Ethereum

EigenLayer

April

Yield

Notable

<p style="text-align: justify">You can also read this news on COINTURK NEWS: <a href="https://en.coin-turk.com/eigenlayer-faces-major-yield-crisis-in-ethereum-ecosystem/" data-wpel-link="internal">EigenLayer Faces Major Yield Crisis in Ethereum Ecosystem</a><br></p>
<p class="p1" style="text-align: justify">According to industry observers, <a href="https://coin-turk.com/ethereumda-3000-dolar-icin-tarih-verildi-yilin-ikinci-ceyregi-ethereum-icin-nasil-olacak" data-wpel-link="internal">Ethereum</a>‘s largest re-staking protocol in terms of Total Value Locked (TVL), EigenLayer, might face a significant yield crisis. Chudnov from 3Jane exchange suggests that EigenLayer’s rapid TVL growth could be surpassing its Actively Verified Services (AVS), potentially leading to a major drop in yields.</p> 
<h2 class="p1" style="text-align: justify" id="notable-comments-from-a-prominent-figure">Notable Comments from a Prominent Figure</h2> 
<p class="p1" style="text-align: justify">In a post dated April 22, Chudnov mentioned that EigenLayer’s TVL exceeds $15 billion, but the security needs for AVS would actually require less than 10% of this, which could precipitate a yield crash. Following an announcement on April 16, EigenLayer removed all limits on liquid staking tokens (LSTs). EigenLayer was launched on the mainnet on April 10.</p> 
<p class="p1" style="text-align: justify"><img loading="lazy" loading="lazy" decoding="async" class="aligncenter wp-image-343088" src="https://coin-turk.com/wp-content/uploads/2024/04/eigenlayer-1.png" alt="" width="500" height="416"></p> 
<p class="p1" style="text-align: justify">When a user stakes an LST through EigenLayer, it is automatically transferred to a node operator; this operator uses the deposits to secure an AVS on EigenLayer while receiving staking rewards. A portion of the staking rewards is transferred to the user.</p> 
<p class="p1" style="text-align: justify">However, according to Chudnov, the Actively Verified Services in the protocol require much less staked <a href="https://en.coin-turk.com/ethereum-takes-major-step-towards-a-layer-2-centric-future/" data-wpel-link="internal">Ethereum</a> for security, which could lead to future problems:</p> 
<blockquote> 
 <p class="p1" style="text-align: justify">“The issue is that none of the AVSs will need security even close to $1.5 billion, let alone $15 billion. The main purpose of Proof-of-Stake is to have the stake value higher than the potential profit from dishonest behavior by the validator.”</p> 
</blockquote> 
<h2 class="p1" style="text-align: justify" id="details-on-eigenlayer">Details on EigenLayer</h2> 
<p class="p1" style="text-align: justify"><strong>EigenLayer,</strong> following the Lido staking protocol, is the second largest protocol in the Ethereum ecosystem. According to blockchain data analysis platform DefiLlama, EigenLayer’s TVL increased by 16% last month to $14.15 billion. As altcoin prices drop, the problem could worsen since AVSs are not encouraged to hold excess on-chain capital. The first solution could be a series of token launches to temporarily increase the security budget requirements, which might be akin to throwing the box away.</p> 
<p class="p1" style="text-align: justify">However, integrating EigenLayer more deeply into the decentralized finance <strong>(<a href="https://coin-turk.com/altcoin-fiyati-hizla-yukseliyor-buyuk-dao-onerisi-gecti" data-wpel-link="internal">DeFi</a>)</strong> ecosystem and creating more benefits for LSTs could offer a permanent solution. Chudnov summarized the issue with these words:</p> 
<blockquote> 
 <p class="p1" style="text-align: justify">“If the EigenLayer ecosystem can embed itself more deeply into the <a href="https://en.coin-turk.com/defi-sector-surges-with-record-high-total-value-locked/" data-wpel-link="internal">DeFi</a> ecosystem through financial primitive elements, then this becomes a much more defensible moat and gives AVS more time to solve issues well below cost.”</p> 
</blockquote> 
<h5><span style="font-weight:bold;font-size:16px">The post first appeared on COINTURK NEWS: </span> <a href="https://en.coin-turk.com/eigenlayer-faces-major-yield-crisis-in-ethereum-ecosystem/" data-wpel-link="internal">EigenLayer Faces Major Yield Crisis in Ethereum Ecosystem</a></h5>

EigenLayer Faces Major Yield Crisis in Ethereum Ecosystem

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