AVS Risk Assessment: EigenDA

AVS Risk Assessment: EigenDA

AVS Risk Assessment: EigenDA

Jun 10, 2024

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YieldNest is advised to onboard EigenDA as an AVS for its Liquid Restaking Tokens (LRTs). However, this decision should be made with a long-term perspective, particularly due to the extended and potentially complex opt-out process involved with EigenDA. Furthermore, conservative operational parameters should be set to account for the complete trust placed in the EigenLabs/EigenDA team. This recommendation is predicated on the existing trust relationship with EigenLayer, which is managed by the same EigenLabs team.

Despite the rapid growth observed in recent months, restakers are urged to exercise considerable caution in a prospective engagement with EigenDA. This caution is justified by the high degree of centralization in its operations and the overall system's relative immaturity (as is the case with EigenLayer generally).

Currently, there is also significant speculation surrounding the EigenLayer points programs. Should this incentive program conclude or the speculative interest wane, EigenLayer and EigenDA might face a sudden increase in exit demand, as is already apparent by the conclusion of EigenLayer's first stage of its incentive program, potentially compromising their cryptoeconomic security. Therefore, heightened vigilance is recommended during this period.

To mitigate protocol risks, it is advisable for YieldNest to onboard EigenDA as an AVS with limited exposure initially. This conservative approach should be maintained until EigenLayer has achieved greater maturity and decentralization, and until EigenDA has decentralized its disperser and made its proxy upgradable contracts either immutable or governable through a time-locked upgrade process.