Two Ethereum Basis researchers have disclosed advisory roles at restaking protocol EigenLayer’s EigenFoundation, elevating issues over potential conflicts of curiosity inside Ethereum’s core growth workforce.
On Sunday, Justin Drake introduced his advisorship through X (previously Twitter), stating the “community deserves transparency.” Two days later, Dankrad Feist additionally disclosed his position at EigenLayer, “on the same conditions” as Drake.
Each state that their involvement comes with important token allocations, however that their work will probably be particularly centered on the protocol’s dangers.
Drake states that he’ll reinvest or donate the proceeds to ‘worthy projects’ and that he had beforehand posted concerning the position in response to an Orbholder’s query, over one month prior. Feist plans to give attention to dangers and decentralization. “I am therefore fully expected to take contrarian views on Eigenlayer,” he says.
Drake’s disclosure got here the day after a publish from influential crypto dealer Jordan Fish, aka Cobie. Replying to Ethereum founder Vitalik Buterin’s celebration of the group’s ‘ideal of ‘open discourse,’ Fish’s tweet, seen solely to followers, reads:
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Conflicts of curiosity?
EigenLayer ($18 billion) is the second largest decentralized finance (DeFi) protocol by complete worth locked (TVL), after liquid staking platform Lido ($35 billion), based on knowledge from DeFiLlama.
Restaking has lengthy been seen as probably harmful for Ethereum’s consensus mannequin, with Buterin authoring a weblog publish titled Don’t overload Ethereum’s consensus exactly one yr in the past.
As EigenLayer’s documentation explains, restaking ‘enables the reuse of ETH on the consensus layer.’ By depositing ETH or liquid staking tokens, equivalent to Lido’s stETH, different tasks can piggyback on Ethereum’s underlying proof of stake (PoS) consensus mechanism to profit from what EigenLayer calls ‘pooled security.’
Nevertheless, utilizing Ethereum’s consensus layer for something aside from block validation may show harmful.
The most important concern is called the ‘principal agent problem,’ which Feist explains outcomes from mismatched incentives through which a protocol’s ‘operator is not necessarily the same as the person providing the capital.’
An analogous set of dangers is posed by liquid staking protocols, which liberate staked ETH for use as collateral on DeFi lending platforms through a wrapper token. The aforementioned Lido has usually come below criticism for capturing as much as nearly a 3rd of staked ETH (at the moment 24%), and rejecting a governance vote to self-limit.
Drake addresses this in his publish: “As a researcher, I feel I did too little too late with regard to liquid staking. This is an opportunity to not repeat the mistake with restaking.”
Backlash
Apart from the potential risks of EigenLayer itself, many have voiced their issues over the character of the disclosures. Firefox’s Taylor Monahan identified that the timing wasn’t splendid.
Hazard, the pseudonymous creator of TodayInDeFi claimed it’s naive to anticipate the Ethereum group to imagine that monetary incentives received’t lead to a battle of curiosity.
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And Rotki developer and open-source advocate Lefteris Karapetsas underlined the significance of “credible neutrality” inside the Ethereum Basis.
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