Is it possible for Eigenlayer to eventually offer Layer 2 Compatibility (whether through establishing its own Layer 2, as is all the rage right now, or integrating existing Layer 2s)?
For small-medium Eth restakers and Eigen stakers, the gas costs of using Eigenlayer are likely to completely offset any yield and rewards received.
My fears that Eigenlayer is only suitable for whales is compounded by the recent ELIP, which to my understanding (correct me if wrong) may impact smaller AVSs or stakers, as the loss of direct-to-staker incentives removes a key tool for incentivizing participation and engagement.
Perhaps it makes strategic sense for Eigenlayer to target only the largest restakers and Eigen holders. But if this is indeed a strategic decision by the protocol, I think this should be articulated, so that smaller restakers and holders can reallocate their funds appropriately.
Hey Ollima, thanks for the great questions. I have some thoughts:
L2s and gas costs:
Restaking on EL currently involves L1 gas costs, which are higher due to the security Ethereum offers. The transaction to restake or delegate (~300k gas) is approximately 4x the cost of transferring an ERC-20 token. While reducing these costs further on ETH isn’t something within our power (ETH foundation is working on this topic tho) , one potential solution could be more LRTs with L2 integrations or batching user assets.
smaller staker participation:
EL’s design prioritizes security for AVSs rather than focusing on smaller restakers. Economies of scale are intrinsic to ETHs security model, which means L1 operations are inherently costlier. small time stakers probably would need pooling mechanisms or LRTs on L2s more suitable if they are focused on cost.
tl;dr its a bit bigger/ more complex than that. there is still plenty of design space to include cost conscious users, but it might be more complicated than just “putting EL on an L2”
Thanks for your well thought out questions tho! It’s great to have these kind of long form discussion here instead of discord where they get lost