In this article, we break down Solayer litepaper pt 1, Endogenous AVS system in ELI5 terms. For those who'd like to get a deeper techncial dive here.

Overview of restaking

Eigenlayer introduced restaking with a mechanism of Exogenous Actively Validated Services. This means systems that are offchain or out of the main Ethereum network, that can continue to share the ETH Proof of Stake security.

Examples include: oracles, rollups, DA layers

Solayer is introducing Endogenous AVS: programs natively onchain to Solana, that utilizes SOL PoS stake to enhance application security and throughput.

Examples include: exchanges, NFT marketplaces, memecoins. Anything that touches onchain.

First, you would need to understand Stake-Weighted Quality of Service (swQoS).

Stake-weighted quality of service

swQoS is a mechanism of network resource allocation, such as blockspace and transaction processing capacity. Built on top of this system, Solayer is creating a new marketplace design of stakers, validators, and applications developers. 

Simply put: the more stake, the higher probability of submitting transactions.

Currently, swQoS is a protocol between RPC nodes and validators, leaving applications little say in a world where they need the most security and performance configuration power to directly service customers.

For example, if there are 2 validators - the first one, holding 2% of the stake and the second, having 0.2%. The former will be able to submit up to 2% of the packets to the block producer, taking priority over the latter. This will provide the higher-quality validator with better performance and increased Sybil Resistance.

In simple terms, each transaction comes with weight. The heavier it is, the more likely your transactions get thorough. Consequently, the more you have at stake, the higher the quality of service you will get and the lesser the potential malicious flooding from lower-quality validators. 

Solayer’s restaking design functions like similarly to a cloud or blockspace marketplace 

Stake used to secure the Solana network can be restaked into applications to improve localized quality of service, specifically through enhanced block space provisioning and prioritized transaction inclusion. In this model, each application functions as a localized sidecar, akin to a virtual cluster instance deployed by a developer. Clusters with a higher stake weight have a better chance of processing transactions efficiently. This is analogous to how developers on AWS can pay for additional storage or RAM to boost their applications' performance; in the Solana ecosystem, the equivalent resources—block space and transaction throughput—are allocated based on stake weight. 

1. Staker is the supply side of the market

2. App is the demand side of the market

3. Validator is the facilitator

Every unit of SOL staked inherently is a unit of blockspace supplied to the developers. Restakers are supplying stake and delegating across e-AVSs, giving them higher weight and hence probability of guaranteed blockspace and transaction inclusion. ‘

sSOL: the liquidity entry point for the restaking marketplace 

sSOL is the Liquid Restaking Token (LRT) that serves as the entry point for participating in Solayer’s cloud marketplace. It offers a user-friendly staking experience where users can easily contribute to stake-weighted Quality of Service (QoS) and earn multiple revenue streams from restaking with just a few clicks. 

In simpler terms: there's no need for users to set up and manage complex validator infrastructure, as the endogenous AVS program handles all the technical details. This streamlined process allows users to focus on restaking and earning without worrying about infrastructure maintenance. 

To put it in ELI5 terms

Let’s go through all these technical concepts and break them in even simpler terms. 

Solayer restaking for dummies 

Imagine a highway with eight lanes. The first lane on the left is the most expensive, and the lanes get progressively cheaper as you move to the right. Naturally, the cheaper lanes on the right have more cars than the expensive ones on the left.

In this analogy:

• Highway is the layer 1 blockchain. 

• Highway lanes represent different staking tiers on the blockchain.

• The toll to get through a highway lane is the stake required for that tier.

• Cars are the applications trying to use the blockchain.

• Restakers delegate their stake to projects, earning multiple streams of rewards in project tokens for their service.

• Validators are the lanes of the highway, allowing cars (applications) to pass through.

• Solayer is the infrastructure that coordinates the toll (restakers), cars (applications), and the highway (validators).

Restakers are crucial as they provide the necessary stake (toll) for applications (cars) to use the blockchain (highway). By doing so, they facilitate the smooth operation of the blockchain and earn rewards for their participation.

So what does “re” mean? 

In addition to securing Solana, through Solayer, stakers are consciously putting their stake to multiple systems to enhance their local application security and performance on the base L1. As a staker, you are putting your SOL to work in multiple ways, increasing throughput and security.

What is stake-weighted QoS? 

Imagine QoS (Quality of Service) as a fast lane on a club reserved for VIP pass holders. The higher your VIP pass, the faster and more efficiently you can pass through, bypassing the regular ticket holders. In the context of Solayer, holding more stake acts like having a VIP pass, giving you a higher priority to submit transactions and ensuring better performance and security for applications. For example, a validator with 2% stake has more throughput and can process more transactions compared to one with only 0.2% stake.

What about sSOL? 

You can think of sSOL as a black American Express card. Just like holding this exclusive card gives you access to various reward programs, holding sSOL allows you to participate in Solayer’s cloud marketplace and earn multiple revenue streams from restaking. It simplifies the process, much like how a black card eliminates the need for managing multiple accounts and offers a seamless experience. This makes us think if we should issue an sSOL sapphire card…