Original title: “EigenLayer overcomes drama with $11 billion in deposits and key role in Ethereum — What’s next for Sreeram Kannan?”
Author: Aleks Gilbert, DL News
Translator: Felix, PANews
In an exclusive interview with Sreeram Kannan, founder of the restaking protocol EigenLayer, he talks about the protocol’s explosive launch and the lessons learned during the controversy following EigenLayer’s introduction.
Since its launch in June 2023, EigenLayer has achieved what many crypto projects have dreamed of.
EigenLayer has accumulated approximately $20 billion in deposits from users, and its parent company has received a $100 million investment from a16z.
Even better, the project quickly proved its worth. More than 100 projects have flocked to AigenLayer, including cryptocurrency exchange Kraken and interoperability protocol developer LayerZero Labs, according to founder Sreeram Kannan.
But EigenLayer may have developed too aggressively and has faced a series of controversies, including accusations that it tried to buy off some influential cryptographers (and leading researchers). Masu.
“For some reason, EigenLayer has become to some extent the center of Ethereum,” founder Sreeram Kannan said in an interview. “And we weren’t ready to be the center of a major ecosystem.”
AigenLayer currently has $11 billion in deposits. It may have originated from academia (Sreeram Kannan is a professor at the University of Washington), but its launch was an overnight success with the aim of creating a “decentralized trust free market.” It has become a classic story.
EigenLayer facilitates the launch of certain protocols by allowing projects to leverage the computers and Ether (ETH) that run and secure Ethereum itself. This is a process known as re-staking.
At last year’s Istanbul conference, Kannan likened the concept to a military alliance.
“Cities don’t have armies, but nations do. In some cases, many nation-states work together to establish truly cooperative alliances.” “It’s exactly the same phenomenon. Sharing. Security is definitely better.”
Some Ethereum researchers were quick to consider EigenLayer a breakthrough. However, some warn that having too many services relying on the same batch of Ether for security could jeopardize the stability of the blockchain.
In other words, if the project built on EigenLayer fails, the re-staked ETH will fail as well. Continuing with Cannan’s analogy, if the city fails, so does the entire army.
In other words, critics fear this could lead to a series of failures that would ultimately damage Ethereum itself.
To alleviate concerns, EigenLayer rolls out features every few months. Later this year, EigenLayer plans to change its security model to limit the impact of failures in certain applications.
However, attempts to focus on security were unsuccessful.
Earlier this year, EigenLayer hired Ethereum Foundation prominent researchers Justin Drake and Dankrad Feist as advisors.
They were hired to address the risks that restaking poses to Ethereum, and were paid handsomely, with Drake’s daily rate potentially worth millions of dollars.
conflict of interest
However, this conflict of interest was only made public after a crypto KOL disclosed it on social media.
The lack of transparency not only contradicts DeFi values, but also led to criticism of the Ethereum Foundation for ignoring conflicts of interest.
Rotki founder Lefteris Karapesas wrote, “I was shocked to learn that Ethereum Foundation researchers leading protocol development were receiving six- and seven-figure rewards from the protocol.”
Both Drake and Feist said they would not compromise for EigenLayer’s money.
Feist said that if implemented correctly, EigenLayer would bring “huge benefits” to Ethereum. “We believe the current leadership intends to do that, and we intend to hold them accountable. “If we believe that is no longer the case, we will not hesitate to say so or resign. ”
Drake has promised to use all the money he gets from EigenLayer into other Ethereum projects in the form of grants and investments. “We are also prepared to terminate our advisory role at any time, for example if EigenLayer moves in a direction that we believe is contrary to Ethereum’s interests.”
The value of cryptocurrencies deposited with EigenLayer reached $20 billion at its peak.
According to Kannan, EigenLayer delayed announcing the partnership at the request of the Ethereum Foundation because the Ethereum Foundation itself wanted to clarify the relationship.
However, cryptocurrency KOL Jordan Fish (better known as Koby) has claimed that Ethereum Foundation researchers are “getting life-changing funding” from projects that “may have a conflict of interest with Ethereum.” ” he wrote to X, then mentioned EigenLayer.
Drake confirmed the relationship on his website and on X, adding that the cryptocurrencies he received could ultimately be worth millions of dollars.
Feist acknowledged the relationship, but said only that the reward would be “a certain amount of tokens.”
In response, Kannan argued, “People think this is some kind of destructive thing, but it’s not.”
complete transparency
“This is completely transparent. We talked with the Ethereum Foundation, and the Ethereum Foundation asked us not to make it public. I will.’
But Kannan said the payment was also a thank you to two researchers who were instrumental in shaping EigenLayer’s direction.
Kannan said, “EigenDA is a protocol built on the ideas of Dankrad and Justin. We want to actually invest in and reward the people who create these ideas. ” he said.
But just as one wave subsided, another arose.
Vesting of tokens
In August, we reported that Eigen Labs pressured partner companies to distribute new tokens to their employees.
Eigen Institute denied this claim. And in September, some critics pointed to evidence suggesting that EigenLayer’s early, deep-pocketed investors could avoid token vesting, but the company said that was an exaggerated concern. said.
Kannan said, “In the world of cryptocurrencies, being right is not enough. In general, when you want to build trust, you need to prove that you are right. This is a higher standard.” I did. “That’s really difficult, especially on a project of this size.”
To address this challenge, Kannan said they are investing more human resources to improve transparency standards.
“If we want to be the regulating engine of humanity, we have to be able to withstand this (surveillance).”
Although Kannan once doubted that cryptocurrencies were a speculative bubble, he now speaks with enthusiasm and sounds like a true believer.
“I had dinner with a member of the United States Congress, and he asked me, ‘Can you tell me why you’re involved in cryptocurrencies?'” Kannan recalled.
“Many DeFi protocol founders say, ‘To improve the financial system and make it more resilient to inflation,’ which is a familiar and well-known phrase. This is the greatest leap forward for human civilization since the enactment of the Constitution.”
Kannan is passionate about peer-to-peer networks and entered the cryptocurrency space in 2018. He wrote an academic paper on the subject and eventually set out to create his own blockchain, called “Trifecta.” However, he was unable to raise funds.
If he had succeeded in attracting venture capital, it would have been easier to launch a blockchain. However, if the new blockchain is based on Ethereum, it can also be easily launched.
“EigenLayer is seen as a mechanism that can solve its own problems.”
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