EigenLayer is an innovative middleware that allows users to restake their assets, such as ETH and Liquid Staking Tokens (LSTs), to provide security to Actively Validated Services (AVSs).
Restaking involves using assets that are already staked in one protocol to secure additional services or layers within EigenLayer. This approach allows users to increase their overall benefits by extending the utility of their existing assets.
EigenLayer creates a permissionless marketplace where various blockchain protocols can rent high-quality operator sets, ensuring enhanced security, flexibility, and access to capital.
AVS rewards are a highly-anticipated game-changer within the restaking ecosystem. They provide operators with fees for their infrastructure services and stakers with fees for their capital that secures the AVS. This system ensures a fair distribution of rewards based on contributions to the network.
This article will discuss the upcoming AVS rewards, explain the programmatic incentives, and guide you through claiming your rewards.
What are AVS Rewards?
Nearly a year after EigenLayer’s mainnet launch and 4 months after delegation became available, EigenLayer introduced rewards functionality. This feature has been developed over months and marks a significant step forward in the restaking landscape.
Starting now, stakers and operators can earn rewards directly through the protocol for securing EigenLayer AVSs. This is an important step towards enabling price discovery for the value of stake and compute provided via EigenLayer.
How Rewards Work
Rewards are distributed weekly on the mainnet and can be claimed through the app interface that allows stakers to track their updated rewards. Rewards are proportional to:
- The amount of stake.
- The AVS’s relative weighting of strategies in a rewards submission.
AVSs can also customize various parameters for their rewards, such as:
- ERC-20 Token Choice: AVSs can choose which ERC-20 token they want to use as a reward for stakers and operators.
- Amount of Distribution: AVSs can decide the total amount of the chosen token they wish to distribute as rewards.
- Timing of Rewards: Rewards can be allocated to past, current, or future stakers and operators. This allows for retroactive rewards for early participants as well as forward-looking commitments to attract future engagement.
Operators will receive a default 10% fee.
Elevating Rewards Through Strategic Incentives
Currently, AVS needs some time to integrate its rewards system. The rewards will most likely be distributed in small amounts the first time.
To support the ecosystem, EigenLayer will implement an incentives program, distributing EIGEN tokens proportionate to the rewards given by each AVS. This mechanism will effectively boost the rewards for stakers and operators.
AVSs Ready to Provide Rewards
For AVSs ready to distribute rewards, the program will enhance their ability to attract and retain stakers and operators. In the first year, at least 4% of EIGEN’s total supply will be distributed through this program, encouraging early rewards adoption and integration.
AVSs Not Ready to Provide Rewards
To support AVSs not ready to distribute rewards on Day 1, a portion of EIGEN incentives will be allocated to stakers and operators of these AVSs. This ensures that all legitimate AVSs can distribute some rewards, encouraging new AVSs to join the EigenLayer ecosystem even if they are not ready to distribute rewards independently.
The programmatic incentives program will be implemented in the coming month. The Eigen Foundation plans to share details of this program, so stay tuned for updates.
Slashing Concerns?
Currently, slashing is not live, allowing operators to opt into multiple AVSs without incremental risk. Future plans include a “unique security” mechanism, where operators can specify the amount of stake available for slashing per AVS. This is designed to mitigate slashing cascade risks that exist in other models.
More details on unique security will be shared before the launch of slashing on EigenLayer.
Claiming Your Rewards
You can claim your rewards both via the EigenLayer app and the eigenlayer-cli. We will soon release our detailed guide on how to claim your staking rewards, so stay tuned.
About Everstake
Everstake is a prominent operator in the EigenLayer ecosystem and currently serves all AVSs. We offer a fixed 10% operator commission, set by EigenLayer, ensuring fair reward distribution.
You can restake and delegate ETH, LSTs, and EIGEN with us. Check our Everstake Blog for more details. You can also undelegate and stake with Everstake as we strive to offer the best restaking experience.
Conclusion
The introduction of AVS rewards on EigenLayer marks a significant advancement in the restaking ecosystem. This innovative feature allows both stakers and operators to earn rewards directly through their participation in securing Actively Validated Services (AVSs).
Programmatic incentives further enhance the ecosystem by distributing EIGEN tokens to participants, thereby boosting the overall rewards and encouraging early and active rewards adoption by AVSs. This design ensures that even AVSs not ready to distribute their own rewards can still attract and retain stakers and operators, promoting the growth and stability of the EigenLayer ecosystem.
Restake wisely with Everstake to secure your assets. Follow our X @eth_everstake for the latest updates, and stay tuned for our detailed guide on claiming rewards.
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