What is Re-Staking? The new solution to the Ethereum "decentralization" problem is here?
When the Ethereum community is concerned about the risks of "concentrating power" in a group of projects, "Re-staking" is a keyword that many people are interested in and is expected to become the right solution. So what is "Re-staking", let's find out in the article below!
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Re-staking problem solved
First, let's find out why the concept of "Re-Staking" was born and has been noticed by the community over time.
At the SBC 2022 conference, EigenLayer's representative Sreeram Kannan raised issues related to the "decentralization" of the Mev-Boost application network .
With these limitations, Re-Staking emerged as a solution to punish (slashing) nodes with bad behavior, while ensuring that they will still receive benefits from Mev when using Mev-Boost's Relayer.
How Re-staking works
Because the Re-Staking documentation does not have too many names or implementation projects, in this article I can only mention content related to EigenLayer (a project that has been talked about by the community quite a lot of time. recently).
Above is an image taken from the Twitter account “Solomon Crypto”. The above model has several steps as follows.
- Step 1: Users will still stake ETH on this chain as usual. Then in section 1a, validators will use this ETH to continue operating the network.
- Step 2: Parallel to the process in step 1a, by continuing to delegate ETH to EigenLayer's contract, validators will interact to choose the task they will perform in step 3. Thus, the same Initial amount of ETH, this capital can be applied to 2 or more parallel security operations.
- Step 3: These tasks include Oracle, Data Availability, and Sidechain or Rollup deployment.
- Step 4: These nodes will receive a reward for the task performed. In addition, if there is fraud, these operators will be subject to a penalty (the specialized term is “slashing”).
Thus, with the above simplification, we can temporarily conclude "Re-Staking is an application layer that helps decentralize validators, and reuses staked Ethereum capital for other security activities".
First, Re-Staking will help reduce the risk that the network depends on Flashbots Mev-Boost. Since most of the processing from Builder - Relayer - Proposer/Validator takes place off-chain, so without a slashing layer to manage, these validators can completely commit fraud.
As mentioned at the beginning, technically, Re-Staking will help Validators balance the MEV profit problem and the overall security of the network. The validators will now have to:
- There are stakes in the Re-Staking platform to ensure that you will be penalized if you cheat.
- Commit that they do not cheat in the interaction with Relay of Mev-Boost.
Second, the capital staked in Ethereum can be reused, in order to increase capital efficiency.
Third, this could be a solution to help drive the need to buy more ETH to stake in the network.
The first risk is the effectiveness of this too-new model. There is currently no real battle with the market and the capacity of the teams will still be a question mark.
The second is the story of decentralization. We hear too much about Lido Finance or Flashbots. Although the applications are at different stages in operating a blockchain, the impact of these two platforms is so great that the community is skeptical about the risk of concentrating power in a certain group. Re-Staking, if not properly designed, could end up creating another bottleneck for the blockchain.
Third, summarizing the above two reasons, security is the biggest concern. Although not too concerned about the team taking the user's ETH and "evaporating" (because all retakes are managed by smart contracts ), any errors in the technical implementation can lead to a domino disaster for the entire blockchain.
Above is the most basic information about “Re-Staking”. Hopefully, the above content will help you to somewhat have your own personal views on "the bends of the market" in the near future.
Note, all of the above content is for informational purposes only and should not be considered investment advice!
For now, goodbye guys and see you in the next post.
Oct 22, 2022