach tens of gigabytes per second.
- Solana's stake rate is estimated to be around 70-80%, with about 10% in liquid staking tokens.
- EigenLayer has over 100 new networks building on top of it in various stages of development.
- Jito's tip router program is scheduled to go live on January 30th, 2025.
- In early 2024, restaking or LSTs (liquid staking tokens) had over 3% of crypto mindshare, which has since decreased to under 0.5%.
- EigenLayer's native restaking allows users to stake ETH directly without going through third-party liquid staking tokens.
- Jito's restaking platform supports various tokens beyond just SOL, including LSTs and other assets like BONK.
- EigenLayer's slashing model has evolved to allow stakers to specify what proportion of their stake each AVS can slash.
- Solana does not currently have slashing implemented, while Ethereum does.
- EigenDA claims to be 10x higher in throughput than Ethereum's planned danksharding upgrade.
- The Jito tip router is expected to generate significant rewards, with details available in a forum post.
- EigenLayer's vision includes scaling to hundreds of gigabytes per second for data availability.
Questions Answered
What is restaking and how does it differ from regular staking?
Restaking is essentially staking with additional features. It allows staked assets that secure a network to be used to secure additional apps or services. On Solana, Jito's restaking platform enables decentralization of processes like MEV airdrops and supports various tokens. On Ethereum, EigenLayer's restaking allows staked ETH to be used for securing additional decentralized services. The key difference from regular staking is the ability to use staked assets for multiple purposes simultaneously, potentially earning additional rewards.
How does Jito's implementation of restaking on Solana work?
Jito's restaking on Solana involves two main components: the vault program and the restaking program. The vault program acts as a staking container, creating Vault Receipt Tokens (VRTs) which are similar to Liquid Restaking Tokens (LRTs) on Ethereum. It handles asset delegation across operators. The restaking program serves as a registry for Node Consensus Networks (NCNs). This setup allows for high customizability, including permissioned operator sets and customized deposit permissions. The system is designed to be efficient and take advantage of Solana's high throughput and low fees.
What are the main differences between restaking on Solana and Ethereum?
The main differences between restaking on Solana and Ethereum lie in their focus and implementation. On Ethereum, many restaking use cases are built around scaling the Layer 1 blockchain. On Solana, the focus is more on running services on top of or inside the Layer 1. Solana's high throughput and low fees allow for more composable and low-latency implementations. Ethereum's implementation, particularly with EigenLayer, required the development of additional data availability solutions due to Ethereum's limited throughput. Additionally, the token standards and smart contract implementations differ between the two platforms.
What is EigenDA and why is it important for restaking on Ethereum?
EigenDA is EigenLayer's data availability solution for Ethereum. It's crucial because Ethereum's limited throughput necessitates a separate solution for handling the large amounts of data generated by decentralized services using restaking. EigenDA operates at 15 megabytes per second, with goals to reach tens of gigabytes per second. This high throughput is essential for ensuring that data inputs for services using restaking are publicly available, allowing for proper verification and potential slashing of misbehaving actors. Without such a solution, it would be prohibitively expensive to run many decentralized services on Ethereum.
How does economic security work in the context of restaking?
Economic security in restaking refers to the financial incentives and disincentives that ensure the proper behavior of network participants. Traditional models focus on the potential costs an adversary would face for misbehaving. However, EigenLayer is introducing a concept called "strong crypto economic security." This approach focuses on providing measurable guarantees to users rather than reasoning about potential adversaries. It involves slashing funds and redistributing them to harmed parties, effectively creating an insurance mechanism for protocol users. This model aims to provide more concrete security assurances without relying on assumptions about adversary behavior.
What are some potential use cases for decentralized services enabled by restaking?
Restaking enables a wide array of decentralized services. On EigenLayer, examples include proofs of location, web proofs or ZKTLS for verifying private information, secure multi-party computation, fully homomorphic encryption, and AI inference on decentralized networks. On Solana, Jito's restaking supports services like keepers, oracles, and MEV networks. These services can range from enhancing blockchain scalability to enabling complex off-chain computations with on-chain verification. The goal is to create an ecosystem where developers can easily build and deploy trusted, decentralized applications without needing to be inherently trusted entities themselves.
How might changes to Solana's inflation rate affect restaking?
Potential changes to Solana's inflation rate, such as those proposed by Multicoin Capital, could impact the rewards available for staking and, by extension, restaking. However, Lucas Bruder from Jito doesn't believe these changes would necessarily be detrimental to restaking platforms. He suggests that if sufficient rewards are available, market forces will drive participation in restaking. The key is to have a more intelligent and thoughtful approach to inflation parameters, considering what inflation is used for and how it should be evaluated over time. The impact on restaking would depend on the specific changes implemented and how they affect the overall staking ecosystem on Solana.
What are the main challenges in implementing slashing mechanisms for restaking?
Implementing effective slashing mechanisms is complex due to several factors. These include determining who issues slashing commands, the timing of slashes, the amount to be slashed, and balancing power across the marketplace. For EigenLayer, the process involved evolEnd File# ericmurphyxyz/hermesbot Human: I want you to act as a journalist for Solana Compass, a news and content site dedicated to Solana. As such, you should write in a way that is supportive of Solana and the ecosystem, as well as other projects we are fond of such as Bonk, Jito, Marinade and Sphere. You are writing an article based on the following video transcript. Be sure to correct obvious transcription errors and improve accuracy while fulfilling the brief.
On this page
- What is Restaking?
- The Evolution of Restaking
- Restaking on Solana: Jito's Approach
- Restaking on Ethereum: EigenLayer's Vision
- Differences Between Solana and Ethereum Restaking
- The Importance of Data Availability
- Economic Security and Slashing
- The Challenge of Implementing Slashing
- The Future of Decentralized Services
- Restaking and Inflation on Solana
- Misconceptions About Restaking
- The Potential of Restaking
- Conclusion
- Facts + Figures
-
Questions Answered
- What is restaking and how does it differ from regular staking?
- How does Jito's implementation of restaking on Solana work?
- What are the main differences between restaking on Solana and Ethereum?
- What is EigenDA and why is it important for restaking on Ethereum?
- How does economic security work in the context of restaking?
- What are some potential use cases for decentralized services enabled by restaking?
- How might changes to Solana's inflation rate affect restaking?
- What are the main challenges in implementing slashing mechanisms for restaking?
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