EigenLayer is a decentralised protocol built atop Ethereum’s infrastructure with a novel concept – restaking. When Ethereum migrated to a Proof of Stake mechanism, it allowed ETH holders to stake their holdings to secure the network and earn rewards. EigenLayer takes this to the next level by restaking locked ETH to other protocols and applications within the EVM ecosystem.
This has a two-pronged effect. First, it allows stakers to earn extra yield from assets that would otherwise be illiquid. Additionally, it adds a layer of security to dApps, reducing the barrier to entry for newer protocols and projects.
EIGEN is an extremely important part of EigenLayer’s ecosystem, as it can be used to secure the network, and agree upon penalties that can’t be determined on-chain which helps avoid forking the main Ethereum blockchain.