21 posts tagged with "Ethereum"

In the rapidly evolving landscape of blockchain technology, a familiar name has stepped into the arena with a bold vision. Sony, the entertainment and technology giant, has launched Soneium—an Ethereum Layer-2 blockchain designed to bridge the gap between cutting-edge Web3 innovations and mainstream internet services. But what exactly is Soneium, and why should you care? Let's dive in.

What is Soneium?​

Soneium is a Layer-2 blockchain built on top of Ethereum, developed by Sony Block Solutions Labs—a joint venture between Sony Group and Startale Labs. Launched in January 2025 after a successful testnet phase, Soneium aims to "realize the open internet that transcends boundaries" by making blockchain technology accessible, scalable, and practical for everyday use.

Think of it as Sony's attempt to make blockchain as user-friendly as its PlayStations and Walkmans once made gaming and music.

The Tech Behind Soneium​

For the tech-curious among us, Soneium is built on Optimism's OP Stack, which means it uses the same optimistic rollup framework as other popular Layer-2 solutions. In plain English? It processes transactions off-chain and only periodically posts compressed data back to Ethereum, making transactions faster and cheaper while maintaining security.

Soneium is fully compatible with the Ethereum Virtual Machine (EVM), so developers familiar with Ethereum can easily deploy their applications on the platform. It also joins Optimism's "Superchain" ecosystem, allowing it to communicate easily with other Layer-2 networks like Coinbase's Base.

What Makes Soneium Special?​

While there are already several Layer-2 solutions on the market, Soneium stands out for its focus on entertainment, creative content, and fan engagement—areas where Sony has decades of experience and vast resources.

Imagine buying a movie ticket and receiving an exclusive digital collectible that grants access to bonus content. Or attending a virtual concert where your NFT ticket becomes a memento with special perks. These are the kinds of experiences Sony envisions building on Soneium.

The platform is designed to support:

• Gaming experiences with faster transactions for in-game assets
• NFT marketplaces for digital collectibles
• Fan engagement apps where communities can interact with creators
• Financial tools for creators and fans
• Enterprise blockchain solutions

Sony's Partnerships Power Soneium​

Sony isn't going it alone. The company has forged strategic partnerships to bolster Soneium's development and adoption:

• Startale Labs, a Singapore-based blockchain startup led by Sota Watanabe (co-founder of Astar Network), is Sony's key technical partner
• Optimism Foundation provides the underlying technology
• Circle ensures that USD Coin (USDC) serves as a primary currency on the network
• Samsung has made a strategic investment through its venture arm
• Alchemy, Chainlink, Pyth Network, and The Graph provide essential infrastructure services

Sony is also leveraging its internal divisions—including Sony Pictures, Sony Music Entertainment, and Sony Music Publishing—to pilot Web3 fan engagement projects on Soneium. For example, the platform has already hosted NFT campaigns for the "Ghost in the Shell" franchise and various music artists under Sony's label.

Early Signs of Success​

Despite being just a few months old, Soneium has shown promising traction:

• Its testnet phase saw over 15 million active wallets and processed over 47 million transactions
• Within the first month of mainnet launch, Soneium attracted over 248,000 on-chain accounts and about 1.8 million addresses interacting with the network
• The platform has successfully launched several NFT drops, including a collaboration with Web3 music label Coop Records

To fuel growth, Sony and Astar Network launched a 100-day incentive campaign with a 100 million token reward pool, encouraging users to try out apps, supply liquidity, and be active on the platform.

Security and Scalability: A Balancing Act​

Security is paramount for Sony, especially as it carries its trusted brand into the blockchain space. Soneium inherits Ethereum's security while adding its own protective measures.

Interestingly, Sony has taken a somewhat controversial approach by blacklisting certain smart contracts and tokens deemed to infringe on intellectual property. While this has raised questions about decentralization, Sony argues that some curation is necessary to protect creators and build trust with mainstream users.

On the scalability front, Soneium's very purpose is to enhance Ethereum's throughput. By processing transactions off-chain, it can handle a much higher volume of transactions at much lower costs—crucial for mass adoption of applications like games or large NFT drops.

The Road Ahead​

Sony has outlined a multi-phase roadmap for Soneium:

1. First year: Onboarding Web3 enthusiasts and early adopters
2. Within two years: Integrating Sony products like Sony Bank, Sony Music, and Sony Pictures
3. Within three years: Expanding to enterprises and general applications beyond Sony's ecosystem

The company is gradually rolling out its NFT-driven Fan Marketing Platform, which will allow brands and artists to easily issue NFTs to fans, offering perks like exclusive content and event access.

While Soneium currently relies on ETH for gas fees and uses ASTR (Astar Network's token) for incentives, there's speculation about a potential Soneium native token in the future.

How Soneium Compares to Other Layer-2 Networks​

In the crowded Layer-2 market, Soneium faces competition from established players like Arbitrum, Optimism, and Polygon. However, Sony is carving a unique position by leveraging its entertainment empire and focusing on creative use cases.

Unlike purely community-driven Layer-2 networks, Soneium benefits from Sony's brand trust, access to content IP, and a potentially huge user base from existing Sony services.

The trade-off is less decentralization (at least initially) compared to networks like Optimism and Arbitrum, which have issued tokens and implemented community governance.

The Big Picture​

Sony's Soneium represents a significant step toward blockchain mass adoption. By focusing on content and fan engagement—areas where Sony excels—the company is positioning Soneium as a bridge between Web3 enthusiasts and everyday consumers.

If Sony can successfully convert even a fraction of its millions of customers into Web3 participants, Soneium could become one of the first truly mainstream blockchain platforms.

The experiment has just begun, but the potential is enormous. As the lines between entertainment, technology, and blockchain continue to blur, Soneium may well be at the forefront of this convergence, bringing blockchain technology to the masses one gaming avatar or music NFT at a time.

Restaking Explained: In Ethereum’s proof-of-stake model, validators normally stake ETH to secure the network and earn rewards, with the risk of slashing if they misbehave. Restaking allows this same staked ETH (or its liquid staking derivatives) to be reused to secure additional protocols or services. EigenLayer introduced restaking via smart contracts that let ETH stakers opt in to extend their security to new systems in exchange for extra yield. In practice, an Ethereum validator can register with EigenLayer and grant its contracts permission to impose additional slashing conditions specified by external protocols. If the validator performs maliciously on any opted-in service, the EigenLayer contracts can slash their staked ETH, just as Ethereum would for consensus violations. This mechanism effectively transforms Ethereum’s robust staking security into a composable “Security-as-a-Service”: developers can borrow Ethereum’s economic security to bootstrap new projects, rather than starting their own validator network from scratch. By leveraging the 31M+ ETH already securing Ethereum, EigenLayer’s restaking creates a “pooled security” marketplace where multiple services share the same trusted capital base.

EigenLayer’s Approach: EigenLayer is implemented as a set of Ethereum smart contracts that coordinate this restaking process. Validators (or ETH holders) who wish to restake either deposit their liquid staking tokens or, in the case of native stakers, redirect their withdrawal credentials to an EigenLayer-managed contract (often called an EigenPod). This ensures EigenLayer can enforce slashing by locking or burning the underlying ETH if needed. Restakers always retain ownership of their ETH (withdrawable after an exit/escrow period), but they opt-in to new slashing rules on top of Ethereum’s. In return, they become eligible for additional restaking rewards paid by the services they secure. The end result is a modular security layer: Ethereum’s validator set and stake are “rented out” to external protocols. As EigenLayer’s founder Sreeram Kannan puts it, this creates a “Verifiable Cloud” for Web3 – analogous to how AWS offers computing services, EigenLayer offers security as a service to developers. Early adoption has been strong: by mid-2024 over 4.9 million ETH (~$15B) was restaked into EigenLayer, demonstrating demand from stakers to maximize yield and from new protocols to bootstrap with minimal overhead. In summary, restaking on Ethereum repurposes existing trust (staked ETH) to secure new applications, and EigenLayer provides the infrastructure to make this process composable and permissionless.

Design Patterns of Actively Validated Services (AVSs)​

What are AVSs? Actively Validated Services (AVSs) refer to any decentralized service or network that requires its own set of validators and consensus rules, but can outsource security to a restaking platform like EigenLayer. In other words, an AVS is an external protocol (outside the Ethereum L1) that hires Ethereum’s validators to perform some verification work. Examples include sidechains or rollups, data availability layers, oracle networks, bridges, shared sequencers, decentralized compute modules, and more. Each AVS defines a unique distributed validation task – for instance, an oracle might require signing price feeds, while a data availability chain (like EigenDA) requires storing and attesting to data blobs. These services run their own software and possibly their own consensus among participating operators, but rely on shared security: the economic stake backing them is provided by restaked ETH (or other assets) from Ethereum validators, rather than a native token for each new network.

Architecture and Roles: EigenLayer’s architecture cleanly separates the roles in this shared security model:

• Restakers – ETH stakers (or LST holders) who opt in to secure AVSs. They deposit into EigenLayer contracts, extending their staked capital as collateral for multiple services. Restakers can choose which AVSs to support, directly or via delegation, and earn rewards from those services. Crucially, they bear slashing risk if any supported AVS reports misbehavior.

• Operators – Node operators who actually run the off-chain client software for each AVS. They are analogous to miners/validators for the AVS’s network. In EigenLayer, an operator must register and be approved (initially whitelisted) to join, and can then opt in to serve specific AVSs. Restakers delegate their stake to operators (if they don’t run nodes themselves), so operators aggregate stake from potentially many restakers. Each operator is subject to the slashing conditions of whatever AVS they support, and they earn fees or rewards for their service. This creates a marketplace of operators competing on performance and trustworthiness, since AVSs will prefer competent operators and restakers will prefer those who maximize rewards without incurring slashing.

• AVS (Actively Validated Service) – The external protocol or service itself, which typically consists of two components: (1) an off-chain binary or client that operators run to perform the service (e.g. a sidechain node software), and (2) an on-chain AVS contract deployed on Ethereum that interfaces with EigenLayer. The AVS’s Ethereum contract encodes the rules for that service’s slashing and reward distribution. For example, it might define that if two conflicting signatures are submitted (proof of equivocation by an operator), a slash of X ETH is executed on that operator’s stake. The AVS contract hooks into EigenLayer’s slashing managers to actually penalize restaked ETH when violations occur. Thus, each AVS can have custom validation logic and fault conditions, while relying on EigenLayer to enforce economic punishments using the shared stake. This design lets AVS developers innovate on new trust models (even new consensus mechanisms or cryptographic services) without reinventing a bonding/slashing token for security.

• AVS Consumers/Users – Finally, the end-users or other protocols that consume the AVS’s output. For instance, a dApp might use an oracle AVS for price data or a rollup might post data to a data availability AVS. Consumers pay fees to the AVS (often funding the rewards restakers/operators earn) and depend on its correctness, which is assured by the economic security the AVS has leased from Ethereum.

Leveraging Shared Security: The beauty of this model is that even a brand-new service can start life with Ethereum-grade security guarantees. Instead of recruiting and incentivizing a fresh set of validators, an AVS taps into an experienced, economically bonded validator set from day one. Smaller chains or modules that would be insecure alone become secure by piggybacking on Ethereum. This pooled security significantly raises the cost to attack any single AVS – an attacker would need to acquire and stake large amounts of ETH (or other whitelisted collateral) and then risk losing it via slashing. Because many services share the same pool of restaked ETH, they effectively form a shared security umbrella: the combined economic weight of the stake deters attacks on any one of them. From a developer’s perspective, this modularizes the consensus layer – you focus on your service’s functionality while EigenLayer handles securing it with an existing validator set. AVSs can thus be very diverse. Some are general-purpose “horizontal” services that many dApps could use (e.g. a generic decentralized sequencer or an off-chain compute network), while others are “vertical” or application-specific (tailored to a niche like a particular bridge or a DeFi oracle). Early examples of AVSs on EigenLayer span data availability (e.g. EigenDA), shared sequencing for rollups (e.g. Espresso, Radius), oracle networks (e.g. eOracle), cross-chain bridges (e.g. Polymer, Hyperlane), off-chain computation (e.g. Lagrange for ZK proofs), and more. All of these leverage the same Ethereum trust base. In summary, an AVS is essentially a pluggable module that outsources trust to Ethereum: it defines what validators must do and what constitutes a slashable fault, and EigenLayer enforces those rules on a pool of ETH that is globally used to secure many such modules.

Incentive Mechanisms for Restakers, Operators, and Developers​

A robust incentive design is critical to align all parties in a restaking ecosystem. EigenLayer and similar platforms create a “win-win-win” by offering new revenue to stakers and operators while lowering costs for emerging protocols. Let’s break down incentives by role:

• Incentives for Restakers: Restakers are primarily motivated by yield. By opting into EigenLayer, an ETH staker can earn extra rewards on top of their standard Ethereum staking yield. For example, a validator with 32 ETH staked in Ethereum’s beacon chain continues earning the ~4-5% base APR, but if they restake via EigenLayer, they can simultaneously earn fees or token rewards from multiple AVSs that they help secure. This “double dipping” dramatically increases potential returns for validators. In EigenLayer’s early rollout, restakers received incentive points that converted into EIGEN token airdrops (for bootstrap); later a continuous reward mechanism (Programmatic Incentives) was launched, distributing millions of EIGEN tokens to restakers as liquidity mining. Beyond token incentives, restakers benefit from diversification of income – instead of relying solely on Ethereum block rewards, they can earn in various AVS tokens or fees. Of course, these higher rewards come with higher risk (greater slashing exposure), so rational restakers will only opt into AVSs they believe are well-managed. This creates a market-driven check: AVSs must offer attractive enough rewards to compensate for risk, or restakers will avoid them. In practice, many restakers delegate to professional operators, so they may also pay a commission to the operator out of their rewards. Even so, restakers stand to gain significantly by monetizing the otherwise idle security capacity of their staked ETH. (Notably, EigenLayer reports that over 88% of all distributed EIGEN went straight into being staked/delegated again – indicating restakers are eagerly compounding their positions.)

• Incentives for Operators: Operators in EigenLayer are the service providers who do the heavy lifting of running nodes for each AVS. Their incentive is the fee revenue or reward share paid by those AVSs. Typically, an AVS will pay out rewards (in ETH, stablecoins, or its own token) to all validators securing it; operators receive those rewards on behalf of the stake they host, and often take a cut (like a commission) for providing infrastructure. EigenLayer allows restakers to delegate to operators, so operators compete to attract as much restaked ETH as possible – more stake delegated means more tasks they can do and more fees earned. This dynamic encourages operators to be highly reliable and specialize in AVSs they can run efficiently (to avoid getting slashed and to maximize uptime). An operator with a good reputation may secure a larger delegation and thus greater total rewards. Importantly, operators face slashing penalties for misconduct just as restakers do (since the stake they carry can be slashed), aligning their behavior with honest execution. EigenLayer’s design effectively creates an open marketplace for validator services: AVS teams can “hire” operators by offering rewards, and operators will choose AVSs that are profitable relative to risk. For instance, one operator might focus on running an oracle AVS if it has high fees, while another might run a data layer AVS that requires lots of bandwidth but pays well. Over time, we expect a free-market equilibrium where operators choose the best mix of AVSs and set an appropriate fee split with their delegators. This contrasts with traditional single-chain staking where validators have fixed duties – here, they can multitask across services to stack earnings. The incentive for operators is thus to maximize their earnings per unit of staked collateral, without overloading to the point of slashing. It’s a delicate balance that should drive professionalization and maybe even insurance or hedging solutions (operators might insure against slashing to protect their delegators, etc.).

• Incentives for AVS Developers: Protocol developers (the teams building new AVSs or chains) arguably have the most to gain from restaking’s “security outsourcing” model. Their primary incentive is cost and time savings: they do not need to launch a new token with high inflation or persuade thousands of independent validators to secure their network from scratch. Bootstrapping a PoS network normally requires giving early validators large token rewards (diluting the supply) and can still result in weak security if the token’s market cap is low. With shared security, a new AVS can come online secured by Ethereum’s $200B+ economic security, instantly making attacks economically unviable. This is a huge draw for infrastructure projects like bridges or oracles that need strong safety guarantees. Moreover, developers can focus on their application logic and rely on EigenLayer (or Karak, etc.) for the validator set management, greatly reducing complexity. Economically, while the AVS must pay for security, it can often do so in a more sustainable way. Instead of huge inflation, it might redirect protocol fees or offer a modest native token stipend. For example, a bridge AVS could charge users fees in ETH and use those to pay restakers, achieving security without printing unbacked tokens. A recent analysis notes that eliminating the need for “highly dilutive reward mechanisms” was a key motivation behind Karak’s universal restaking design. Essentially, shared security allows “bootstrapping on a budget.” Additionally, if the AVS does have a token, it can be used more for governance or utility rather than purely for security spend. Developers are also incentivized by network effects: by plugging into a restaking hub, their service can more easily interoperate with other AVSs (shared users and operators) and gain exposure to the large community of Ethereum stakers. The flip side is that AVS teams must design compelling reward schemes to attract restakers and operators in the open market. This often means initially offering generous yields or token incentives to kickstart participation – much like liquidity mining in DeFi. For instance, EigenLayer itself distributed the EIGEN token widely to early stakers/operators to encourage participation. We see similar patterns with new restaking platforms (e.g. Karak’s XP campaign for future $KAR tokens). In summary, AVS developers trade off giving some rewards to Ethereum stakers in return for avoiding the dead-start problem of securing a new network. The strategic gain is faster time-to-market and higher security from day one, which can be a decisive advantage especially for critical infrastructure like cross-chain bridges or financial services that require trust.

Regulatory Risks and Governance Concerns​

Regulatory Uncertainty: The novel restaking model exists in a legal gray area, raising several regulatory questions. One concern is whether offering “security-as-a-service” could be seen by regulators as an unregistered security offering or a form of high-risk investment product. For example, the distribution of the EIGEN token via a staker airdrop and ongoing rewards has drawn scrutiny about compliance with securities laws. Projects must be careful that their tokens or reward schemes don’t trigger securities definitions (e.g. Howey test in the U.S.). Additionally, restaking protocols aggregate and reallocate stakes across networks, which might be viewed as a form of pooled investment or even a bank-like activity if not properly decentralized. EigenLayer’s team acknowledges the regulatory risk, noting that changing laws could impact the feasibility of restaking and that EigenLayer “might be classified as an illegal financial activity in some regions”. This means regulators could determine that handing off slashing control to third-party services (AVSs) violates financial or consumer-protection rules, especially if retail users are involved. Another angle is sanctions/AML: restaking moves stake into contracts that then validate other chains – if one of those chains is processing illicit transactions or is sanctioned, could Ethereum validators inadvertently fall foul of compliance? This remains untested. So far, no clear regulations target restaking specifically, but the evolving stance on crypto staking (e.g. the SEC’s actions against centralized staking services) suggests that restaking may attract scrutiny as it grows. Projects like EigenLayer have taken a cautious approach – for instance, the EIGEN token was initially non-transferrable upon launch to avoid speculative trading and potential regulatory issues. Nonetheless, until frameworks are defined, restaking platforms operate with the risk that new laws or enforcement could impose constraints (such as requiring participant accreditation, disclosures, or even prohibiting certain types of cross-chain staking).

Governance and Consensus Concerns: Restaking introduces complex governance challenges both at the protocol level and for the broader Ethereum ecosystem:

• Overloading Ethereum’s Social Consensus: A prominent worry, voiced by Vitalik Buterin, is that extended uses of Ethereum’s validator set could inadvertently drag Ethereum itself into external disputes. Vitalik’s admonition: “Dual-use of validator staked ETH, while it has some risks, is fundamentally fine, but attempting to ‘recruit’ Ethereum’s social consensus for your application’s own purposes is not.”. In plain terms, it’s acceptable if Ethereum validators also validate, say, an oracle network and get slashed individually for misbehavior there (no effect on Ethereum’s consensus). What’s dangerous is if an external protocol expects the Ethereum community or core protocol to step in to resolve some issue (for example, to fork out validators who behaved badly on the external service). EigenLayer’s design consciously tries to avoid this scenario by keeping slashable faults objective and isolated. Slashing conditions are cryptographic (e.g. double-signing proof) and do not require Ethereum governance intervention – thus any punishment is self-contained to the EigenLayer contract and doesn’t involve Ethereum altering its state or rules. In cases of subjective faults (where human judgment is needed, say for an oracle pricing dispute), EigenLayer plans to use its own governance (e.g. an EIGEN token vote or a council) rather than burden Ethereum’s social layer. This separation is critical to maintain Ethereum’s neutrality. However, as restaking grows, there is a systemic risk that if a major incident occurred (such as a bug causing mass slashing of a huge portion of validators), the Ethereum community might be pressured to respond (for instance, by reversing slashes). That would entangle Ethereum in the fate of external AVSs – exactly what Vitalik warns against. The social consensus risk is thus mostly about extreme “black swan” cases, but it underscores the importance of keeping Ethereum’s core minimal and uninvolved in restaking governance.

• Slashing Cascades and Ethereum Security: Relatedly, there is concern that slashing events in restaking could cascade and compromise Ethereum. If a very popular AVS (with many validators) suffered a catastrophic failure leading to mass slashing, thousands of ETH validators might lose stake or get forced out. In a worst-case scenario, if enough stake is slashed, Ethereum’s own validator set could shrink or centralize rapidly. For example, imagine a top EigenLayer operator running 10% of all validators is slashed on an AVS – those validators could go offline after losing funds, reducing Ethereum’s security. Chorus One (a staking service) analyzed EigenLayer and noted this cascade risk is exacerbated if the restaking market leads to only a few large operators dominating. The good news is that historically, slashing on Ethereum is rare and usually small-scale. EigenLayer also initially limited the amount of stake and disabled slashing while the system was new. By April 2025, EigenLayer enabled slashing on mainnet with careful monitoring. To further mitigate unintended slashes (e.g. due to bugs), EigenLayer introduced “slashing veto committees” – essentially a multi-sig of experts who can override a slashing if it appears to be a mistake or an attack on the protocol. This is a temporary centralizing measure, but it addresses the risk of a flawed AVS smart contract wreaking havoc. In time, such committees could be replaced by more decentralized governance or fail-safes.

• Centralization of Restaking and Governance: A key governance concern is who controls the restaking protocol and its parameters. In EigenLayer’s early stages, upgrades and critical decisions were controlled by a multisig of the team and close community (e.g. a 9-of-13 multisig). This is practical for rapid development safety, but it’s a centralization risk – those key holders could collude or be compromised to maliciously change rules (for instance, to steal staked funds). Recognizing this, EigenLayer established a more formal EigenGov framework in late 2024, introducing a Protocol Council of experts and a community governance process for changes. The council now controls upgrades via a 3-of-5 multisig, with community oversight. Over time, the intent is to evolve to token-holder governance or a fully decentralized model. Still, in any restaking system, governance decisions (like which new collateral to support, what AVS to “bless” with official status, how slashing disputes are resolved) carry high stakes. There’s a potential conflict of interest: large staking providers (like Lido or exchanges) could influence governance to favor their operators or assets. Indeed, competition is emerging – e.g. Lido’s founders backing Symbiotic, a multi-asset restaking platform – and one can imagine governance wars if, say, a proposal arises to ban a certain AVS that is seen as risky. The restaking layer itself needs robust governance to manage such issues transparently.

• Validator Centralization: On the operational side, there is concern that AVSs will preferentially choose big operators, causing centralization in who actually validates most of the restaked services. If, for efficiency, many AVS teams all select a handful of professional validators (e.g. major staking companies) to service them, those entities gain outsized power and share of rewards. They could then undercut others by offering better terms (thanks to economies of scale), potentially snowballing into an oligopoly. This mirrors concerns in vanilla Ethereum staking (e.g. Lido’s dominance). Restaking could amplify it since operators that run multiple AVSs have more revenue streams. This is as much an economic concern as a governance one – it might require community-imposed limits or incentives to encourage decentralization (for instance, EigenLayer could cap how much stake one operator can control, or AVSs could be required to distribute their assignments). Without checks, the “rich get richer” dynamic could lead to a few node operators effectively controlling large swathes of the Ethereum validator set across many services, which is unhealthy for decentralization. The community is actively discussing such issues, and some have proposed that restaking protocols include mechanisms to favor smaller operators or enforce diversity (perhaps via the delegation strategy or through social coordination by staker communities).

In summary, while restaking unlocks tremendous innovation, it also introduces new vectors of risk. Regulators are eyeing whether this represents unregulated yield products or poses systemic dangers. Ethereum’s leadership stresses the importance of not entangling base-layer governance in these new uses. The EigenLayer community and others have responded with careful design (objective slashing only, two-tier tokens for different fault types, vetting AVSs, etc.) and interim central control to prevent accidents. Ongoing governance challenges include decentralizing control without sacrificing safety, ensuring open participation rather than concentration, and establishing clear legal frameworks. As these restaking networks mature, expect improved governance structures and possibly industry standards or regulations to emerge that address these concerns.

EigenLayer vs. Karak vs. Babylon: A Comparative Analysis​

The restaking/shared-security landscape now includes several frameworks with different designs. Here we compare EigenLayer, Karak Network, and Babylon – highlighting their technical architectures, economic models, and strategic focus:

Technical Architecture & Security Base: EigenLayer is an Ethereum-native protocol (smart contracts on Ethereum L1) that leverages staked ETH (and equivalent Liquid Staking Tokens) as the security collateral. It “piggybacks” on Ethereum’s beacon chain – validators opt in via Ethereum contracts, and slashing is enforced on their ETH stake. This means EigenLayer’s security is fundamentally tied to Ethereum’s PoS and the value of ETH. In contrast, Karak positions itself as a “universal restaking layer” not tied to a single base chain. Karak launched its own L1 blockchain (with EVM compatibility) optimized for shared security services. Karak’s model is chain-agnostic and asset-agnostic: it allows restaking of many types of assets across multiple chains, not just ETH. Supported collateral reportedly includes ETH and LSTs plus other ERC-20s (stablecoins like USDC/sDAI, LP tokens, even other L1 tokens). This means Karak’s security base is a diversified basket; validation in Karak could be backed by, say, some combination of staked ETH, staked SOL (if bridged in), stablecoins, etc., depending on what the AVS (or “VaaS” in Karak’s terminology) accepts. Babylon takes a different route: it harnesses the security of Bitcoin (BTC) – the largest crypto asset – to secure other chains. Babylon is built as a Cosmos-based chain (Babylon Chain) that connects to Bitcoin and PoS chains via the IBC protocol. BTC holders lock native BTC on the Bitcoin mainnet (in a clever time-locked vault) and thereby “stake” BTC to Babylon, which then uses that as collateral to secure consumer PoS chains. Thus, Babylon’s security base is the value of Bitcoin (over $500B market cap), tapped in a trustless way (no wrapped BTC or custodians – it uses Bitcoin scripts to enforce slashing). In summary, EigenLayer relies on Ethereum’s economic security, Karak is multi-asset and multi-chain (a generic layer for any collateral), and Babylon extends Bitcoin’s proof-of-work security into PoS ecosystems.

Restaking Mechanism: In EigenLayer, restaking is opt-in via Ethereum contracts; slashing is programmatic and enforced by Ethereum consensus (honoring the EigenLayer contracts). Karak, as an independent L1, maintains its own restaking logic on its chain. Karak introduced the concept of Validation-as-a-Service (VaaS) – analogous to Eigen’s AVS – but with a universal validator marketplace across chains. Karak’s validators (operators) run its chain and any number of Distributed Secure Services (DSS), which are Karak’s equivalent of AVSs. A DSS might be a new app-specific blockchain or service that rents security from Karak’s staked asset pool. Karak’s innovation is standardizing requirements so that any chain or app (Ethereum, Solana, an L2, etc.) could plug in and use its validator network and varied collateral. Slashing in Karak would be handled by its protocol rules – since it can stake e.g. USDC, it presumably slashes a validator’s USDC if they misbehave on a service (the exact multi-asset slashing mechanics are complex and not public, but the idea is similar: each collateral can be taken away if violations are proven). Babylon’s mechanism is unique due to Bitcoin’s limitations: Bitcoin doesn’t support smart contracts to auto-slash, so Babylon uses cryptographic tricks. BTC is locked in a special output that requires a key. If a BTC-staking participant cheats (e.g. signs two conflicting blocks on a client chain), the protocol leverages an extractable one-time signature (EOTS) scheme to reveal the participant’s private key, allowing their locked BTC to be swept to a burn address. In simpler terms, misbehavior causes the BTC staker to effectively slash themselves, as the act of cheating gives away control of their deposit (which is then destroyed). Babylon’s Cosmos-based chain coordinates this process and communicates with partner chains (via IBC) to provide services like checkpointing and finality using BTC’s timestamps. In Babylon, the validators of the Babylon chain (called finality providers) are separate – they run the Babylon consensus and assist in relaying information to Bitcoin – but don’t provide economic security; the economic security comes purely from locked BTC.

Economic Model & Rewards: EigenLayer’s economic model is centered on Ethereum’s staking economy. Restakers earn AVS-specific rewards – these could be paid in ETH fees, the AVS’s own token, or other tokens depending on each AVS’s design. EigenLayer itself introduced the $EIGEN token largely for governance and to reward early participants, but AVSs are not required to use or pay in EIGEN (it’s not a gas token for them). The platform targets a free-market equilibrium where each AVS sets a reward rate to attract sufficient security. Karak appears to be launching its native token $KAR (not yet live as of early 2025) as the primary asset in its ecosystem. Karak raised $48M and was backed by major investors, implying $KAR will have value and likely be used for governance and possibly fee payments on the Karak network. However, Karak’s main promise is “no inflation” for new networks leveraging it – instead of issuing their own tokens for security, they tap into existing assets via Karak. So a new chain using Karak might pay validators in, say, its transaction fees (which could be in a stablecoin or in the chain’s native token if it has one) but would not need to continuously mint new tokens for staking rewards. Karak set up a validator marketplace where developers can post bounties/rewards for validators to restake assets and secure their service. This marketplace approach aims to make rewards more competitive and consistent rather than extremely high inflation followed by crash – theoretically reducing costs for developers and giving validators steady multi-chain income. Babylon’s economics differ as well: BTC stakers who lock their Bitcoin earn yield in the tokens of the networks they are securing. For example, if you stake BTC to help secure a Cosmos zone (one of Babylon’s client chains), you receive that zone’s staking rewards (its native staking token) as if you were a delegator there. Those partner chains benefit by getting an extra layer of security (checkpoints on Bitcoin, etc.), and in return they allocate a portion of their inflation or fees to BTC stakers via Babylon. In effect, Babylon acts as a hub where BTC holders can delegate security to many chains and get paid in many tokens. The Babylon chain itself has a token called $BABY, used to stake in Babylon’s own consensus (Babylon still needs its own PoS validators to run the chain’s infrastructure). $BABY is also likely used in governance and maybe to align incentives (for instance, finality providers stake BABY). But importantly, $BABY does not replace BTC as the source of security – it’s more for running the chain – whereas BTC is the collateral that backs the shared security service. As of May 2025, Babylon had successfully bootstrapped with over 50,000 BTC staked (~$5.5 billion) by BTC holders, making it one of the most secure Cosmos chains by capital. Those BTC stakers then earn staking rewards from multiple connected chains (e.g. Cosmos Hub’s ATOM, Osmosis’s OSMO, etc.), achieving diversified yield while holding BTC.

Strategic Focus and Use Cases: EigenLayer’s strategy has been Ethereum-centric, aiming to accelerate innovation within the Ethereum ecosystem. Its early target use cases (data availability, middleware like oracles, rollup sequencing) all enhance Ethereum or its rollups. It essentially supercharges Ethereum as a meta-layer of services, and now with its planned “multi-chain” support (added in 2025), EigenLayer will allow AVSs to run on other EVM chains or L2s while still using Ethereum’s validator set. This cross-chain verification means EigenLayer is evolving into a cross-chain security provider, but anchored in Ethereum (validators and staking still live on Ethereum for slashing). Karak positions itself as a globally extensible base layer for all kinds of applications – not just crypto infrastructure, but also real-world assets, financial markets, even government services, according to its marketing. The name “Global Base Layer for Programmable GDP” hints at an ambition to work with institutions and nation-states. Karak emphasizes integration of traditional finance and AI, suggesting it will pursue partnerships beyond the crypto-native realm. Technically, by supporting assets like stablecoins and potentially government currencies, Karak could enable, for example, a government to launch a blockchain secured by its own fiat token staked via Karak’s validators. Its support for enterprise and multiple jurisdictions is a differentiator. In essence, Karak is trying to be “restaking for everyone, on any chain, with any asset” – a broader net than EigenLayer’s Ethereum-first approach. Babylon’s focus is on bridging the Bitcoin and Cosmos (and broader PoS) ecosystems. It specifically enhances inter-chain security by providing Bitcoin’s immutability and economic weight to otherwise smaller proof-of-stake chains. One of Babylon’s killer apps is adding Bitcoin finality checkpoints to PoS chains, making it extremely hard for those chains to be attacked or reorganized without also attacking Bitcoin. Babylon thus markets itself as bringing “Bitcoin’s security to all of crypto”. Its near-term focus has been Cosmos SDK chains (which it calls Bitcoin Supercharged Networks in Phase 3), but the design is meant to be interoperable with Ethereum and rollups as well. Strategically, Babylon taps into the vast BTC holder base, giving them a yield option (BTC is otherwise a non-yielding asset) and at the same time offering chains access to the “gold standard” of crypto security (BTC + PoW). This is quite distinct from EigenLayer and Karak, which are more about leveraging PoS assets.

Table: EigenLayer vs Karak vs Babylon

Strategic Differences: EigenLayer benefits from Ethereum’s massive decentralized validator set and credibility, but it is limited to ETH-based security. It excels at serving Ethereum-oriented projects (many AVSs are Ethereum rollup or middleware projects). Karak’s strategy is to capture a larger market by being flexible in asset support and chain support – it’s not married to Ethereum and even pitches that developers can avoid being “confined exclusively to Ethereum for security”. This could attract projects in ecosystems like Arbitrum, Polygon, or even non-EVM chains that want a neutral security provider. Karak’s multi-asset approach also means it can tap into assets that have lower yields elsewhere; as co-founder Raouf Ben-Har noted, “Many assets have lower opportunity costs versus ETH… meaning [our services] have an easier path to sustainable yields.”. For example, staked ARB (Arbitrum’s token) currently has few uses; Karak could let ARB holders restake into securing new dApps, creating a win-win (yield for ARB holders, security for the dApp). This strategy, however, comes with technical complexity (managing different asset risks) and trust assumptions (bridging assets into Karak’s platform safely). Babylon’s strategy is distinct by focusing on Bitcoin – it is leveraging the largest crypto asset by market cap, which also has a very different community and use profile (long-term holders). Babylon basically unlocked a new staking source that was previously untapped: $1.2 trillion of BTC that could not natively stake. By doing so, it addresses a huge security pool and targets chains that value Bitcoin’s assurances. It also appeals to Bitcoin holders by giving them a way to earn yield without giving up custody of BTC. One might say Babylon is almost the inverse of EigenLayer: instead of extending Ethereum’s security outward, it is importing Bitcoin’s security into PoS networks. Strategically, it could unify the historically separate Bitcoin and DeFi worlds.

Each of these frameworks has trade-offs. EigenLayer currently enjoys a first-mover advantage in Ethereum restaking and a large TVL (~$20B restaked by late 2024), plus deeply integrated Ethereum community support. Karak is newer (mainnet launched April 2024) and aims to grow by covering niches EigenLayer doesn’t (non-ETH collateral, non-Ethereum chains). Babylon operates in the Cosmos arena and taps Bitcoin – it doesn’t compete with EigenLayer for ETH stakers, but rather offers an orthogonal service (some projects might use both). We are seeing a convergence where multiple restaking layers could even interoperate: e.g. an Ethereum L2 could use EigenLayer for ETH-based security and also accept BTC security via Babylon – demonstrating that these models are not mutually exclusive but part of a broader “shared security market”.

Recent Developments and Ecosystem Updates (2024–2025)​

EigenLayer’s Progress: Since its inception in 2021, EigenLayer has rapidly evolved from concept to a live network. It launched on Ethereum mainnet in stages – Stage 1 in mid-2023 enabled basic restaking, and by April 2024 the full EigenLayer protocol (with support for operators and initial AVSs) was deployed. The ecosystem growth has been substantial: as of early 2025 EigenLayer reports 29 AVSs live on mainnet (and 130+ in development) ranging from data layers to oracles. Over 200 operators and tens of thousands of restakers are participating, contributing to a restaked TVL that reached ~$20 billion by late 2024. A major milestone was the introduction of slashing and reward enforcement on mainnet in April 2025, marking the final step of EigenLayer’s security model coming into effect. This means AVSs can now truly penalize misbehavior and pay out rewards trustlessly, moving past the “trial phase” where these were turned off. Alongside this, EigenLayer implemented a series of upgrades: for example, the MOOCOW upgrade (July 2025) improved validator efficiency by allowing easier restake withdrawals and consolidation (leveraging Ethereum’s Pectra fork). Perhaps the most significant new feature is Multi-Chain Verification, launched in July 2025, which enables AVSs to operate across multiple chains (including L2s) while still using Ethereum-based security. This was demonstrated on Base Sepolia testnet and will roll out to mainnet, effectively turning EigenLayer into a cross-chain security provider (not just for Ethereum L1 apps). It addresses a prior limitation that EigenLayer AVSs had to post all data on Ethereum; now an AVS can run on, say, an Optimistic Rollup or another L1, and EigenLayer will verify proofs (using Merkle roots) back on Ethereum to slash or reward as needed. This greatly expands EigenLayer’s reach and performance (AVSs can run where it’s cheaper while keeping Ethereum security). In terms of community and governance, EigenLayer rolled out EigenGov in late 2024 – a council and ELIP (EigenLayer Improvement Proposal) framework to decentralize decision-making. The Protocol Council (5 members) now oversees critical changes with community input. Additionally, EigenLayer has been conscious of concerns raised by Ethereum’s core community. In response to Vitalik’s warnings, the team has published materials explaining how they avoid overloading Ethereum’s consensus, for instance by using the EIGEN token for any “subjective” services and leaving ETH restaking for purely objective slashing cases. This two-tier approach (ETH for clear-cut faults, EIGEN for more subjective or governance-led decisions) is still being refined, but shows EigenLayer’s commitment to aligning with Ethereum’s ethos.

On the ecosystem side, EigenLayer’s emergence has inspired a wave of innovation and discussion. By mid-2024, analysts noted restaking had become “a leading narrative within the Ethereum community”. Many DeFi and infrastructure projects started plotting how to leverage EigenLayer for security or additional yield. At the same time, community members are debating risk management: for example, Chorus One’s detailed risk report (April 2024) brought attention to operator centralization and cascade slashing risks, prompting further research and possibly features like stake distribution monitoring. The EIGEN token distribution was also a hot topic – in Q4 2024 EigenLayer conducted a “stake drop” where active Ethereum users and early EigenLayer participants received EIGEN, but it was non-transferrable initially. Some community members were unhappy with aspects of the drop (e.g. large portions allocated to VCs, and some DeFi protocols that integrated EigenLayer not being directly rewarded). This feedback has led the team to emphasize more community-centric incentives moving forward, and indeed the Programmatic Incentives introduced aim to continuously reward those actually restaking and operating. By 2025, EigenLayer is one of the fastest-growing developer ecosystems – even recognized in an Electric Capital report – and has secured major partnerships (e.g. with LayerZero, ConsenSys, Risc0) to drive adoption of AVSs. Overall, EigenLayer’s trajectory in 2024–2025 shows a maturing platform addressing early concerns and expanding functionality, solidifying its position as the pioneer of Ethereum restaking.

Karak and Other Competitors: Karak Network stepped into the spotlight with its mainnet launch in April 2024 and quickly positioned itself as a notable EigenLayer rival on Ethereum and beyond. Backed by large investors and even certain Ethereum stakeholders (Coinbase Ventures, among others), Karak’s promise of “restaking for everyone, on any chain, with any asset” garnered attention. In late 2024, Karak upgraded to a V2 mainnet with enhanced features for universal security, completing migrations across Arbitrum and Ethereum by November 2024. This indicates Karak expanded support for more assets and possibly improved its smart contracts or consensus. By early 2025, Karak had grown its user base via an XP incentive program (encouraging testnet participation, staking, etc., with the hope of a future $KAR airdrop). Community discussions around Karak often compare it to EigenLayer: Bankless noted in May 2024 that while Karak’s total value staked was still “nowhere near the size of EigenLayer,” it had seen rapid growth (4x in a month) possibly due to users seeking higher rewards or diversifying away from EigenLayer. Karak’s appeal lies in supporting assets like Pendle yield tokens, Arbitrum’s ARB, Mantle’s token, etc., which broadens the restaking market. As of 2025, Karak is likely focusing on onboarding more “Validation-as-a-Service” clients and possibly preparing the launch of its KAR token (its documentation suggests following official channels for token updates). The competition between EigenLayer and Karak remains friendly but significant – both aim to attract stakers and projects. If EigenLayer holds the ETH maximalist segment, Karak is appealing to multi-chain users and those with non-ETH assets looking for yield. We can expect Karak to announce partnerships in the coming year, perhaps with Layer2 networks or even institutional players given its “institutional-grade” branding. The restaking market is thus not a monopoly; rather, multiple platforms are finding niches, which could lead to a fragmented but rich ecosystem of shared security providers.

Babylon’s Launch and the BTC Staking Frontier: Babylon completed a major milestone in 2025 by activating its core functionality – Bitcoin staking for shared security. After a Phase-1 testnet and gradual rollout, Babylon’s Phase-2 mainnet went live in April 2025, and by May 2025 it reported over 50k BTC staked in the protocol. This is a remarkable achievement, effectively plugging in ~$5B of Bitcoin into the interchain security market. Babylon’s early adopter chains (the first “Bitcoin Supercharged Networks”) include several Cosmos-based chains that integrated Babylon’s light client and started relying on BTC checkpoint finality. The Babylon Genesis chain itself launched on April 10, 2025, secured by the new $BABY token staking, and one day later (April 11) the trustless BTC staking was piloted with an initial 1000 BTC cap. By April 24, 2025, BTC staking opened permissionlessly to all, and the cap was lifted. The smooth operation for the first weeks led the team to declare Bitcoin staking “successfully bootstrapped,” calling Babylon Genesis now “among the most secure L1s in the world in terms of staking market cap.”. With Phase-2 complete, Phase-3 aims to onboard many external networks as clients, turning them into BSNs (Bitcoin Supercharged Networks). This will involve interoperability modules so that Ethereum, its rollups, and any Cosmos chain can all use Babylon to draw security from BTC. The Babylon community – comprising Bitcoin holders, Cosmos devs, and others – has been actively discussing governance of the $BABY token (ensuring the Babylon chain remains neutral and reliable for all connected chains) and the economics (for instance, balancing BTC staking rewards among many consumer chains so that it’s attractive to BTC holders without over-subsidizing). One interesting development is Babylon’s support for things like Nexus Mutual cover (as per a May 2025 post) to offer insurance on BTC staking slashing, which could further entice participants. This shows the ecosystem maturing around risk management for this new paradigm.

Community and Cross-Project Discussions: As of 2025, a broader conversation is taking place about the future of shared security in crypto. Ethereum’s community largely welcomes EigenLayer but remains cautious; Vitalik’s blog post (May 2023) set the tone for careful delineation of what is acceptable. EigenLayer regularly engages the community via its forum, addressing questions like “Is EigenLayer overloading Ethereum’s consensus?” (short answer: they argue it is not, due to design safeguards). In the Cosmos community, Babylon sparked excitement as it potentially solves long-standing security issues (e.g. small zones suffering 51% attacks) without requiring them to join a shared-security hub like Polkadot or Cosmos Hub’s ICS. There is also interesting convergence: some Cosmos folks ask if Ethereum staking could ever power Cosmos chains (which is more EigenLayer’s domain), while Ethereum folks wonder if Bitcoin staking could secure Ethereum rollups (Babylon’s concept). We are seeing early signs of cross-pollination: for instance, ideas of using EigenLayer to restake ETH onto non-Ethereum chains (Symbiotic and Karak are steps in that direction) and using Babylon’s BTC staking as an option for Ethereum L2s. Even Solana has a restaking project (Solayer) that launched a soft test and hit caps quickly, showing the interest spans multiple ecosystems.

Governance developments across these projects include increasing community representation. EigenLayer’s council includes external community members now, and it has funded grants (via the Eigen Foundation) to Ethereum core devs, signaling goodwill back to Ethereum’s core. Karak’s governance is likely to revolve around the KAR token – currently, they run an off-chain XP system, but one can expect a more formal DAO once KAR is liquid. Babylon’s governance will be crucial as it coordinates between Bitcoin (which has no formal governance) and Cosmos chains (which have on-chain governance). It set up a Babylon Foundation and community forum to discuss parameters like unbonding periods for BTC, which require careful alignment with Bitcoin’s constraints.

In summary, by mid-2025 the restaking and shared security market has gone from theory to practice. EigenLayer is fully operational with real services and slashing, proving out the model on Ethereum. Karak has introduced a compelling multi-chain variant, broadening the design space and targeting new assets. Babylon has demonstrated that even Bitcoin can join the shared security party via clever cryptography, addressing a completely different segment of the market. The ecosystem is vibrant: new competitors (e.g. Symbiotic on Ethereum, Solayer on Solana, BounceBit using custodial BTC) are emerging, each experimenting with different trade-offs (Symbiotic aligning with Lido to use stETH and any ERC-20, BounceBit taking a regulated approach with wrapped BTC, etc.). This competitive landscape is driving rapid innovation – and importantly, discussion about standards and safety. Community forums and research groups are actively debating questions like: Should there be limits on restaked stake per operator? How to best implement cross-chain slashing proofs? Could restaking unintentionally increase systemic correlation between chains? All of these are being studied. The governance models are also evolving – EigenLayer’s move to a semi-decentralized council is one example of balancing agility and security in governance.

Looking ahead, the restaking paradigm is poised to become a foundation of Web3 infrastructure, much like how cloud services became essential in Web2. By commoditizing security, it enables smaller projects to launch with confidence and larger projects to optimize their capital use. The developments through 2025 show a promising yet cautious trajectory: the technology works and is scaling, but all players are mindful of risks. With Ethereum’s core devs, Cosmos builders, and even Bitcoiners now involved in shared security initiatives, it’s clear this market will only grow. We can expect closer collaboration across ecosystems (perhaps joint security pools or standardized slashing proofs) and, inevitably, regulatory clarity as regulators catch up to these multi-chain, multi-asset constructs. In the meantime, researchers and developers have a trove of new data from EigenLayer, Karak, Babylon, and others to analyze and improve upon, ensuring that the “restaking revolution” continues in a safe and sustainable manner.

Sources:

1. EigenLayer documentation and whitepaper – definition of restaking and AVS
2. Coinbase Cloud blog (May 2024) – EigenLayer overview, roles of restakers/operators/AVSs
3. Blockworks News (April 2024) – Karak founders on “universal restaking” vs EigenLayer
4. Ditto research (2023) – Comparison of EigenLayer, Symbiotic, Karak asset support
5. Messari Research (Apr 2024) – “Babylon: Bitcoin Shared Security”, BTC staking mechanism
6. HashKey Research (Jul 2024) – Babylon vs EigenLayer restaking yields
7. EigenLayer Forum (Dec 2024) – Discussion of Vitalik’s “Don’t overload Ethereum’s consensus” and EigenLayer’s approach
8. Blockworks News (Apr 2024) – Chorus One report on EigenLayer risks (slashing cascade, centralization)
9. Kairos Research (Oct 2023) – EigenLayer AVS overview and regulatory risk note
10. EigenCloud Blog (Jan 2025) – “2024 Year in Review” (EigenLayer stats, governance updates)
11. Blockworks News (Apr 2024) – Karak launch coverage and asset support
12. Babylon Labs Blog (May 2025) – “Phase-2 launch round-up” (Bitcoin staking live, 50k BTC staked)
13. Bankless (May 2024) – “The Restaking Competition” (EigenLayer vs Karak vs others)
14. Vitalik Buterin, “Don’t Overload Ethereum’s Consensus”, May 2023 – Guidance on validator reuse vs social consensus
15. Coinbase Developer Guide (Apr 2024) – Technical details on EigenLayer operation (EigenPods, delegation, AVS structure).

The Speed Revolution Ethereum Has Been Waiting For?​

In the high-stakes world of blockchain scaling solutions, a new contender has emerged that's generating both excitement and controversy. MegaETH is positioning itself as Ethereum's answer to ultra-fast chains like Solana—promising sub-millisecond latency and an astonishing 100,000 transactions per second (TPS).

But these claims come with significant trade-offs. MegaETH is making calculated sacrifices to "Make Ethereum Great Again," raising important questions about the balance between performance, security, and decentralization.

As infrastructure providers who've seen many promising solutions come and go, we at BlockEden.xyz have conducted this analysis to help developers and builders understand what makes MegaETH unique—and what risks to consider before building on it.

What Makes MegaETH Different?​

MegaETH is an Ethereum Layer-2 solution that has reimagined blockchain architecture with a singular focus: real-time performance.

While most L2 solutions improve on Ethereum's ~15 TPS by a factor of 10-100x, MegaETH aims for 1,000-10,000x improvement—speeds that would put it in a category of its own.

Revolutionary Technical Approach​

MegaETH achieves its extraordinary speed through radical engineering decisions:

1. Single Sequencer Architecture: Unlike most L2s that use multiple sequencers or plan to decentralize, MegaETH uses a single sequencer for ordering transactions, deliberately choosing performance over decentralization.

2. Optimized State Trie: A completely redesigned state storage system that can handle terabyte-level state data efficiently, even on nodes with limited RAM.

3. JIT Bytecode Compilation: Just-in-time compilation of Ethereum smart contract bytecode, bringing execution closer to "bare-metal" speed.

4. Parallel Execution Pipeline: A multi-core approach that processes transactions in parallel streams to maximize throughput.

5. Micro Blocks: Targeting ~1ms block times through continuous "streaming" block production rather than batch processing.

6. EigenDA Integration: Using EigenLayer's data availability solution instead of posting all data to Ethereum L1, reducing costs while maintaining security through Ethereum-aligned validation.

This architecture delivers performance metrics that seem almost impossible for a blockchain:

• Sub-millisecond latency (10ms target)
• 100,000+ TPS throughput
• EVM compatibility for easy application porting

Testing the Claims: MegaETH's Current Status​

As of March 2025, MegaETH's public testnet is live. The initial deployment began on March 6th with a phased rollout, starting with infrastructure partners and dApp teams before opening to broader user onboarding.

Early testnet metrics show:

• ~1.68 Giga-gas per second throughput
• ~15ms block times (significantly faster than other L2s)
• Support for parallel execution that will eventually push performance even higher

The team has indicated that the testnet is running in a somewhat throttled mode, with plans to enable additional parallelization that could double gas throughput to around 3.36 Ggas/sec, moving toward their ultimate target of 10 Ggas/sec (10 billion gas per second).

The Security and Trust Model​

MegaETH's approach to security represents a significant departure from blockchain orthodoxy. Unlike Ethereum's trust-minimized design with thousands of validating nodes, MegaETH embraces a centralized execution layer with Ethereum as its security backstop.

The "Can't Be Evil" Philosophy​

MegaETH employs an optimistic rollup security model with some unique characteristics:

1. Fraud Proof System: Like other optimistic rollups, MegaETH allows observers to challenge invalid state transitions through fraud proofs submitted to Ethereum.

2. Verifier Nodes: Independent nodes replicate the sequencer's computations and would initiate fraud proofs if discrepancies are found.

3. Ethereum Settlement: All transactions are eventually settled on Ethereum, inheriting its security for final state.

This creates what the team calls a "can't be evil" mechanism—the sequencer can't produce invalid blocks or alter state incorrectly without being caught and punished.

The Centralization Trade-off​

The controversial aspect: MegaETH runs with a single sequencer and explicitly has "no plans to ever decentralize the sequencer." This brings two significant risks:

1. Liveness Risk: If the sequencer goes offline, the network could halt until it recovers or a new sequencer is appointed.

2. Censorship Risk: The sequencer could theoretically censor certain transactions or users in the short term (though users could ultimately exit via L1).

MegaETH argues these risks are acceptable because:

• The L2 is anchored to Ethereum for final security
• Data availability is handled by multiple nodes in EigenDA
• Any censorship or fraud can be seen and challenged by the community

Use Cases: When Ultra-Fast Execution Matters​

MegaETH's real-time capabilities unlock use cases that were previously impractical on slower blockchains:

1. High-Frequency Trading and DeFi​

MegaETH enables DEXs with near-instant trade execution and order book updates. Projects already building include:

• GTE: A real-time spot DEX combining central limit order books and AMM liquidity
• Teko Finance: A money market for leveraged lending with rapid margin updates
• Cap: A stablecoin and yield engine that arbitrages across markets
• Avon: A lending protocol with orderbook-based loan matching

These DeFi applications benefit from MegaETH's throughput to operate with minimal slippage and high-frequency updates.

2. Gaming and Metaverse​

The sub-second finality makes fully on-chain games viable without waiting for confirmations:

• Awe: An open-world 3D game with on-chain actions
• Biomes: An on-chain metaverse similar to Minecraft
• Mega Buddies and Mega Cheetah: Collectible avatar series

Such applications can deliver real-time feedback in blockchain games, enabling fast-paced gameplay and on-chain PvP battles.

3. Enterprise Applications​

MegaETH's performance makes it suitable for enterprise applications requiring high throughput:

• Instantaneous payments infrastructure
• Real-time risk management systems
• Supply chain verification with immediate finality
• High-frequency auction systems

The key advantage in all these cases is the ability to run compute-intensive applications with immediate feedback while still being connected to Ethereum's ecosystem.

The Team Behind MegaETH​

MegaETH was co-founded by a team with impressive credentials:

• Li Yilong: PhD in computer science from Stanford specializing in low-latency computing systems
• Yang Lei: PhD from MIT researching decentralized systems and Ethereum connectivity
• Shuyao Kong: Former Head of Global Business Development at ConsenSys

The project has attracted notable backers, including Ethereum co-founders Vitalik Buterin and Joseph Lubin as angel investors. Vitalik's involvement is particularly noteworthy, as he rarely invests in specific projects.

Other investors include Sreeram Kannan (founder of EigenLayer), VC firms like Dragonfly Capital, Figment Capital, and Robot Ventures, and influential community figures such as Cobie.

Token Strategy: The Soulbound NFT Approach​

MegaETH introduced an innovative token distribution method through "soulbound NFTs" called "The Fluffle." In February 2025, they created 10,000 non-transferable NFTs representing at least 5% of the total MegaETH token supply.

Key aspects of the tokenomics:

• 5,000 NFTs were sold at 1 ETH each (raising ~$13-14 million)
• The other 5,000 NFTs were allocated to ecosystem projects and builders
• The NFTs are soulbound (cannot be transferred), ensuring long-term alignment
• Implied valuation of around $540 million, extremely high for a pre-launch project
• The team has raised approximately $30-40 million in venture funding

Eventually, the MegaETH token is expected to serve as the native currency for transaction fees and possibly for staking and governance.

How MegaETH Compares to Competitors​

vs. Other Ethereum L2s​

Compared to Optimism, Arbitrum, and Base, MegaETH is significantly faster but makes bigger compromises on decentralization:

• Performance: MegaETH targets 100,000+ TPS vs. Arbitrum's ~250 ms transaction times and lower throughput
• Decentralization: MegaETH uses a single sequencer vs. other L2s' plans for decentralized sequencers
• Data Availability: MegaETH uses EigenDA vs. other L2s posting data directly to Ethereum

vs. Solana and High-Performance L1s​

MegaETH aims to "beat Solana at its own game" while leveraging Ethereum's security:

• Throughput: MegaETH targets 100k+ TPS vs. Solana's theoretical 65k TPS (typically a few thousand in practice)
• Latency: MegaETH ~10 ms vs. Solana's ~400 ms finality
• Decentralization: MegaETH has 1 sequencer vs. Solana's ~1,900 validators

vs. ZK-Rollups (StarkNet, zkSync)​

While ZK-rollups offer stronger security guarantees through validity proofs:

• Speed: MegaETH offers faster user experience without waiting for ZK proof generation
• Trustlessness: ZK-rollups don't require trust in a sequencer's honesty, providing stronger security
• Future Plans: MegaETH may eventually integrate ZK proofs, becoming a hybrid solution

MegaETH's positioning is clear: it's the fastest option within the Ethereum ecosystem, sacrificing some decentralization to achieve Web2-like speeds.

The Infrastructure Perspective: What Builders Should Consider​

As an infrastructure provider connecting developers to blockchain nodes, BlockEden.xyz sees both opportunities and challenges in MegaETH's approach:

Potential Benefits for Builders​

1. Exceptional User Experience: Applications can offer instant feedback and high throughput, creating Web2-like responsiveness.

2. EVM Compatibility: Existing Ethereum dApps can port over with minimal changes, unlocking performance without rewrites.

3. Cost Efficiency: High throughput means lower per-transaction costs for users and applications.

4. Ethereum Security Backstop: Despite centralization at the execution layer, Ethereum settlement provides a security foundation.

Risk Considerations​

1. Single Point of Failure: The centralized sequencer creates liveness risk—if it goes down, so does your application.

2. Censorship Vulnerability: Applications could face transaction censorship without immediate recourse.

3. Early-Stage Technology: MegaETH's novel architecture hasn't been battle-tested at scale with real value.

4. Dependency on EigenDA: Using a newer data availability solution adds an additional trust assumption.

Infrastructure Requirements​

Supporting MegaETH's throughput will require robust infrastructure:

• High-capacity RPC nodes capable of handling the firehose of data
• Advanced indexing solutions for real-time data access
• Specialized monitoring for the unique architecture
• Reliable bridge monitoring for cross-chain operations

Conclusion: Revolution or Compromise?​

MegaETH represents a bold experiment in blockchain scaling—one that deliberately prioritizes performance over decentralization. Whether this approach succeeds depends on whether the market values speed more than decentralized execution.

The coming months will be critical as MegaETH transitions from testnet to mainnet. If it delivers on its performance promises while maintaining sufficient security, it could fundamentally reshape how we think about blockchain scaling. If it stumbles, it will reinforce why decentralization remains a core blockchain value.

For now, MegaETH stands as one of the most ambitious Ethereum scaling solutions to date. Its willingness to challenge orthodoxy has already sparked important conversations about what trade-offs are acceptable in pursuit of mainstream blockchain adoption.

At BlockEden.xyz, we're committed to supporting developers wherever they build, including high-performance networks like MegaETH. Our reliable node infrastructure and API services are designed to help applications thrive across the multi-chain ecosystem, regardless of which approach to scaling ultimately prevails.

Looking to build on MegaETH or need reliable node infrastructure for high-throughput applications? Contact Email: info@BlockEden.xyz to learn how we can support your development with our 99.9% uptime guarantee and specialized RPC services across 27+ blockchains.

The Web3 Scaling Problem​

The blockchain industry faces a persistent challenge: how do we scale to support millions of users without sacrificing security or decentralization?

Ethereum, the leading smart contract platform, processes roughly 15 transactions per second on its base layer. During periods of high demand, this limitation has led to exorbitant gas fees—sometimes exceeding $100 per transaction during NFT mints or DeFi farming frenzies.

This scaling bottleneck presents an existential threat to Web3 adoption. Users accustomed to the instant responsiveness of Web2 applications won't tolerate paying $50 and waiting 3 minutes just to swap tokens or mint an NFT.

Enter the solution that's rapidly reshaping blockchain architecture: Rollups-as-a-Service (RaaS).

Understanding Rollups-as-a-Service (RaaS)​

RaaS platforms enable developers to deploy their own custom blockchain rollups without the complexity of building everything from scratch. These services transform what would normally require a specialized engineering team and months of development into a streamlined, sometimes one-click deployment process.

Why does this matter? Because rollups are the key to blockchain scaling.

Rollups work by:

• Processing transactions off the main chain (Layer 1)
• Batching these transactions together
• Submitting compressed proofs of these transactions back to the main chain

The result? Drastically increased throughput and significantly reduced costs while inheriting security from the underlying Layer 1 blockchain (like Ethereum).

"Rollups don't compete with Ethereum—they extend it. They're like specialized Express lanes built on top of Ethereum's highway."

This approach to scaling is so promising that Ethereum officially adopted a "rollup-centric roadmap" in 2020, acknowledging that the future isn't a single monolithic chain, but rather an ecosystem of interconnected, purpose-built rollups.

Caldera: Leading the RaaS Revolution​

Among the emerging RaaS providers, Caldera stands out as a frontrunner. Founded in 2023 and having raised $25M from prominent investors including Dragonfly, Sequoia Capital, and Lattice, Caldera has quickly positioned itself as a leading infrastructure provider in the rollup space.

What Makes Caldera Different?​

Caldera distinguishes itself in several key ways:

1. Multi-Framework Support: Unlike competitors who focus on a single rollup framework, Caldera supports major frameworks like Optimism's OP Stack and Arbitrum's Orbit/Nitro technology, giving developers flexibility in their technical approach.

2. End-to-End Infrastructure: When you deploy with Caldera, you get a complete suite of components: reliable RPC nodes, block explorers, indexing services, and bridge interfaces.

3. Rich Integration Ecosystem: Caldera comes pre-integrated with 40+ Web3 tools and services, including oracles, faucets, wallets, and cross-chain bridges (LayerZero, Axelar, Wormhole, Connext, and more).

4. The Metalayer Network: Perhaps Caldera's most ambitious innovation is its Metalayer—a network that connects all Caldera-powered rollups into a unified ecosystem, allowing them to share liquidity and messages seamlessly.

5. Multi-VM Support: In late 2024, Caldera became the first RaaS to support the Solana Virtual Machine (SVM) on Ethereum, enabling Solana-like high-performance chains that still settle to Ethereum's secure base layer.

Caldera's approach is creating what they call an "everything layer" for rollups—a cohesive network where different rollups can interoperate rather than exist as isolated islands.

Real-World Adoption: Who's Using Caldera?​

Caldera has gained significant traction, with over 75 rollups in production as of late 2024. Some notable projects include:

• Manta Pacific: A highly scalable network for deploying zero-knowledge applications that uses Caldera's OP Stack combined with Celestia for data availability.

• RARI Chain: Rarible's NFT-focused rollup that processes transactions in under a second and enforces NFT royalties at the protocol level.

• Kinto: A regulatory-compliant DeFi platform with on-chain KYC/AML and account abstraction capabilities.

• Injective's inEVM: An EVM-compatible rollup that extends Injective's interoperability, connecting the Cosmos ecosystem with Ethereum-based dApps.

These projects highlight how application-specific rollups enable customization not possible on general-purpose Layer 1s. By late 2024, Caldera's collective rollups had reportedly processed over 300 million transactions for 6+ million unique wallets, with nearly $1 billion in total value locked (TVL).

How RaaS Compares: Caldera vs. Competitors​

The RaaS landscape is becoming increasingly competitive, with several notable players:

Conduit​

• Focuses exclusively on Optimism and Arbitrum ecosystems
• Emphasizes a fully self-serve, no-code experience
• Powers approximately 20% of Ethereum's mainnet rollups, including Zora

AltLayer​

• Offers "Flashlayers"—disposable, on-demand rollups for temporary needs
• Focuses on elastic scaling for specific events or high-traffic periods
• Demonstrated impressive throughput during gaming events (180,000+ daily transactions)

Sovereign Labs​

• Building a Rollup SDK focused on zero-knowledge technologies
• Aims to enable ZK-rollups on any base blockchain, not just Ethereum
• Still in development, positioning for the next wave of multi-chain ZK deployment

While these competitors excel in specific niches, Caldera's comprehensive approach—combining a unified rollup network, multi-VM support, and a focus on developer experience—has helped establish it as a market leader.

The Future of RaaS and Blockchain Scaling​

RaaS is poised to reshape the blockchain landscape in profound ways:

1. The Proliferation of App-Specific Chains​

Industry research suggests we're moving toward a future with potentially millions of rollups, each serving specific applications or communities. With RaaS lowering deployment barriers, every significant dApp could have its own optimized chain.

2. Interoperability as the Critical Challenge​

As rollups multiply, the ability to communicate and share value between them becomes crucial. Caldera's Metalayer represents an early attempt to solve this challenge—creating a unified experience across a web of rollups.

3. From Isolated Chains to Networked Ecosystems​

The end goal is a seamless multi-chain experience where users hardly need to know which chain they're on. Value and data would flow freely through an interconnected web of specialized rollups, all secured by robust Layer 1 networks.

4. Cloud-Like Blockchain Infrastructure​

RaaS is effectively turning blockchain infrastructure into a cloud-like service. Caldera's "Rollup Engine" allows dynamic upgrades and modular components, treating rollups like configurable cloud services that can scale on demand.

What This Means for Developers and BlockEden.xyz​

At BlockEden.xyz, we see enormous potential in the RaaS revolution. As an infrastructure provider connecting developers to blockchain nodes securely, we're positioned to play a crucial role in this evolving landscape.

The proliferation of rollups means developers need reliable node infrastructure more than ever. A future with thousands of application-specific chains demands robust RPC services with high availability—precisely what BlockEden.xyz specializes in providing.

We're particularly excited about the opportunities in:

1. Specialized RPC Services for Rollups: As rollups adopt unique features and optimizations, specialized infrastructure becomes crucial.

2. Cross-Chain Data Indexing: With value flowing between multiple rollups, developers need tools to track and analyze cross-chain activities.

3. Enhanced Developer Tools: As rollup deployment becomes simpler, the need for sophisticated monitoring, debugging, and analytics tools grows.

4. Unified API Access: Developers working across multiple rollups need simplified, unified access to diverse blockchain networks.

Conclusion: The Modular Blockchain Future​

The rise of Rollups-as-a-Service represents a fundamental shift in how we think about blockchain scaling. Rather than forcing all applications onto a single chain, we're moving toward a modular future with specialized chains for specific use cases, all interconnected and secured by robust Layer 1 networks.

Caldera's approach—creating a unified network of rollups with shared liquidity and seamless messaging—offers a glimpse of this future. By making rollup deployment as simple as spinning up a cloud server, RaaS providers are democratizing access to blockchain infrastructure.

At BlockEden.xyz, we're committed to supporting this evolution by providing the reliable node infrastructure and developer tools needed to build in this multi-chain future. As we often say, the future of Web3 isn't a single chain—it's thousands of specialized chains working together.

Looking to build on a rollup or need reliable node infrastructure for your blockchain project? Contact Email: info@BlockEden.xyz to learn how we can support your development with our 99.9% uptime guarantee and specialized RPC services across 27+ blockchains.

For years, the Ethereum Name Service (ENS) was seen by many as a niche tool for crypto enthusiasts—a way to replace long, clunky wallet addresses with human-readable .eth names. But in 2025, that perception is outdated. ENS has evolved into a foundational layer for programmable brand identity, turning a simple name into a portable, verifiable, and unified anchor for your company’s entire digital presence.

It’s no longer just about brand.eth. It’s about making brand.com crypto-aware, issuing verifiable roles to employees, and building trust with customers through a single, canonical source of truth. This is the guide for businesses on why ENS now matters and how to implement it today.

TL;DR

• ENS turns a name (e.g., brand.eth or brand.com) into a programmable identity that maps to wallets, apps, websites, and verified profile data.
• You don’t have to abandon your DNS domain: with Gasless DNSSEC, a brand.com can function as an ENS name without on-chain fees at setup.
• .eth pricing is transparent and renewal-based (shorter names cost more), and the revenue funds the public-good protocol via the ENS DAO.
• Subnames like alice.brand.eth or support.brand.com let you issue roles, perks, and access—time-boxed and constrained by NameWrapper “fuses” and expiry.
• ENS is moving core functionality to L2 in ENSv2, with trust-minimized resolution via CCIP‑Read—important for cost, speed, and scale.

Why ENS Matters for Modern Companies​

For businesses, identity is fragmented. You have a domain name for your website, social media handles for marketing, and separate accounts for payments and operations. ENS offers a way to unify these, creating a single, authoritative identity layer.

• Unified, Human-Readable Identity: At its core, ENS maps a memorable name to cryptographic addresses. But its power extends far beyond a single blockchain. With multi-chain support, your brand.eth can point to your Bitcoin treasury, Solana operations wallet, and Ethereum smart contracts simultaneously. Your brand’s name becomes the single, user-friendly anchor for payments, applications, and profiles across the web3 ecosystem.
• Deep Ecosystem Integration: ENS isn't a speculative bet on a niche protocol; it's a web3 primitive. It is natively supported across major wallets (Coinbase Wallet, MetaMask), browsers (Brave, Opera), and decentralized applications (Uniswap, Aave). When partners like GoDaddy integrate ENS, it signals a convergence between web2 and web3 infrastructure. By adopting ENS, you are plugging your brand into a vast, interoperable network.
• Rich, Verifiable Profile Data: Beyond addresses, ENS names can store standardized text records for profile information like an avatar, email, social media handles, and a website URL. This turns your ENS name into a canonical, machine-readable business card. Your support, marketing, and engineering tools can all pull from the same verified source, ensuring consistency and building trust with your users.

Two Onramps: .eth vs. “Bring Your Own DNS”​

Getting started with ENS is flexible, offering two primary paths that can and should be used together.

1. Register brand.eth​

This is the web3-native approach. Registering a .eth name gives you a crypto-native asset that signals your brand's commitment to the ecosystem. The process is straightforward and transparent.

• Clear Fee Schedule: Fees are paid annually in ETH to prevent squatting and fund the protocol. Prices are based on scarcity: 5+ character names are just $5/year, 4-character names are$160/year, and 3-character names are $640/year.
• Set a Primary Name: Once you own brand.eth, you should set it as the "Primary Name" (also known as a reverse record) for your main company wallet. This is a critical step that allows wallets and dapps to display your memorable name instead of your long address, dramatically improving user experience and trust.

2. Enhance brand.com Inside ENS (No Migration Required)​

You don't need to abandon your valuable web2 domain. Thanks to a feature called Gasless DNSSEC, you can link your existing DNS domain to a crypto wallet, effectively upgrading it into a fully functional ENS name.

• Zero On-chain Cost for Owners: The process allows a brand.com to become resolvable within the ENS ecosystem without requiring the domain owner to submit an on-chain transaction.
• Mainstream Registrar Support: GoDaddy has already streamlined this with a one-click “Crypto Wallet” record, powered by this ENS feature. Other major registrars that support DNSSEC can also be configured to work with ENS.

Pragmatic advice: Do both. Use brand.eth for your web3-native audience and treasury operations. Simultaneously, bring brand.com into ENS to unify your entire brand footprint and provide a seamless bridge for your existing user base.

Zero-to-One Rollout: A One-Week Plan​

Deploying ENS doesn't have to be a multi-quarter project. A focused team can establish a robust presence in about a week.

• Day 1–2: Name & Policy Claim brand.eth and link your existing DNS name using the Gasless DNSSEC method. This is also the time to establish an internal policy on canonical spelling, use of emojis, and normalization rules. ENS uses a standard called ENSIP-15 to handle name variations, but it's crucial to be aware of homoglyphs (characters that look alike) to prevent phishing attacks against your brand.

• Day 3: Primary Names & Wallets For your company’s treasury, operations, and payment wallets, set the Primary Name (reverse record) so that they resolve to treasury.brand.eth or a similar name. Use this opportunity to populate multi-coin address records (BTC, SOL, etc.) to ensure payments sent to your ENS name are correctly routed, no matter the chain.

• Day 4: Profile Data Fill out the standardized text records on your primary ENS name. At a minimum, set email, url, com.twitter, and avatar. An official avatar adds immediate visual verification in supported wallets. For enhanced security, you can also add a public PGP key.

• Day 5: Subnames Begin issuing subnames like alice.brand.eth for employees or support.brand.com for departments. Use the NameWrapper to apply security "fuses" that can, for example, prevent the subname from being transferred. Set an expiry date to automatically revoke access when a contract ends or an employee leaves.

• Day 6: Website / Docs Decentralize your web presence. Pin your press kit, terms of service, or a status page to a decentralized storage network like IPFS or Arweave and link it to your ENS name via the contenthash record. For universal access, users can resolve this content through public gateways like eth.limo.

• Day 7: Integrate in Product Start using ENS in your own application. Use libraries like viem with ensjs to resolve names, normalize user inputs, and show avatars. When looking up addresses, perform a reverse lookup to display the user's Primary Name. Be sure to use a resolver gateway that supports CCIP-Read to ensure your app is future-proof for ENSv2's L2 architecture.

Common Patterns That Pay Off Fast​

Once set up, ENS unlocks powerful, practical use cases that deliver immediate value.

• Safer, Simpler Payments: Instead of copying and pasting a long, error-prone address, put pay.brand.eth on your invoices. By publishing all your multi-coin addresses under one name, you drastically reduce the risk of customers sending funds to the wrong address or chain.
• Authentic Support & Social Presence: Publish your official social media handles in your ENS text records. Some tools can already verify these records, creating a strong defense against impersonation. A support.brand.eth name can point directly to a dedicated support wallet or secure messaging endpoint.
• Decentralized Web Presence: Host a tamper-evident status page or critical documentation at brand.eth using the contenthash. Because the link is on-chain, it cannot be taken down by a single provider, offering a higher degree of resilience for essential information.
• A Programmable Org Chart: Issue employee.brand.eth subnames that grant access to internal tools or token-gated channels. With NameWrapper fuses and expiry dates, you can create a dynamic, programmable, and automatically-revocable identity system for your entire organization.
• Gas-Light User Experiences: For high-volume use cases like issuing loyalty IDs or tickets as subnames, on-chain transactions are too slow and expensive. Use an offchain resolver with CCIP-Read. This standard allows ENS names to be resolved from L2s or even traditional databases in a trust-minimized way. Industry leaders like Uniswap (uni.eth) and Coinbase (cb.id) already use this pattern to scale their user identity systems.

Security & Governance You Shouldn’t Skip​

Treat your primary ENS name like you treat your primary domain name: as a critical piece of company infrastructure.

• Separate “Owner” from “Manager”: This is a core security principle. The "Owner" role, which has the power to transfer the name, should be secured in a cold storage multisig wallet. The "Manager" role, which can update day-to-day records like IP addresses or avatars, can be delegated to a more accessible hot wallet. This separation of powers drastically reduces the blast radius of a compromised key.
• Use NameWrapper Protections: When issuing subnames, use the NameWrapper to burn fuses like CANNOT_TRANSFER to lock them to a specific employee or CANNOT_UNWRAP to enforce your governance policies. All permissions are governed by an expiry date you control, providing time-boxed access by default.
• Monitor Renewals: Don’t lose your .eth name because of a missed payment. Calendar your renewal dates and remember that while .eth names have a 90-day grace period, the policies for subnames are entirely up to you.

Developer Quickstart (TypeScript)​

Integrating ENS resolution into your app is simple with modern libraries like viem. This snippet shows how to look up an address from a name, or a name from an address.

import { createPublicClient, http } from "viem";
import { mainnet } from "viem/chains";
import { normalize, getEnsAddress, getEnsName, getEnsAvatar } from "viem/ens";

const client = createPublicClient({ chain: mainnet, transport: http() });

export async function lookup(nameOrAddress: string) {
  if (nameOrAddress.endsWith(".eth") || nameOrAddress.includes(".")) {
    // Name → Address (normalize input per ENSIP-15)
    const name = normalize(nameOrAddress);
    const address = await getEnsAddress(client, {
      name,
      gatewayUrls: ["https://ccip.ens.xyz"],
    });
    const avatar = await getEnsAvatar(client, { name });
    return { type: "name", name, address, avatar };
  } else {
    // Address → Primary Name (reverse record)
    const name = await getEnsName(client, {
      address: nameOrAddress as `0x${string}`,
      gatewayUrls: ["https://ccip.ens.xyz"],
    });
    return { type: "address", address: nameOrAddress, name };
  }
}

Two key takeaways from this code:

• normalize is essential for security. It enforces ENS naming rules and helps prevent common phishing and spoofing attacks from look-alike names.
• gatewayUrls points to a Universal Resolver that supports CCIP-Read. This makes your integration forward-compatible with the upcoming move to L2 and off-chain data.

For developers building with React, the ENSjs library offers higher-level hooks and components that wrap these common flows, making integration even faster.

Choosing and Protecting Your Name: Brand & Legal​

• Normalization and Usability: Familiarize yourself with ENSIP-15 normalization. Set clear internal guidelines on the use of emojis or non-ASCII characters, and actively screen for "confusables" that could be used to impersonate your brand.
• Trademark Reality Check: .eth names operate outside of the traditional ICANN framework and its UDRP dispute resolution process. Trademark owners cannot rely on the same legal rails they use for DNS domains. Therefore, defensive registration of key brand terms is a prudent strategy. (This is not legal advice; consult with counsel.)

What’s Next: ENSv2 and the Move to L2​

The ENS protocol is not static. The next major evolution, ENSv2, is underway.

• Protocol Moving to L2: To reduce gas costs and increase speed, the core ENS registry will be migrated to a Layer 2 network. Name resolution will be bridged back to L1 and other chains via CCIP-Read and cryptographic proof systems. This will make registering and managing names significantly cheaper, unlocking richer application patterns.
• Seamless Migration Plan: The ENS DAO has published a detailed migration plan to ensure existing names can be moved to the new system with minimal friction. If you operate at scale, this is a key development to follow.

Implementation Checklist​

Use this checklist to guide your team’s implementation.

• Claim brand.eth; link brand.com via Gasless DNSSEC.
• Park ownership of the name in a secure multisig; delegate manager roles.
• Set a Primary Name on all organizational wallets.
• Publish multi-coin addresses for payments.
• Fill out text records (email, url, social, avatar).
• Issue subnames for teams, employees, and services using fuses and expiry.
• Host a minimal decentralized site (e.g., status page) and set the contenthash.
• Integrate ENS resolution (viem/ensjs) into your product; normalize all inputs.
• Calendar all .eth name renewal dates and monitor expiry.

ENS is ready for business. It has moved beyond a simple naming system to become a critical piece of infrastructure for any company building for the next generation of the internet. By establishing a programmable and persistent identity, you lower risk, create smoother user experiences, and ensure your brand is ready for a decentralized future.

In 2024, something remarkable is happening: Big Tech is not just exploring blockchain; it's deploying critical workloads on Ethereum's mainnet. Microsoft processes over 100,000 supply chain verifications daily through their Ethereum-based system, JP Morgan's pilot has settled $2.3 billion in securities transactions, and Ernst & Young's blockchain division has grown 300% year-over-year building on Ethereum.

But the most compelling story isn't just that these giants are embracing public blockchains—it's why they're doing it now and what their $4.2 billion in combined Web3 investments tells us about the future of enterprise technology.

The Decline of Private Blockchains Was Inevitable (But Not for the Reasons You Think)​

The fall of private blockchains like Hyperledger and Quorum has been widely documented, but their failure wasn't just about network effects or being "expensive databases." It was about timing and ROI.

Consider the numbers: The average enterprise private blockchain project in 2020-2022 cost $3.7 million to implement and yielded just $850,000 in cost savings over three years (according to Gartner). In contrast, early data from Microsoft's public Ethereum implementation shows a 68% reduction in implementation costs and 4x greater cost savings.

Private blockchains were a technological anachronism, created to solve problems enterprises didn't yet fully understand. They aimed to de-risk blockchain adoption but instead created isolated systems that couldn't deliver value.

The Three Hidden Forces Accelerating Enterprise Adoption (And One Major Risk)​

While Layer 2 scalability and regulatory clarity are often cited as drivers, three deeper forces are actually reshaping the landscape:

1. The "AWSification" of Web3​

Just as AWS abstracted infrastructure complexity (reducing average deployment times from 89 days to 3 days), Ethereum's Layer 2s have transformed blockchain into consumable infrastructure. Microsoft's supply chain verification system went from concept to production in 45 days on Arbitrum—a timeline that would have been impossible two years ago.

The data tells the story: Enterprise deployments on Layer 2s have grown 780% since January 2024, with average deployment times falling from 6 months to 6 weeks.

2. The Zero-Knowledge Revolution​

Zero-knowledge proofs haven't just solved privacy—they've reinvented the trust model. The technological breakthrough can be measured in concrete terms: EY's Nightfall protocol can now process private transactions at 1/10th the cost of previous privacy solutions while maintaining complete data confidentiality.

Current enterprise ZK implementations include:

• Microsoft: Supply chain verification (100k tx/day)
• JP Morgan: Securities settlement ($2.3B processed)
• EY: Tax reporting systems (250k entities)

3. Public Chains as a Strategic Hedge​

The strategic value proposition is quantifiable. Enterprises spending on cloud infrastructure face average vendor lock-in costs of 22% of their total IT budget. Building on public Ethereum reduces this to 3.5% while maintaining the benefits of network effects.

The Counter Argument: The Centralization Risk​

However, this trend faces one significant challenge: the risk of centralization. Current data shows that 73% of enterprise Layer 2 transactions are processed by just three sequencers. This concentration could recreate the same vendor lock-in problems enterprises are trying to escape.

The New Enterprise Technical Stack: A Detailed Breakdown​

The emerging enterprise stack reveals a sophisticated architecture:

Settlement Layer (Ethereum Mainnet):

• Finality: 12 second block times
• Security: $2B in economic security
• Cost: $15-30 per settlement

Execution Layer (Purpose-built L2s):

• Performance: 3,000-5,000 TPS
• Latency: 2-3 second finality
• Cost: $0.05-0.15 per transaction

Privacy Layer (ZK Infrastructure):

• Proof Generation: 50ms-200ms
• Verification Cost: ~$0.50 per proof
• Data Privacy: Complete

Data Availability:

• Ethereum: $0.15 per kB
• Alternative DA: $0.001-0.01 per kB
• Hybrid Solutions: Growing 400% QoQ

What's Next: Three Predictions for 2025​

1. Enterprise Layer 2 Consolidation The current fragmentation (27 enterprise-focused L2s) will consolidate to 3-5 dominant platforms, driven by security requirements and standardization needs.

2. Privacy Toolkit Explosion Following EY's success, expect 50+ new enterprise privacy solutions by Q4 2024. Early indicators show 127 privacy-focused repositories under development by major enterprises.

3. Cross-Chain Standards Emergence Watch for the Enterprise Ethereum Alliance to release standardized cross-chain communication protocols by Q3 2024, addressing the current fragmentation risks.

Why This Matters Now​

The mainstreaming of Web3 marks the evolution from "permissionless innovation" to "permissionless infrastructure." For enterprises, this represents a $47 billion opportunity to rebuild critical systems on open, interoperable foundations.

Success metrics to watch:

• Enterprise TVL Growth: Currently $6.2B, growing 40% monthly
• Development Activity: 4,200+ active enterprise developers
• Cross-chain Transaction Volume: 15M monthly, up 900% YTD
• ZK Proof Generation Costs: Falling 12% monthly

For Web3 builders, this isn't just about adoption—it's about co-creating the next generation of enterprise infrastructure. The winners will be those who can bridge the gap between crypto innovation and enterprise requirements while maintaining the core values of decentralization.

Maximal Extractable Value (MEV) is not just a trader’s bogeyman—it’s the economic engine quietly shaping how blocks get built, how wallets route orders, and how protocols design markets. Here’s a pragmatic guide for founders, engineers, traders, and validators.

TL;DR​

• What MEV is: Extra value a block producer (validator/sequencer) or their partners can extract by reordering, inserting, or excluding transactions beyond base rewards and gas.
• Why it exists: Public mempools, deterministic execution, and transaction-order dependencies (e.g., AMM slippage) create profitable ordering games.
• How modern MEV works: A supply chain—wallets & orderflow auctions → searchers → builders → relays → proposers—formalized by Proposer-Builder Separation (PBS) and MEV-Boost.
• User protections today: Private transaction submission and Order Flow Auctions (OFAs) can reduce sandwich risk and share price improvement with users.
• What’s next (as of September 2025): Enshrined PBS, inclusion lists, MEV-burn, SUAVE, and shared sequencers for L2s—all aimed at fairness and resilience.

The Five-Minute Mental Model​

Think of blockspace as a scarce resource sold every 12 seconds on Ethereum. When you send a transaction, it lands in a public waiting area called the mempool. Some transactions, particularly DEX swaps, liquidations, and arbitrage opportunities, have ordering-dependent payoffs. Their outcome and profitability change based on where they land in a block relative to other transactions. This creates a high-stakes game for whoever controls the ordering.

The maximum potential profit from this game is Maximal Extractable Value (MEV). A clean, canonical definition is:

“The maximum value extractable from block production in excess of the standard block reward and gas fees by including, excluding, and changing the order of transactions.”

This phenomenon was first formalized in the 2019 academic paper “Flash Boys 2.0,” which documented the chaotic "priority gas auctions" (where bots would bid up gas fees to get their transaction included first) and highlighted the risks this posed to consensus stability.

A Quick Taxonomy (With Examples)​

MEV isn't a single activity but a category of strategies. Here are the most common ones:

• DEX Arbitrage (Backrunning): Imagine a large swap on Uniswap causes the price of ETH to drop relative to its price on Curve. An arbitrageur can buy the cheap ETH on Uniswap and sell it on Curve for an instant profit. This is a "backrun" because it happens immediately after the price-moving transaction. This form of MEV is generally considered beneficial as it helps keep prices consistent across markets.
• Sandwiching: This is the most infamous and directly harmful form of MEV. An attacker spots a user's large buy order in the mempool. They frontrun the user by buying the same asset just before them, pushing the price up. The victim's trade then executes at this worse, higher price. The attacker then immediately backruns the victim by selling the asset, capturing the price difference. This exploits the user's specified slippage tolerance.
• Liquidations: In lending protocols like Aave or Compound, positions become under-collateralized if the value of their collateral drops. These protocols offer a bonus to whoever is first to liquidate the position. This creates a race among bots to be the first to call the liquidation function and claim the reward.
• NFT Mint “Gas Wars” (Legacy Pattern): In hyped NFT mints, a race ensues to secure a limited-supply token. Bots would compete fiercely for the earliest slots in a block, often bidding up gas prices to astronomical levels for the entire network.
• Cross-Domain MEV: As activity fragments across Layer 1s, Layer 2s, and different rollups, opportunities arise to profit from price differences between these isolated environments. This is a rapidly growing and complex area of MEV extraction.

The Modern MEV Supply Chain (Post-Merge)​

Before the Merge, miners controlled transaction ordering. Now, validators do. To prevent validators from becoming overly centralized and specialized, the Ethereum community developed Proposer-Builder Separation (PBS). This principle splits the job of proposing a block for the chain from the complex job of building the most profitable block.

In practice today, most validators use middleware called MEV-Boost. This software lets them outsource block building to a competitive market. The high-level flow looks like this:

1. User/Wallet: A user initiates a transaction, either sending it to the public mempool or to a private RPC endpoint that offers protection.
2. Searchers/Solvers: These are sophisticated actors who constantly monitor the mempool for MEV opportunities. They create "bundles" of transactions (e.g., a frontrun, a victim's trade, and a backrun) to capture this value.
3. Builders: These are highly specialized entities that aggregate bundles from searchers and other transactions to construct the most profitable block possible. They compete against each other to create the highest-value block.
4. Relays: These act as trusted middlemen. Builders submit their blocks to relays, which check them for validity and hide the contents from the proposer until it's signed. This prevents the proposer from stealing the builder's hard work.
5. Proposer/Validator: The validator running MEV-Boost queries multiple relays and simply chooses the most profitable block header offered. They sign it blindly, without seeing the contents, and collect the payment from the winning builder.

While PBS has successfully broadened access to block building, it has also led to centralization among a small set of high-performance builders and relays. Recent studies show that a handful of builders produce the vast majority of blocks on Ethereum, which is an ongoing concern for the network's long-term decentralization and censorship resistance.

Why MEV Can Be Harmful​

• Direct User Cost: Sandwich attacks and other forms of frontrunning result in worse execution quality for users. You pay more for an asset or receive less than you should have, with the difference being captured by a searcher.
• Consensus Risk: In extreme cases, MEV can threaten the stability of the blockchain itself. Before the Merge, "time-bandit" attacks were a theoretical concern where miners could be incentivized to re-organize the blockchain to capture a past MEV opportunity, undermining finality.
• Market Structure Risk: The MEV supply chain can create powerful incumbents. Exclusive order flow deals between wallets and builders can create paywalls for user transactions, entrenching builder/relay oligopolies and threatening the core principles of neutrality and censorship resistance.

What Actually Works Today (Practical Mitigations)​

You are not powerless against harmful MEV. A suite of tools and best practices has emerged to protect users and align the ecosystem.

For Users and Traders​

• Use a Private Submission Path: Services like Flashbots Protect offer a "protect" RPC endpoint for your wallet. Sending your transaction through it keeps it out of the public mempool, making it invisible to sandwich bots. Some services can even refund you a portion of the MEV extracted from your trade.
• Prefer OFA-Backed Routers: Order Flow Auctions (OFAs) are a powerful defense. Instead of sending your swap to the mempool, routers like CoW Swap or UniswapX send your intent to a competitive marketplace of solvers. These solvers compete to give you the best possible price, effectively returning any potential MEV back to you as price improvement.
• Tighten Slippage: For illiquid pairs, manually set a low slippage tolerance (e.g., 0.1%) to limit the maximum profit a sandwich attacker can extract. Breaking large trades into smaller chunks can also help.

For Wallets & Dapps​

• Integrate an OFA: By default, route user transactions through an Order Flow Auction. This is the most effective way to protect users from sandwich attacks and provide them with superior execution quality.
• Offer Private RPC as Default: Make protected RPCs the default setting in your wallet or dapp. Allow power users to configure their builder and relay preferences to fine-tune the trade-off between privacy and inclusion speed.
• Measure Execution Quality: Don't just assume your routing is optimal. Benchmark your execution against public mempool routing and quantify the price improvement gained from OFAs and private submission.

For Validators​

• Run MEV-Boost: Participate in the PBS market to maximize your staking rewards.
• Diversify: Connect to a diverse set of relays and builders to avoid dependence on a single provider and enhance network resilience. Monitor your rewards and block inclusion rates to ensure you are well-connected.

L2s & the Rise of SEV (Sequencer Extractable Value)​

Layer 2 rollups don't eliminate MEV; they just change its name. Rollups concentrate ordering power in a single entity called the sequencer, creating Sequencer Extractable Value (SEV). Empirical research shows that MEV is widespread on L2s, though often with lower profit margins than on L1.

To combat the centralization risk of a single sequencer per rollup, concepts like shared sequencers are emerging. These are decentralized marketplaces that allow multiple rollups to share a single, neutral entity for transaction ordering, aiming to arbitrate cross-rollup MEV more fairly.

What’s Coming Next (And Why It Matters)​

The work to tame MEV is far from over. Several major protocol-level upgrades are on the horizon:

• Enshrined PBS (ePBS): This aims to move Proposer-Builder Separation directly into the Ethereum protocol itself, reducing the reliance on trusted, centralized relays and hardening the network's security guarantees.
• Inclusion Lists (EIP-7547): This proposal gives proposers a way to force a builder to include a specific set of transactions. It's a powerful tool to combat censorship, ensuring that even transactions with low fees can eventually make it onto the chain.
• MEV-Burn: Similar to how EIP-1559 burns a portion of the base gas fee, MEV-burn proposes to burn a portion of builder payments. This would smooth out MEV revenue spikes, reduce incentives for destabilizing behavior, and redistribute value back to all ETH holders.
• SUAVE (Single Unifying Auction for Value Expression): A project by Flashbots to create a decentralized, privacy-preserving auction layer for orderflow. The goal is to create a more open and fair market for block building and combat the trend toward exclusive, centralized deals.
• OFA Standardization: As auctions become the norm, work is underway to create formal metrics and open tooling to quantify and compare the price improvement offered by different routers, raising the bar for execution quality across the entire ecosystem.

A Founder’s Checklist (Ship MEV-Aware Products)​

• Default to Privacy: Route user flow through private submission or encrypted intents-based systems.
• Design for Auctions, Not Races: Avoid "first-come, first-served" mechanics that create latency games. Leverage batch auctions or OFAs to create fair and efficient markets.
• Instrument Everything: Log slippage, effective price versus oracle price, and the opportunity cost of your routing decisions. Be transparent with your users about their execution quality.
• Diversify Dependencies: Rely on multiple builders and relays today. Prepare your infrastructure for the transition to enshrined PBS tomorrow.
• Plan for L2s: If you're building a multichain application, account for SEV and cross-domain MEV in your design.

Developer FAQ​

• Is MEV “bad” or “illegal”? MEV is an unavoidable byproduct of open, deterministic blockchain markets. Some forms, like arbitrage and liquidations, are essential for market efficiency. Others, like sandwiching, are purely extractive and harmful to users. The goal isn't to eliminate MEV but to design mechanisms that minimize the harm and align extraction with user benefit and network security. Its legal status is complex and varies by jurisdiction.
• Does private transaction submission guarantee no sandwiches? It significantly reduces your exposure by keeping your transaction out of the public mempool where most bots are looking. When combined with an OFA, it's a very strong defense. However, no system is perfect, and guarantees depend on the specific policies of the private relay and builders you use.
• Why not just “turn MEV off”? You can't. As long as there are on-chain markets with price inefficiencies (which is always), there will be profit in correcting them. Trying to eliminate it entirely would likely break useful economic functions. The more productive path is to manage and redistribute it through better mechanism design like ePBS, inclusion lists, and MEV-burn.

Further Reading​

• Canonical definition & overview: Ethereum.org—MEV docs
• Origins & risks: Flash Boys 2.0 (Daian et al., 2019)
• PBS/MEV-Boost primer: Flashbots docs and MEV-Boost in a Nutshell
• OFA research: Uniswap Labs—Quantifying Price Improvement in Order Flow Auctions
• ePBS & MEV-burn: Ethereum Research forum discussions
• L2 MEV evidence: Empirical analyses across major rollups (e.g., "Analyzing the Extraction of MEV Across Layer-2 Rollups")

Bottom Line​

MEV isn’t a glitch; it’s an incentive gradient inherent to blockchains. The winning approach is not denial—it’s mechanism design. The goal is to make value extraction contestable, transparent, and user-aligned. If you’re building, bake this awareness into your product from day one. If you’re trading, insist your tools do it for you. The ecosystem is rapidly converging on this more mature, resilient future—now is the time to design for it.

Ethereum, the world's most adopted blockchain platform for smart contracts, is known for its regular upgrades, each bringing forth new features, parameter adjustments, or enhanced security. These upgrades, driven by both proactive innovation and the need to mitigate potential security threats, have punctuated Ethereum's evolution over the years.

Before the Ethereum merge last September, the platform had seen 14 upgrades. Notably, a reactive upgrade occurred in 2016 after the DAO Fork incident when Ethereum Classic (ETC) emerged following a cyber-attack that jeopardized the DAO project's ETH funding.

Over the past few years, significant upgrades have taken place. The London upgrade in August 2020 introduced EIP-1599, introducing ETH burning and dynamic adjustment of the Base Fee for every transaction. In September 2022, the Paris upgrade transitioned Ethereum's consensus mechanism from Proof of Work (POW) to Proof of Stake (POS), signaling the end of the machine mining era.

After the Shanghai upgrade, Ethereum's core development team announced that the most important update this year would be the Cancun upgrade, expected to occur later this year.

Cancun Upgrade: What Is It and Why Does It Matter?​

Named after the city that hosted the Ethereum Developer Conference (Devcon), the upcoming Cancun upgrade will implement crucial improvements to the Ethereum network.

The star of the upgrade, EIP-4844, aims to allow Ethereum nodes to temporarily store and retrieve off-chain data, fulfilling the data and storage needs of blockchain applications. If successfully implemented, EIP-4844 is expected to reduce the costs of Layer 2 (L2) rollup solutions. Reportedly, EIP-4844 has already been tested on four development networks, with a fifth testing network about to launch.

Originally intended for completion during the Shanghai upgrade, EIP-4844 was postponed to the Cancun upgrade. Developers have also agreed to include EIP-6780 (preparing for future application of Verkle Trees), EIP-6475 (providing improved readability and compact serialization), and EIP-1153 (introducing transient storage opcode) in the upgrade.

The Principle Behind the Upgrade​

The essence of Ethereum's scalability efforts lies in increasing data processing volume and speed. Two directions are pursued concurrently – Layer 2 rollups and sharding on the mainnet. The implementation of EIP-4844 is the first step towards complete sharding.

Prior to the Cancun upgrade, L2 information was stored in the Calldata of L1 information. This method was costly and limited due to Calldata's limited space.

With the Cancun upgrade, L1 will be stored in a new location called "Blob". Blob storage is more affordable and offers more space, allowing Ethereum to host more data, increase its transactions per second (TPS), and reduce costs. As Blob is a temporary data package cleaned up every 30 days, nodes only need to download a fixed amount of data per month, decreasing node burden.

In essence, the Cancun upgrade will make L2 cheaper and faster. This will not only benefit L2 protocols but will also foster rapid development for ecosystems built on L2.

In conclusion, the upcoming Ethereum Cancun upgrade promises to be an important milestone, heralding a new era of efficient, affordable, and scalable blockchain applications. Stay tuned for further updates as the Ethereum community continues its pioneering work in advancing decentralized technologies.

Hello and welcome back to our blockchain blog! Today, we will be diving into an exciting new proposal called ERC-4337, which introduces account abstraction to Ethereum without requiring any consensus-layer protocol changes. Instead, this proposal relies on higher-layer infrastructure to achieve its goals. Let's explore what ERC-4337 has to offer and how it addresses the limitations of the current Ethereum ecosystem.

What is ERC-4337?​

ERC-4337 is a proposal that introduces account abstraction to Ethereum through the use of a separate mempool and a new type of pseudo-transaction object called a UserOperation. Users send UserOperation objects into the alternative mempool, where a special class of actors called bundlers package them into a transaction making a handleOps call to a dedicated contract. These transactions are then included in a block.

The proposal aims to achieve several goals:

1. Enable users to use smart contract wallets with arbitrary verification logic as their primary accounts.
2. Completely remove the need for users to have externally owned accounts (EOAs).
3. Ensure decentralization by allowing any bundler to participate in the process of including account-abstracted user operations.
4. Enable all activity to happen over a public mempool, eliminating the need for users to know direct communication addresses of specific actors.
5. Avoid trust assumptions on bundlers.
6. Avoid requiring any Ethereum consensus changes for faster adoption.
7. Support other use cases such as privacy-preserving applications, atomic multi-operations, paying transaction fees with ERC-20 tokens, and developer-sponsored transactions.

Backwards Compatibility​

Since ERC-4337 does not change the consensus layer, there are no direct backwards compatibility issues for Ethereum. However, pre-ERC-4337 accounts are not easily compatible with the new system because they lack the necessary validateUserOp function. This can be addressed by creating an ERC-4337 compatible account that re-implements the verification logic as a wrapper and setting it as the original account’s trusted op submitter.

Reference Implementation​

For those interested in diving deeper into the technical details of ERC-4337, a reference implementation is available at https://github.com/eth-infinitism/account-abstraction/tree/main/contracts.

Security Considerations​

The entry point contract for ERC-4337 must be heavily audited and formally verified, as it serves as a central trust point for the entire system. While this approach reduces the auditing and formal verification load for individual accounts, it does concentrate security risk in the entry point contract, which must be robustly verified.

Verification should cover two primary claims:

1. Safety against arbitrary hijacking: The entry point only calls an account generically if validateUserOp to that specific account has passed.
2. Safety against fee draining: If the entry point calls validateUserOp and passes, it must also make the generic call with calldata equal to op.calldata.

Conclusion​

ERC-4337 is an exciting proposal that aims to introduce account abstraction to Ethereum without requiring consensus-layer protocol changes. By using higher-layer infrastructure, it opens up new possibilities for decentralization, flexibility, and various use cases. While there are security considerations to address, this proposal has the potential to greatly improve the Ethereum ecosystem and user experience.