According to Eigen Layer whitepaper, restaking positions might not be easily fungible if there are a lot of AVS.
This fungibility issue is not technical, is it ? For me, it has more to do with lack of liquidity of the Liquid Restaking Derivative (LRD) on DeFi, rather than a pure technical issue. If an Eigen Layer LRD has a market cap of 150k$, there’s no way it can be liquid on Uniswap.
In this case, we can imagine that 2 or 3 restaking positions will count for a large majority of Eigen Layer restaking. Rocket Pool ETH, for example, represents around 220k ETH. If an EL restaking mode represents hundreds of thousands of ETH, we could create a fungible LRD.
THis leads us to my question for you : who would be able to create this LRD token ? EL team ? EL veto/EL holders ? AVS ? Or maybe the validators themselves ?
(I enjoyed creating this topic, because Eigen Layer seems to be a usefull projet. Thank you for reading this post !)
@sam.omw1 can you please answer him.
yeah this is a great question !
from what i know, to maintain transparency and avoid principal-agent problems between fungible position holders and node operators, EigenLayer will not issue a fungible token to represent restaked positions.
restakers may select different combinations of modules to validate, exposing them to varying levels of slashing risk.
managing such risks and ensuring transparency can be challenging that’s why EigenLayer will not issue fungible tokens.
imo what’s likely is that operators running the softwares services could create these LRD tokens and users just deposit their $ETH in the services where they wanna delegate.
hope that helps,
Thank you for answering me !
So, on the long run, we could use ETH LRDs earning 6% ETH + other tokens. But Eigen Layer will not create this lrd token, validators will have to do it by themselves
Protocoles like Lido or Rocket Pool might be intersted by this opportunity in the next years. Seems a lil bit degen at first, but who knows ?
Thanks for your explanation
indeed that could make sense, i mean their business model is based on getting more yield on $ETH so if EigenLayer gives them the opportunity to obtain even more yield in a safe way, why not i guess
I knew it, you’ll only answer this question. Thanks for your time