Chainfeeds Introduction:
This article is a preliminary analysis of restaking risks, aiming to guide the discussion from the perspective of professional node operators. It will assess how risks affect the Ethereum ecosystem directly (such as slashing cascades) and indirectly (such as deteriorating risk profiles due to centralization). It discusses the operational risks associated with EigenLayer and AVS applications, with a particular focus on developing reasonable participation rules and slashing conditions, and introduces a model designed to address systemic risks at the protocol and AVS levels. Finally, a framework for selecting AVS based on modern portfolio theory is proposed.
Article Source:
https://mp.weixin.qq.com/s/U5D2BMmziPRoFqkiEgaLcQ
Article author:
Gabriella Sofia, Umberto Natale, Michael Moser
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Chorus One: Risks facing Ethereum: - Centralization risk: Professional node operators not only improve their profitability by effectively managing resources and optimizing service selection, but also reduce operating costs through economies of scale and provide more attractive revenue distribution models to delegators, which largely drives the trend of centralization. In addition, professional node operators with dedicated teams supporting EigenLayer operations also benefit from this, which provides additional bandwidth for introducing AVSs; it is difficult for individual operators to maintain this speed. - Cascading risk of slashing effects between Ethereum and AVSs: Another potential risk associated with the Ethereum network is the correlation of punitive measures. If a large participant controls multiple "identities", even if these identities are distributed across several nominally separate accounts, they are likely to repeat the same mistakes in all accounts. Risks facing node operators: - Operational pressure: Operators are forced to maximize the value of their pledged capital through re-staking, and this increase in capital flow may be offset by initial operating costs, forcing node operators to evaluate and introduce profitable AVSs to compensate for fixed costs, while also bringing a more complex risk burden. - Security risks and node operators: Professional node operators need to pay great attention to security when integrating new networks. Even in stealth mode, AVSs developers should provide private access to the code repository, which can be achieved by signing a non-disclosure agreement. For security reasons, the smart contracts of AVSs should be observable and should not adopt an upgradeable contract framework. - Related risks: Node operators who choose a specific AVS may face unforeseen risks due to the actions of other operators. These actions may not be malicious, but errors in AVSs may lead to relevant penalties in Ethereum. Undesirable consequences include large-scale slashing events that may undermine the security of AVSs and Ethereum, and poorly performing operators reducing the overall profitability of AVSs, which is not conducive to the risk/reward assessment of holders. Risks faced by AVSs: - Slashing risk: In EigenLayer, the pooled re-pledged assets are subject to new slashing rules set by AVSs developers. We consider the case where some configuration errors in the routine of node operators lead to slashing events on Ethereum. Specifically, given that slashing events lead to the deactivation of the validator who made the mistake, we are interested in the possibility of a one-time event, that is, a slashing event occurs and propagates to AVSs.
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