Ethereum's evolution from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) model has been a significant milestone, offering users the opportunity to secure the network and earn rewards through staking. However, staked ETH has traditionally been inaccessible during the staking period, limiting its utility. EigenLayer has emerged as a groundbreaking protocol within the Ethereum ecosystem, aiming to address this limitation by introducing innovative features. 

Within a year, Eigenlayer has attracted over $12bn in Total Value Locked, with a huge upswing taking effect around Feb 2024 when protocol caps were lifted and airdrop rumors began to surface.

What is EigenLayer?

EigenLayer stands as a pioneering protocol operating on the Ethereum blockchain, introducing the concept of "restaking." This mechanism enables users to reuse both ETH and Liquid Staking Tokens (LSTs) within the consensus layer. By allowing stakeholders to reallocate their staked assets, EigenLayer enhances security for various applications while enabling participants to earn additional rewards. 

Central to EigenLayer's functionality is its ability to diversify Ethereum's security landscape. Participants can now restake their assets across multiple services, reducing capital requirements and bolstering trust assurances for each service. This multiplies Ethereum's collective security resources, eliminating the need for independent trust networks for decentralized services, and thereby promoting innovation and governance within the ecosystem.

How Does EigenLayer Work?

EigenLayer operates by revolutionizing Ethereum's staking system with a concept known as restaking. Unlike traditional staking models where assets are locked for a set period, EigenLayer introduces a dynamic approach. Participants begin by staking their assets, whether Ethereum (ETH) or Liquid Staking Tokens (LSTs), onto the Ethereum network through the EigenLayer application. Once staked, users can opt into EigenLayer through specific smart contracts, initiating the restaking process.

Through restaking, participants contribute to securing various decentralized applications (dApps) and services within the Ethereum ecosystem, which is what the application refers to as a ‘modular approach’. 

This process, facilitated by Active Validator Services (AVS), allows users to diversify their investments across multiple services, potentially increasing rewards while reducing capital requirements. EigenLayer's design offers flexibility, enabling participants to engage in multiple security pools simultaneously, enhancing network-wide trust and security.

EigenLayer introduces delegation and operator functionalities, where users can delegate their restaked assets to specialized operators. These operators manage the restaking process and employ specific staking strategies, optimizing rewards and security. Additionally, EigenLayer implements safety measures such as a hold period for withdrawals, adding an extra layer of security to the restaking process. 

Overall, EigenLayer stands as a pivotal protocol within the Ethereum ecosystem, revolutionizing staking mechanisms and enhancing network security and flexibility.

EigenLayer Airdrop: the Eigendrop

While there is no official airdrop date yet, and plenty of scams that claim otherwise, the real ‘Eigendrop’ is already anticipated to be one of the biggest airdrops of the year. 

Within the EigenLayer ecosystem, users accumulate "restaked points" through restaking activities, potentially serving as criteria for future airdrops, mirroring strategies seen with AltLayer, Jito, and other high profile protocols that recently launched their own tokens.

Accruing EigenLayer Points involves restaking liquid staking tokens (LSTs) within the EigenLayer system. Points earned depend on the quantity and duration of tokens restaked. Additionally, users can acquire EigenLayer Points through liquid restaking tokens (LRTs), which represent staked LSTs, offering enhanced liquidity alongside point accumulation through platforms like Ether.fi, Swell, and Kelp DAO.