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Eigen Labs, Developer Behind Restaking Protocol EigenLayer, Raises $100M From A16z Crypto

Pioneering restaking project EigenLayer, a project led by Sreeram Kannan, isn't even live, but investors are piling in. A16z Crypto is affiliated with the venture capital firm Andreessen Horowitz.

By Bradley Keoun, Margaux Nijkerk|Edited by Sheldon Reback

Updated Mar 8, 2024, 9:57 p.m. Published Feb 22, 2024, 2:30 p.m.

EigenLayer CEO Sreeram Kannan (University of Michigan, modified by CoinDesk)

Eigen Labs, the developer behind EigenLayer, the crypto restaking project atop Ethereum that is shaking up the decentralized finance landscape even though it's not yet live, raised $100 million from venture capital investor a16z crypto.

Eigen Labs confirmed the investment in a thread on the social media platform X.

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EigenLayer is at the heart of a new blockchain-industry trend known as "restaking," where Ethereum's ether (ETH) tokens that are deposited or "staked" as security for the main blockchain can be repurposed to secure additional networks and protocols.

Earlier this month, EigenLayer, which initially launched in June, temporarily lifted its cap on deposits, citing rising interest in the protocol from new users. It has since soared to nearly $8 billion in total value locked (TVL), according to DefiLlama.

EigenLayer has also benefited from new "liquid restaking" protocols built on top of it, like Ether.fi and Puffer, which aim to simplify restaking for users and offer extra rewards in the form of “points.” Liquid restaking platforms park assets with EigenLayer and hand their users tradeable receipts called "liquid restaking tokens" (LRTs), which are quickly becoming some of the most-used assets in decentralized finance (DeFi). Ether.fi, the largest liquid restaking protocol, launched last year and boasts over $1.4 billion in TVL as of Thursday. Puffer, which launched just over three weeks ago, also crossed $1 billion in deposits earlier this week.

All of the recent hype around EigenLayer comes before the platform has even launched any of its actively validated services (AVSs) – the third-party networks that will use EigenLayer to power their security, and will ultimately pay out "restaking interest" to the platform's depositors.

The first AVS set to launch later this year, EigenDA, will be a data availability blockchain built by Eigen Labs.

While EigenLayer’s ecosystem has caught the attention of many, some Ethereum developers have cautioned that its “shared security” model risks straining the Ethereum network. Ethereum co-founder Vitalik Buterin wrote a blog post in May 2023 about the “high systemic risks to the ecosystem” that restaking presents.

UPDATE (Feb. 22, 16:03 UTC): Adds additional information about Eigenlayer

EigenLayer Ethereum Restaking A16z crypto Andreessen Horowitz

Bradley Keoun

Bradley Keoun is CoinDesk's managing editor of tech & protocols, where he oversees a team of reporters covering blockchain technology, and previously ran the global crypto markets team. A two-time Loeb Awards finalist, he previously was chief global finance and economic correspondent for TheStreet and before that worked as an editor and reporter for Bloomberg News in New York and Mexico City, reporting on Wall Street, emerging markets and the energy industry. He started out as a police-beat reporter for the Gainesville Sun in Florida and later worked as a general-assignment reporter for the Chicago Tribune. Originally from Fort Wayne, Indiana, he double-majored in electrical engineering and classical studies as an undergraduate at Duke University and later obtained a master's in journalism from the University of Florida. He is currently based in Austin, Texas, and in his spare time plays guitar, sings in a choir and hikes in the Texas Hill Country. He owns less than $1,000 each of several cryptocurrencies.

Margaux Nijkerk

Margaux Nijkerk reports on the Ethereum protocol and L2s. A graduate of Johns Hopkins and Emory universities, she has a masters in International Affairs & Economics. She holds BTC and ETH above CoinDesk's disclosure threshold of $1,000.