What Is EigenLayer? How EigenCloud Restaking Works

Several similar names refer to different things:

• EigenLayer is the set of smart contracts on Ethereum that handles deposits, delegation, rewards and slashing ².
• EigenCloud is the platform brand launched on June 17, 2025. It packages EigenLayer with EigenDA (data availability), EigenCompute (verifiable compute), EigenVerify (dispute resolution) and AgentKit for developers ¹¹⁰.
• Eigen Labs, Inc. is the company that builds these products ¹. It raised a $50 million Series A in March 2023, led by Blockchain Capital, and a $100 million Series B in February 2024, led by a16z crypto. When EigenCloud launched, a16z crypto also bought $70 million worth of EIGEN ¹⁰.
• Eigen Foundation oversees the EIGEN token and protocol governance ⁷.

EigenLayer does not issue its own liquid restaking token. Tokens such as those from ether.fi, Renzo or Kelp come from separate protocols that deposit into EigenLayer on their users' behalf, and they carry their own contract and liquidity risks.

Restaking lets the same collateral that secures Ethereum, or other tokens, also back the promises of extra services ². The roles are:

1. Restakers deposit native ETH (through an "EigenPod" linked to their Ethereum validator), liquid staking tokens such as stETH, EIGEN, or other approved ERC-20 tokens ².
2. Operators run the software for one or more services, known as AVSs (originally "actively validated services"). Restakers delegate their deposits to an operator, or act as their own operator ².
3. AVSs are services such as data-availability layers, oracles or bridges. Each AVS defines its tasks, its rewards and the conditions under which an operator gets slashed ²³.

Operator sets and unique stake. Since April 2025, operators join specific operator sets created by AVSs and allocate a slice of their delegated stake to each one. An AVS can slash only the stake allocated to its own set ³⁶. Joining a slashable set is opt-in for operators. Restakers choose their exposure by choosing which operator to delegate to ⁶.

What happens to slashed funds. In standard operator sets, slashed ERC-20 tokens are burned by sending them to a dead address. In "redistributable" sets, they go to a recipient the AVS named when it created the set, after a seven-day delay. Slashed native ETH cannot be redistributed; it stays permanently locked in the EigenPod contract ³.

Rewards come from AVSs, not from EigenLayer itself, and are paid in whatever tokens each AVS chooses ⁵. EigenLayer calculates rewards off-chain and posts a weekly Merkle root on Ethereum. Each payout becomes claimable one week after its root is posted ⁵.

Operators take a commission that can be set anywhere from 0% to 100% per AVS, with a default of 10% ⁵. Separately, the Eigen Foundation pays programmatic incentives in EIGEN to qualifying stakers and operators. These began accruing on August 15, 2024 ⁹.

Returns therefore depend on which AVSs your operator serves and on their token prices. EigenLayer publishes no fixed yield. Gas for deposits, withdrawals and claims is paid on Ethereum. Rewards stop accruing once you queue a withdrawal ⁵.

Leaving EigenLayer takes two steps. First you queue a withdrawal. Once the mainnet withdrawal delay of 100,800 blocks, about 14 days, has passed, you complete it ⁴. Operators face similar delays: removing stake from an operator set takes about 14 days, and changing allocation settings takes about 17.5 days ⁴.

These delays give AVSs time to slash misbehavior that happened before you left. They also mean you cannot exit quickly in a market drop through EigenLayer itself. Holders of liquid restaking tokens may be able to sell on secondary markets, though possibly at a discount.

EIGEN launched with an initial supply of about 1.67 billion tokens. It became transferable on September 30, 2024 ⁸⁹. Its stated purpose is to cover "intersubjective" faults: misbehavior that cannot be proven on-chain but that most observers would agree happened. Holders can resolve such disputes by forking the token ⁹.

• Allocation: 45% goes to the community, split equally among stakedrops (airdrops to past restakers), community initiatives, and R&D and ecosystem growth ⁸.
• Unlocks: Investors and early contributors were locked for one year after transferability, then unlock 4% a month ⁸.
• Inflation: New EIGEN is issued at a fixed 4% of the initial supply each year, unless governance changes that ⁸.

EigenLayer's contracts and the EIGEN token are "mostly upgradeable" ⁷. Control is split among four multisigs ⁷:

Safety-critical changes go through a minimum 10-day timelock. Pausing does not: a single Pauser signer can pause the protocol ⁷.

The main risks to weigh:

• Smart-contract risk. The contracts hold billions of dollars and can be upgraded. Upgrades are timelocked, but they still depend on the multisig signers ⁷¹³.
• Slashing risk. An operator's fault, or a buggy AVS slashing condition, can cost you stake you allocated ³.
• Operator and AVS selection. Your risk depends on whom you delegate to and which sets that operator joins ⁶.
• Liquidity risk. The 14-day exit delay, plus any liquid restaking token trading below its underlying value ⁴.
• Layered risk. Restaked liquid staking tokens add the staking protocol's risk on top. See our Lido profile for stETH.