Base Ecology Emerges
Similar to the EigenLayer, the Overload re-staking protocol is now available. Its highlight is the ability to stake any ERC-20 tokens, not just ETH. Additionally, this protocol does not reduce the operation of nodes, further reducing the asset risk for re-stakers.
Table of Contents
Background: Introduction to Re-staking
Introduction to Overload Re-staking Protocol
Stake Any ERC-20 Tokens
On-chain Consensus
No Slashing Mechanism
Empowered Stakers
New Staking Competitions
Restaking Facilities in Various Ecosystems
Is the Security Adequate?
Is it Necessary to Build a Re-staking Ecology?
Re-staking refers to the process of staking liquid tokens (LST) again. It not only protects the main network but also external networks. For example, users can choose to stake ETH in the Lido protocol to protect the security of the Ethereum network, and stake the stETH token, which represents the staked proof, in EigenLayer to protect other networks and earn higher returns.
EigenLayer is the pioneering re-staking protocol that allows node operators to manage the tokens staked by stakers and help protect the security of external network projects. The latter is also known as Actively Validated Services (AVS).
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(recommended reading:
How will the re-staking project EigenLayer change the Web3 infrastructure ecosystem?
Reason for recommendation: This article comprehensively explains the design concept, problem-solving, and current development status of EigenLayer, allowing readers to quickly understand the roles of various participants in the ecosystem, including token stakers, node operators, and AVS. It provides a better understanding of the content of this article.)
The Total Value Locked (TVL) of this protocol has reached over $16 billion, and there are already nine AVS waiting to cooperate.
(EigenLayer enters the next stage, familiarize yourself with these projects before the wave of AVS arrives)
In the Base ecosystem, a similar re-staking project called Overload has emerged. According to the team, this project has three main differences:
Stake any ERC-20 tokens
On-chain consensus
No slashing mechanism
Empowered stakers
Each of these changes the re-staking mechanism, as explained below.
Compared to EigenLayer, which only accepts ETH and its corresponding liquid token staking, Overload can accept any ERC-20 tokens for staking. This increases the flexibility and motivation for stakers.
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Overload can accept any ERC-20 tokens for staking
This is to compensate for the insufficient asset volume in the Base ecosystem. On the other hand, further discussion is needed to determine whether this design will affect the security of AVS in the future.
Overload introduces the concept of on-chain consensus, allowing AVS to perform verification directly on the chain. According to the team, this can prevent malicious behavior by node operators and greatly simplify the development of AVS.
On the Ethereum network, there are four potential punishments for validators:
Proposing a different block
Surround voting
Double signing
Inactivity leaks
Validators who violate these rules will lose a portion of their staked ETH as a slashing penalty. In the re-staking ecosystem, this means that node operators can cause losses to stakers’ assets, which is considered a risk and cost that stakers need to bear in order to obtain higher returns.
However, Overload does not have a slashing mechanism. Since AVS uses on-chain consensus, it only applies the penalty for “inactivity leaks” and imprisons the validator, temporarily excluding them from the validator set and causing them to miss out on proof rewards. This penalty does not cause losses to stakers’ assets.
The Overload team believes that this can increase stakers’ willingness to stake their assets.
Compared to EigenLayer’s design, where stakers delegate their tokens to node operators who can choose which AVS to operate, the actual power and difficulty of token stakers are not high.
Overload downplays the role of node operators, allowing stakers to independently choose which AVS to operate their tokens and stake them with the corresponding validators. They can also choose more than one target, enhancing their asset autonomy.
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Overload allows stakers to independently choose which AVS to operate
The Overload team has announced that they will launch a staking-related competition soon, following the marketing strategy of EigenLayer, in order to attract early adopters.
The Overload team’s first step is moderate and reasonable. By accepting a diverse range of ERC-20 assets as collateral, they can compensate for the lack of funds in the Base ecosystem. On the other hand, the absence of a slashing mechanism can reduce concerns for Layer 2 and new projects. Finally, because Layer 2 users are relatively advanced in their operations, granting more permissions to stakers may meet their needs.
However, whether the market will accept this remains to be seen.
In addition to the Base network, there have been several re-staking projects on Solana this year, such as Cambrian, Solayer Labs, and Picasso, all aiming to build a Solana-style EigenLayer to strengthen the existing ecosystem.
(EigenLayer for SOL? The re-staking trend reaches the Solana ecosystem)
However, the core of re-staking is to share security with external decentralized networks, which needs to be built on a solid foundation of the original main network.
Compared to the market capitalization of ETH ($370 billion) or SOL ($71 billion), the TVL of Base is currently only $5.4 billion. Will it have the capability to operate a strong re-staking ecosystem? It still has a long way to go.
Another key issue that all re-staking teams need to clarify is whether the network that their proposed protocol is based on really needs a re-staking ecosystem. For example, some users in the Solana community believe that Solana’s future development will focus on a single-chain system, so the benefits of decentralizing security to other external networks may not be necessary.
The Overload team also needs to consider (or rationalize) whether the Base ecosystem really needs a re-staking ecosystem and whether it will overlap with the existing Ethereum infrastructure.
Base
EigenLayer
Overload
Restaking
Solana
Re-staking