can someone who understands this much better than me show me how restaking doesn't totally turn a decentralized system into a fragile one vulnerable to cascading risk

ceo @ helius.dev, host @ lightspeed, ex coinbase — wartime shitposter

The long and short of it is that restaking is not the same as rehypothecation. Rehypothecation makes you vulnerable to market risk, which is an exogenous risk that you can't control. Slashing is an endogenous risk, it's 100% in your control not to sign two blocks at the same height.

Software Engineer @ Cadence Design Systems. B4: Stanford EE / Illinois ECE

In fact, I would advocate in the opposite direction and say that all PoS chains should merge together into one common validator set. If you are double-signing on some random Cosmos chain, why should ETH or anyone else keep you as a validator? It's in everyone's interest to cut you out across sovereign chains.

Yes you can have extremely dumb slashing conditions. I could create a BOGO AVS that calls rand_int()%2 to determine whether you get slashed. In practice, (1) validators are already quite technical ppl and unlikely to signup for nonsense and (2) unlikely to sign onto AVS's that EL's veto committee won't underwrite.

Rehypothecation is not a perfect analogy, but you can sub out credit risks of borrowers for various risks of the intermediary AVSs -- ie. do they have a poor implementation of the slashing conditions?

I imagine AVSs will have more complex logic than just equivocation slashing

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Hmm, that's not how I would use 'control' definitionally. I mean 'control' as in 'agency'. You have 100% agency to take ownership or to delegate responsibility and take on principal agent risk. Running an anti-slasher over the top of any client protects you from client bugs, which is a smaller piece of code to audit

it's not 100% in control though because

1) most people delegate

2) a client bug could cause double signing even if you do everything properly (hence emphasis on "client diversity)

there's always outside risk and the more things get restaked the more that risk will compound

Community Liaison @ Chainlink | The CLG Podcast http://spoti.fi/3hwr1Jm | Complex topics explained simply | Opinions are my own

Maybe, but we already have Liquid Staking Tokens that suffer from the same principal agent problem. A solution here is just to pay solo stakers more, which is a outcome we could have when AVSs have more granular control over what validators they want to incentivize .

Most Eigen stakers will likely delegate their capital to third party operators, who then run the infra and choose the AVS’ on their behalf 

So while it may not be explicitly market risks, the concept is similar enough as an analogy, particularly when slashing risks are tied to external dependencies

Director of Operations at Hats.Finance, a decentral platform for Audit Competitions and Bug Bounties. 

True, but Lido has just under 30% of stake. The same people concerned about Eigenlayer restaking also seem to be weirdly against ringing the alarm on LSTs.

What about added smart contract risk? If Eigenlayer manages 40% of all staked ETH and either itself or another entity using restaked ETH has a hiccup suddenly 40% of staked ETH could be gone.

This is a great mental model to think about it as well.

This is a good answer. Bankless had the eigenlayer founder on a show recently and he discussed this exactly, if you want to check it out. I had my same hesitations initially, though.