What is Restaking on Solana?

What is Restaking on Solana?

Solayer Core

May 31, 2024

Origins of restaking 

Restaking is a concept introduced by Eigenlayer. It enables stakers to contribute their crypto-economic security by reusing their staked assets on Ethereum as collateral in other proof-of-stake systems, also known as Actively Validated Services (AVSs). This not only optimizes the usage of staked assets but also boosts the overall security and efficiency of the ecosystem. Stakers can earn additional rewards through restaking. These rewards may come in the form of proof-of-stake yield from AVS, bridge fees, or a combination of both.

In Eigenlayer's model, these systems each have their individual networks and function on the main chain (in Eigenlayer's case, Ethereum) where the staked assets are pooled. AVSs can include cross-chain bridges, shared sequencers, oracle network, among others. Such systems are typically referred to as exogenous AVSs.

Introducing restaking on Solana 

Solayer is a restaking network developed on Solana. Rather than focusing on exogenous AVSs, Solayer aims to support endogenous AVSs on the Solana blockchain. The goal of the endogenous AVSs is to provide on-chain decentralized applications (dApps) on Solana with a greater likelihood of secured block space and prioritized transaction inclusion.

Restaking Pool Manager

The restaking pool manager oversees the flow of assets into the protocol. When users deposit Liquid Staking Tokens (LST) or SOL (which is first converted to sSOL-raw), they receive a fungible token representation in return, collectively called Solayer assets. Currently, these assets are illiquid to facilitate points calculation for the liquidity reward program. However, they will become liquid in the future to encourage composability with DeFi.

  • Unbonding Process: Solayer assets at this layer won't have any unbonding lockups since they unwrap into the respective LSTs. The AVS unbonding process is separately managed by the delegation manager. To offer more flexibility, Solayer allows them to design their own unbonding process with a maximum unbonding period of 2 days. Solayer will also provide an emergency exit mechanism to release the bound stake from users should the AVS cease to function.

Delegation to Secure Additional Networks

Stage 2 of our protocol development will enable users to pledge their Solayer assets to secure additional networks by delegating them to a Solayer operator responsible for managing the AVS nodes. Should an operator engage in malicious behavior, they will be subject to penalties, potentially resulting in a loss of the user's deposit. Consequently, users must exercise caution when selecting operators to delegate to, ensuring that they possess a trustworthy track record and fulfill the requisite criteria of the AVS.

  • Restaking Portfolio: Once delegation to SVNs and node operators is live, users will construct their restaking portfolio by selecting the node operators to delegate to and SVNs to secure. They will then be issued a non-fungible token (NFT). This token is non-fungible due to the idiosyncratic risks associated with the selected node operators and the SVNs.

Rewards Accounting

Rewards accounting is calculated offline. Solayer has implemented a state watcher to keep track of deposits and withdrawals. Together with the invite relationship data, additional rewards will be applied to user accounts in real-time.

  • Permissioned Restake Method: The Restake method on Solayer is permissioned and requires an additional signature from the server to enforce deposit limits in the first few epochs. The Unstake method does not require an additional signature from Solayer.

Native SOL Restaking

For native SOL restaking, Solayer first converts your SOL to an intermediary form called sSOL-raw, which is the Liquid Staking Token (LST) issued by the stake pool manager. This entire process is non-custodial, ensuring that staked SOL is delegated to validators who earn MEV-boosted returns. The sSOL-raw is then converted to sSOL after another interaction with the Solayer restaking pool manager. All these steps are executed in a single transaction for efficiency.

Explanation through an analogy 

Imagine you have a garden where you grow vegetables, and you decide to share your garden tools with your neighbours to help them grow their gardens too. In return, they give you some of the vegetables they grow, so everyone benefits.

In this analogy:

  • Your garden represents the main blockchain (Ethereum or Solana).

  • The garden tools are your staked assets (the tokens you’ve locked up to help secure the network).

  • Your neighbours are AVSs that need tools to operate efficiently.

  • The vegetables they give you are the additional rewards you earn for sharing your tools.

In Eigenlayer's system on Ethereum, you share your tools with neighbours who have their gardens elsewhere but still use your tools (exogenous AVSs). This helps secure various services like cross-chain bridges or oracle networks and you earn rewards from these services.

On the other hand, Solayer on Solana focuses on sharing tools with neighbours within the same garden (endogenous AVSs). These neighbours are decentralized applications (dApps) on Solana that benefit from better block space and transaction prioritization, making the whole garden (Solana) more secure and efficient.

So, by "restaking" your tools in both systems, you maximize the use of your garden tools and get more vegetables in return.

Key takeaways

  1. Restaking allows stakers to maximize their assets by using them as collateral in multiple proof-of-stake systems, enhancing security and earning additional rewards.

  2. Solayer focuses on supporting both Solana's exogenous AVSs, such as oracles and bridges, and endogenous AVSs, aiming to secure block space and prioritize transactions for on-chain dApps.

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Solayer leverages the economic principles of staking to extend the security of Solana's base layer.

©2024 Solayer · All Rights Reserved


Solayer leverages the economic principles of staking to extend the security of Solana's base layer.

©2024 Solayer · All Rights Reserved