EigenLayer’s biggest risk may be centralization, report suggests

Chorus One tried to tease out some risks that could emerge from the buzzy restaking protocol

article-image

EigenLayer and Adobe Stock modified by Blockworks

share

EigenLayer and its more than $12 billion in total value locked (TVL) went to mainnet last week, bringing the protocol’s vision for a restaking ecosystem on Ethereum a step closer to reality. 

Building an entire ecosystem atop Ethereum could be lucrative — a16z general partner Ali Yahya said EigenLayer has “the potential to change everything” — but it also could come with hard-to-predict risks. EigenLayer’s mainnet launch came with slashing and in-protocol payments disabled, and the protocol pledged to let the marketplace “develop and stabilize” before removing the training wheels. 

Read more: Restaking protocol EigenLayer heads to Ethereum mainnet

In the meantime, the potential restakers, validators, actively validated service (AVS) operators and other members of EigenLayer’s orbit cannot be entirely certain what risks the protocol could create down the road.

In a new report, the Ethereum node operator Chorus One tried to predict some of these risks. One key assertion the report makes is that EigenLayer could face pressures toward centralization, which could make potential black-swan events further reaching within Ethereum. 

The main catastrophic event that industry watchers speculate could happen to EigenLayer would be a slashing cascade. 

Slashing occurs when an operator running one of EigenLayer’s AVSs — varied blockchain services secured by restaked ether — is penalized. In such cases, the operator has some of their stake confiscated for breaking rules set by the AVSs. If a significant amount of ether is locked in EigenLayer and a large operator suffers a major slashing event, it could lead to a cascade of slashing damage. In a worst-case scenario, this could compromise the security of the Ethereum network.

Read more: Ethereum is ‘much more centralized than folks realize’: Blocknative’s Matt Cutler

Put simply, a slashing event could have cascading effects “if there’s a very small number of node operators that are really big and somebody makes a mistake,” Michael Moser, the head of research at Chorus One, said. 

It’s hard to know how big the risk of slashing events on EigenLayer could be, since AVSs are yet to set slashing rules, the report notes. But lest readers take their restaked ether and flock for the exits, it bears note that slashing on Ethereum is somewhat rare: 431 validators have ever been slashed on the network, per Rated. 

Most slashing scenarios are caused by human error, Chorus One’s report says, and it would take a major slashing event where the slashed operator didn’t fix the problem for a lengthy period of time for Ethereum’s security to be threatened.

In an interview, the Chorus One team said a perhaps more likely negative outcome of EigenLayer’s launch is centralization. 

Read more: Restaking is a ticking time bomb

On EigenLayer, AVSs can choose which operators to work with. Chorus One predicts AVSs will pick the operators with the largest amount of pooled security to offer, which will be professional node operators and liquid restaking projects. Even if AVSs are evenly distributed between operators, Chorus One sees the big operators still benefiting from economies of scale to achieve higher margins, meaning they can pay higher yield to those delegating their restaked ether — and cause their portion of the total supply to grow further.

The ability of AVSs to generate yield could also prove unpredictable, Chorus One notes. While running AVSs on testnet, the company found hidden costs from things like data storage or cloud computing, Chorus One’s Gabriella Sofia said. These costs could make margins slim for running some AVSs.

But EigenLayer’s potential risks haven’t stopped Chorus One from drawing delegations as it grows its presence as an EigenLayer operator.

“We are, of course, still running the system,” Sofia said.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens