EigenLabs CEO on Jump in User Deposits

The protocol is presented by the Stellar Community Fund Accelerate your web three project with stellar funding. Eigen Leer has recorded a jump in user deposits which are now exceeding a billion dollars. Joining us now to discuss is Eigen Layer founder and CEO Shriram Cannon Shriram. Welcome to the show. Thanks so much and my pleasure to be here. All right, a billion dollars when this news broke, you exceeded 900 million. I believe that you said we were gonna stop at a billion dollars. Talk to us about uh what's happened since the news broke and now, yeah, so you know, we opened so we have gone through the Eigen like launch process in a guarded manner. So we launched with a small TV L cap six months back and over time as we press the robustness of the protocol, we've just increased the caps. The most recent Capra was two days back. Uh We opened the caps from um you know, we had 100 and 50,008, something like that and we opened it to 500,008. We are right now at it's the gap is not close, it's at 450,000 around. So that and, and at the current price that brings us to 1 billion. So 50,000 left to go. Yeah. All right. Let's take a step back before we move forward with the conversation and just explain to our audience what's going on here. So Eigen layer offers a protocol for users to deposit and retake Ether from liquid staking tokens. Talk to us about how this works. Yeah. Uh eer is structured as a platform for decentralized trust. You know, when you ask like what is the key defining feature of a crypto or Blockchain solution versus another like, you know, uh a cloud or a web two solution. It's decentralized trust and decentralized trust has two components to it. A variety of decentralized node operators and some amount of economic stake which is backing that, hey, my node operator is honest, they're putting it, making the stake liable to punishments if the operator is not honest. And so this creates a system of, you know, positive and negative incentives. So that in a in a pseudonymous world, which is what blockchains are, we can still maintain correctness and accuracy of these platforms with internal enforcement. So usually staking protocols had their own native tokens. Each you know, a Blockchain like a salon or, or an atoll. So it has its own native token, which is what is used for staking what we figured out is that there is a lot of protocols that want to build, that may not be able to have a native token on day one or do not want to have a native token. And for all these protocols, if there is a common source of both tagged assets, which is in this case, eat particularly in the form of either liquid stick tokens or in the form of um what we call native retaking where a stake in ether and then add a step in your withdrawal flow to go through the item that contract. What this does is enables the Eigen contracts to add positive and negative incentives to and, and when you do this, you're committing that you or your delegated node operator will actually run these new services and protocols that are built on top of Eigen. This enables um the decent less trust network of EUM the stake and the node operators to be more broadly accessible to anybody who wants to build new services. So every new protocol instead of having to go and start off on its own trust network can leverage and use the existing trust network of Ether. So that's the idea. Sure. And if we zoom all the way out to, let's say new users of the Ethereum ecosystem, what benefit do they see from this? Um Talk to us a little bit about how a more secure Ethereum network via Eigen player benefits that end user. I think the a good mental model to think of is the evolution of web applications. If you look at web application development back in like 1995 the application developer has to build their own server stack. They have to build their own identity stack, their own payments stack, their own database management and then build whatever application imagine. I just want to set up an online bookstore like Amazon books. I have to do all these things. I have to figure out how to do, set up my own server, payments, identity, databases, and then do the little thing that I actually want to do. So what in a world like that, the rate of innovation and rate of interesting new applications being built is very low because it's very difficult to do all of these things to offer a useful product of consumer application. If you go to 2023 today, like if you want to build a web application, you use a cloud service like AWS, you go and use. There's a bunch of software as a service components like identity that is, you know, all payments that is Stripe or paypal uh on top of which you can use databases, existing database services like Mongo DB and then you only build the new things that you want to build and as a consumer application developer. So what Eigen layer does is take Ethereum as the trust source and just like there was the cloud. Now there is the Decentralized cloud that can be built on top of Ethereum Eigen layer makes it very, very flexible and programmable. So anybody can build come and build new protocols. Think of these new protocols as like S a services, somebody builds an identity protocol, somebody builds a payments protocol, somebody builds a database protocol. And then now if you want to build any user crypto applications, it's very easy. Just come and conc it use this database, use that data availability layer, use that oracle, use this um settlement layer and you just compose all of this and then create useful end user products out of that. You know, building these protocols is all about uh feedback from the community and iterations, especially when you're building in a web three environment or ecosystem. I've heard you speak at a few different conferences and the the questions you get are always very thoughtful. I feel like the feedback is um is usually very good talk to us about the feedback that you've received from the community and the future iterations you envision for the protocol. Yeah, so I it is a very complex coordinating engine. So it brings in all these different sides, you know, stickers, people who have ST eat right or or the second side is operators. People who provide computational services. We have a test net right now running. We have all the major operators like Coinbase cloud blog demon Google cloud, peer to peer figment all the major operators running on this network again, like for seeking feedback from them so that we know how to make sure that we are complying with their requirements. The third side of our marketplace is builders, people who build these new protocols and services and it is in some sense, the lifeblood of our whole ecosystem is people coming and building new things. Otherwise this protocol is meaningless. So we've seen for the stakers, the feedback we've received is hey, you know, I can stake and receive rewards on other protocols. It's it's value addition. So they are very interested in the platform for the operators. One of the hard things is whenever there is a new like layer one or a protocol, there's a huge amount of business development and like customer relationships cost to them because they have to reach out to a new new community of token holders. Whereas with Eigen its E and E Ethereum related assets. So it's a much more unified community. So as long as they get the community buying, they can keep adding more and more services on top. So this is the attraction from the operator side, from the builder side, they can go to market early and fast and this is the consistent feedback we've received. In fact, the feedback from the builders has been overwhelming like, you know, it is very complex to build a protocol because these are infrastructure protocols, people building bridges, people building fast settlement layers, people building new chains, very complex everywhere. And it requires aligning with the Eigen layer like underlying cross structure. And we've seen builders very interested in leveraging it particularly because it's not our own trust network. It is the Ethereum trust network that is being channeled through Eigen layer. So overall, we are seeing, you know, a robust interest across the different participants. There's also the implicit set of participants, which is the broader Ethereum community because, you know, this is a, this is a thing that moves along and accelerates the Ethereum ecosystem, whether it is the Ethereum road map of e the asset or the utility of the asset in, in a variety of different applications. So that's, that's what we're hearing from the different uh sides of the marketplace. I want to chat about the builders for just a second. Any builders who are coming to uh build on layer or with agin layer. Is there any security risk or potential security challenge that they should be aware of? Yeah, I mean, building an infrastructure perimeter is actually like quite complicated with E and they're built on very nuanced trust models that is trust coming from, is it coming because nodes are decentralized? That's one kind of a trust model that is trust coming because you have a certain amount of heat locked or a certain amount of assets locked, that's economic security. There are other kinds of trust, you know that the person who is taking is the same person who is producing blocks in the Ethereum ecosystem. That's another kind of trust. So these are different kinds of trust and as an infrastructure builder calibrating to what type of trust you're seeking and then understanding any risks or differences that come from the Eigen layer protocol is is super helpful. And of course, one of the underlying risk of building any smart contract based system is smart contract risks, part of the Eigen layer protocol or you know, contract is compromised. What are the measures and steps you know, in the E A protocol, one of the steps we've taken is unlike many a activities, crypto activities which are instantaneous and that's their main advantage. Oh, I get like instant settlement on this bridge or I get like super fast confirmation on like a chain. One of the main things that staking staking is a long term activity. So people take for weeks, months or even years together. And so because taking is a long term activity, we can have additional measures, security measures, which is when you withdraw stake from the Eigen Vale Protocol, it takes a week. So that gives us time to respond, pause, the contracts upgrade it do like a variety of things to make sure that if there are any vulnerabilities they can be taken care of. Sure. Um Thank you so much for joining me and sharing that great news. Congratulation. Congratulations on the 450,000 eat steak and I look forward to hearing about that last 50,000. Thank you so much and I really appreciate being here that was Ein Lab's founder and Ceo Shriram Cannon.