Panel on DA Restaking by Filipe

Transcript

okay hello everyone so we we'll start the the reaking uh da panel um so let me introduce you to the to the speakers so we we have on stage uh Mike uh the CEO of uh eeri we have Nick the CEO of Celestia uh tun uh the founder of countet and nater is replacing Vasa is a bit late so he might uh hop on stage uh a little in a few minutes uh he's the the head of deral of Egan layer so um's nater's been [Laughter] restak okay so we we'll start uh then with the first question um so I would

like unique to to maybe uh give a little bit your your perspective about um data availability and focus on the difference of what uh Celestia is offering in terms of that availability versus Egen da uh with Egan layer and then maybe nether you can also follow up on that to explain the audience the the main differences between both I guess I guess I should go since it's most relevant to me um so the question is what's the difference between different da layers like Celestia or ethereum or yeah exactly yeah I think um well there's there's a few things that are like like important um when thinking about like different

data availability offerings one is is it specifically designed just to do data availability so one of the differences between Celestia and ethereum is that ethereum is started out as a full fully sort of Monolithic chain with execution and smart contracts and state and um and so that makes the blockchain a little bit like heavier and it's not like purpose-built to do data availability they added EA P 4844 which is sort of a side car that has like a adds a data availability like functionality whereas Celestia started from scratch and said if you're going to build a blockchain that was only trying to do data availability how would you design it and that sort of resulted in

this very minimal chain where you can't do execution or smart contract on the Bas layer all you can do is publish data uh and so I think that's one of the the big differences there's a lot more but I I'll stop there and let other people chime in so maybe nether you you you can follow up on that and explain the main difference with the versus uh Celestia to make sure the audience understands the the difference yeah totally I mean I think that I encourage everyone to you know consider all the different options that are out there and just pick whatever works best for them between all the different solutions I'm not I'm not the type that's going to show the product that I work for just because I do that I would rather them pick the right solution for the thing that they

want a lot of the the different uh characteristics though that people do often look at are you know price throughput um things like reserve bandwidth that people may or may not need for their use case so I would just say uh you know there are different trade-offs between the different networks different offerings look at what you need for your product choose the right uh product for the right job and realize that you know this I feel like data availability and I may be curious to hear what Nick thinks about this is uh ultimately like starting to become somewhat of a commodity or uh in some sense and it's also not as tightly coupled to um this the rest of the system as maybe other pieces are so you can often even kind of switch depending on how your product is built with

different data availability layers in the future if you choose to do that so that's just my general brain dump uh tun maybe you can share a little bit your your perspective as well on this related to let's say what will be the type of use cases you feel is more suable like for that availability on Celestia versus a yeah I mean I think the main thing to to really think about when you look at the different da layers is a one first what are the different guarantees they have for instance how does one da layer do reconstruction um from like client sampling how efficiently can it do it how much bandwidth does it use uh the

second thing you have to think about of course is the duration aspect you know for you know depending on the type of safety guarantees that your rollup wants you effectively have to think about how long you want your data to persist uh how much you want to be thinking about actively bidding for instance you know in ethereum da you have to actually think about how blob space pricing is done in a somewhat different manner than you do in the Alda layers finally I think um there's a sense in which you know over time I think da layers will just eventually become more complic ated just like the Natural Evolution of um memory within CPUs right you know early CPUs sort of didn't even have a cache eventually you

had sort of an L1 cache eventually had L2 cache L3 cache then you split the L1 cache into L1 data and L1 execution so I think a lot of the the natural things you see in the history of computing and the evolution of the history of computing will will likely still have to occur and I think da is only like the first sort of part of that sequence of new things great thank you um so for for the next like topic I would like to discuss more about the RIS taking risks and what is the role that let's say AVS selection plays into it um so so Mike maybe you can take that one first um and kind of focus on let's say identifying the rest taking risk um how do you think it

should be estimated that risk how the AVS selection kind of play plays a role into it and how the selection of a Iger node operator that is obviously exposed to multiple avss also plays a risk in the overall resticking risk that the hand user has uh sorry so I'm having a hard time hearing the echo is like totally messing with my so I I think I heard the question uh I think it was uh how do you estimate reaking risk how do you select node operators was that the gist what is the role AVS selection right AVS selection and and yeah because AVS selection versus operator selection obviously are uh very different things

um uh I mean the first thing I'll say this is maybe maybe really obvious you can't estimate the risk right now because none of the abss have sorted out their slashing conditions there's no slashing implemented on igen lay uh so it's probably not accurate to say there's no risk but uh slashing risk is is minimal there's smart contract risk um uh so and as I said again to repeat there none of the abss that I know of have actually figured out their slashing conditions uh uh fully so I don't know how you estimate you can come up with models and you know there's um um a number of companies like authentic is a good example that are building sort of Frameworks for abss that allow them to sort of uh construct oh thank you

whoever fixed the echo uh allowed them to construct um more like templatized uh slashing uh rules which to will make it easier to characterize the risk um I think it's really naive to to think uh that uh anytime in near future it's going to be programmatic uh the way that um uh yeah I guess I'll just talk about like how we plan to select abss in the near term is going to be very um bespoke Hands-On and working with uh you know helpful third parties like Gauntlet uh uh to uh to do a deep dive do a full audit of of the ABS and really understand the the the details of the

risks that that are involved and just make a you know case-by case decision uh at some point that's going to turn into a more decentralized governance process um but uh if I had to guess I don't think we'll be ready for that for a while probably for maybe a year maybe even longer um so realistically it's it's going to be a very kind of Hands-On spoke process um um so maybe I'll just I'll say a little bit about node operators I think we've been just kind of spoiled but because almost all node operators are pretty good I mean you take a look at the top I don't know 30 uh they're really good I mean there slashing is almost non-existent for ethereum consensus um the the experience we've had working with them

is that there's a high degree of professionalism and they're they're all very technical sort of sharp teams I I uh my my kind of arbitrary estimate is that the the risk of no operator error is is probably fairly low I think the risk is more on the AVS implementation side uh so so I think the risk is probably more on the avss slashing rules hacking Etc uh than than on node operators I think node operators are generally uh going to be good I I mean I can talk more about how we plan to do the uh risk allocation and uh uh but but that's I think that's another topic we can we can talk about later yeah great thank you that was very insightful uh ter maybe you can um kind of give some insight about um high level right what

will be the general like Risk mitigation framework uh you think makes sense uh for let's say uh institutional reaker right that wants to let's say ask a node operator to you know uh run the nodes and they want to have some sort of AVS selection so just like a a general framework that you think makes sense on a high level yeah I think the um highest level you know three things that you should you know if you want like sort of the three three things to keep in mind when thinking about reaking risk the first is of course slashing that's sort of the obvious one but the other two are liquidity and duration so the liquidity risk is effectively you know if I have to withdraw I want raw eth I want to do

a withdrawal how long does that take what's my expected time to withdraw um it you know in in you know sort of different settings you may have quite quite a bit of different risk in terms of how easy it is to to offer withdrawals to users um withdrawal is sort of the duration risk is sort of dual to the the liquidity risk in the sense that people who don't want to wait the withdrawal period want some liquid liquidity mechanism whether it comes from using an LRT whether it comes from things that are sort of these lending protocols people are building around lrts uh like ion and I think there's there's sort of this this natural tension between the

three of them the slashing risk obviously is very hard to actually really measure it in some ways right now even even if you had the code for the slashing rules because a lot of it also depends on the fee streams you know if if I have an AVS that's earning you know one basis point a block but you can be slashed 50% well then that's a very you know that's a very different type of thing versus an AVS where I'm earning three basis points a block and the maximum slash is 1% right I can cover it in in a few blocks so I I think that this is probably why the slashing risk is you know the furthest out but it's also the one that you know is sort of the the scariest I think the liquidity risk is actually really interesting because the lrts have already shown you

how Capital formation is already happening around these and so monitoring both liquidity risk within sort of lending protocols that are sort of offering leverage whether they're synthetic leverage like Pendle or whether it's you know uh um sort of real hard leverage like gearbox or Moro uh that effect is actually quite important to Monitor and I think that's sort of where you have to be careful um and and yeah I think if you look at lsts one of the dominant advantages for Lio when they started was a they had this insane liquidity pool due to kind of the timing of when Lio launch relative to curve but also be Lio had

very good withdrawal semantic so it was very easy for users to enter and exit um and that part of the ux was really important but that part of the ux is actually a risk a risk you you have to think about when you're an institution because if I am 50% of an AVS if I cannot sort of withdraw efficiently then that affects my overall portfolio construction myself so anyway those are the three things I would remember think about like slashing liquidity duration thank you so much um BS well welcome here in the panel um so for the next topic um and thank you actually uh tun to actually facilitate that transition into liquid reaking and what the the the risks that it represents for

for Egan Le but also opportunities uh so vs um what is your opinion in terms of liquid raking in terms of the risks it represents uh the opportunities so tyun was just mentioning about the duration and liquidity risk which obviously it kind of lowers right the the liquidity and duration risk of raking to use the LRT so I guess this is something more on the opportunity side right as a as a benefit but it also comes with a certain uh drawback right and UT risks uh so we we'll be super glad to have your perspective on this yeah definitely um I think there's definitely some complexity

to this when it comes to risk man management but um there's a there's a misconception that uh projects that have Economic Security that's um restak onto their abs have the equivalent amount of liquidity and that's not exactly true and the reality is um the majority of these ecosystems are looking to inherit some of this Downstream and you know we have projects that are actively building you know liquidity as a service something like bar chain for example which is like actively focused on just incorporating that module and so it's interesting because lrts can then enable um again

some of the flexibility that lsts offered initially to the staking landscape where you know your your capital is no longer locked and you can have this flexibility to go enter new dii positions and now what's interesting with LRT supporting abss is not only can they have this Economic Security but then they can also eventually enable some of this liquidity Downstream um to these ecosystems so uh again you know Taren mentioned like Risk Management and there's definitely like quite a bit of work that needs to be done in terms of what um you know calculations and estimations of how much security and how much liquidity different types of ABS is need because that's likely going to be

varying based on the use cases but uh I think there's some very interesting implementations that could happen um since we're talking about liquid re seeking I must ask you Mike uh obviously uh what is what what do you think is the impact of lrts in igan's you know trust Marketplace and how that can somehow influence or change the you know the the pricing right of basically renting uh trust uh we'll be very glad to get your your perspective on this as well an instant for instance like do you think lrts are making it actually cheaper right for uh basically protocols to kind of you know rent trust from Egen

layer because of the fact there are lrts and Native lrts and it reduces the liquidity risk and how do you think that actually impacts the world marketplace uh so again I'll repeat the question so you're asking um how do lrts impact the price of renting trust by AVS as other services um uh they make it a lot cheaper for a number of reasons um uh for one thing there is um for all intense purposes an infinite amount of eth uh available for security I I say that because you know whatever it is now $14 billion of uh eth security available largely because of the speculative you

know Mania around lrts and points farming and all that um uh and there's currently not $14 billion of need need uh for Economic Security um so there is this mismatch in demand and because part the part of the reason that there's so much eth is because of lrts that just naturally is going to uh it pretty much empirically has brought the price down to as close to zero without being zero I mean most of these deals the security deals that uh have been announced by you know us and others uh they're being done at around like 50 basis points and which is just an arbitrary number it's like what's the lowest number above zero

that's just even worth doing um so uh so that's the state of the market right now and that's that's fine um uh I I don't think anybody us probably Igan Lair expected uh this kind of craziness um uh but I think that Dynamic will change uh it probably will take a year or two so I do I do think this will this will be a uh a process in the end this whole ecosystem only works if like there's actual useful economic work happening like abss have to have actual customers it it can't just be like an infinite you know token emissions Farm uh you know that that can last for a while the specul you know the

money printer is back on so sure you know that that'll last for some amount of time but at some point somebody's got to buy something somebody's got to do something uh useful um and as that ramps up as the need for actual Economic Security ramps up then the prices I think will will adjust um uh right now I guess again empirically practically what's happening with abss is uh in my experience conversation I don't think anyone's really thinking super deeply about like what's the exact right number you know is it 500 million is it a billion is it two billion everyone's kind of pulling these numbers out of you know whatever um what they're looking for is a a press release and a number that they can go to their

potential customers with and say look we've got a billion dollars of security doesn't doesn't that sound like a big number yeah that's a big number okay great you should use our Bridge because the other Bridges don't have a billion dollars uh that's and that's actually exactly the right way to do it because like again the most important thing is these abss have to get customers and start doing useful things and having a big flashy number and a press release is exactly what they need to do that and so it's it's it's the right model and they can it's actually perhaps a good thing that there's so much eat Supply that they can basically get this security for effectively free so it's actually a good way to bootstrap the the market but it'll take time to catch up I think those are very good points that the point aen layer points ether

Five Points and so on it kind of is a sub it subsidizes right also uh the W system and it actually um creates like a distortion in the like the real price right of buying trust um maybe to to just end since we have just one minute uh nether do do you think lrts represent systemic risk for Egan layer so we've uh really thought deeply about this and I think the best place to kind of learn about all of the research is just to go to our documentation we have a risk in FAQ uh everything that you would want to know is hopefully outline there um and then if you have anything else additionally more specifically you probably reach out to one of us I don't know if Vos might want

to add to that or not no I would I would definitely defer to most of our research on this um the only the only thing I would say is there is this current um current incentivization structure which is just like stacking forms of yield um and it is a short-term incentive to draw users but it's not necessarily the long-term incentive or game that we want to play at Ian layer and I think it's really good like Mike said to you know um to some ENT Farm marketing from a bunch of sources and be able to like you know bring people on board but the

reality is Downstream we want to drive fees from these um abss back to the ethereum reaking and operator community and I think that's what it comes down to so really both creating ways for abss and you know if they're in L2 they're Downstream daps and partners to be able to bring in users on board but also which is a short-term win but then also so you know create incentive structures that will create an ecosystem that doesn't necessarily flee as soon as you know all of the stuff goes live and you know we're dealing with um rapidly exiting users that we just farming right and so making sure that we're playing both a short-term and a long-term wi at the same

time great uh thank you so much then for uh you know being in this panel was an honor to you to moderate this panel with you know such uh well-known you know people in the space super insightful uh so thank you so much and we'll live the place for for the next panel [Applause]