a16z: Why We Invested in EigenLayer
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a16z: Why We Invested in EigenLayer
Overall, EigenLayer is a decentralized and market-driven mechanism for extending Ethereum's capabilities.
Navigating Web3 tides with focused insightsAuthor: Ali Yahya, General Partner at a16z crypto
Translation: Karen, Foresight News
Few individuals possess both visionary insight and the ability to drive transformative change. Sreeram Kannan, founder of EigenLayer, is not only exceptionally talented and brilliant but also possesses a fundamentally clear and compelling vision of the future—one that instantly feels real when you speak with him. Sreeram carries what I call the Promethean fire, driving new technologies to life and creating an entirely new future.
I first met Sreeram in 2019, when he was an associate professor at the University of Washington, just beginning his entrepreneurial journey. He made a strong impression then, and over the years since, we’ve had many interactions with him and the world-class team he has assembled. In 2022, Sreeram delivered an insightful talk on EigenLayer and EigenDA as part of our Summer Research Fellowship; last year, he and Soubhik, EigenLayer’s Protocol Research Lead, published a comprehensive overview of slashing cryptoeconomics on our blog.
Today, we’re announcing that we are leading EigenLayer’s Series B funding round, and we’re thrilled to partner with Sreeram and the entire team to build a platform that unlocks a new dimension of innovation on Ethereum.
Background
To fully appreciate the scope of EigenLayer, it helps to zoom out—starting with Bitcoin.
Bitcoin was the first complete implementation built entirely on blockchain technology. Initially conceived as a payment mechanism, it gradually evolved into a form of digital gold—a store of value despite its high volatility.
Ethereum’s genius lay in deconstructing Bitcoin’s monolithic, single-application model by separating consensus from the application logic built atop it.
Ethereum enabled developers to write their own applications in the form of smart contracts, leveraging the blockchain’s pooled security and computational resources.
This single change unlocked immense design space for open innovation—almost everything we know and love today stems from this shift. It meant people could now build decentralized applications without launching their own blockchains.
Ethereum’s advanced programmability was a breakthrough for a wide range of applications. But it wasn’t without limitations. As a developer, there are still many constraints on what you can and cannot do.
For example, your code must be compatible with the Ethereum Virtual Machine (EVM). While EVM remains a solid computational model for certain lightweight applications due to its alignment with Ethereum’s block size and gas limits, it may be unsuitable for others that are more complex or require specialized functionality.
In an ideal world, developers should have nearly complete freedom.
If needed, you should be able to write code for distributed services using any instruction set, define your own consensus mechanism, data dissemination algorithms, block time, and gas limits—and even set validator requirements based on specific hardware needs such as GPUs or Trusted Execution Environments (TEEs).
And you should be able to do all this without having to build your own blockchain network from scratch. Instead, you could build atop the most secure, programmable blockchain already equipped with a decentralized and robust group of validators: Ethereum.
Enter EigenLayer
EigenLayer is a set of smart contracts on Ethereum that creates a two-sided market for raw cryptoeconomic security: On the demand side, it allows builders to write code that effectively extends Ethereum’s capabilities. On the supply side, validators participating in Ethereum’s consensus—who also happen to have the required capabilities and hardware—can opt in to run these distributed services by re-staking ETH. Overall, EigenLayer is a decentralized, market-driven mechanism for expanding Ethereum’s capabilities.
The implications of this mechanism are profound. We believe that by further decoupling cryptoeconomic security from the EVM, EigenLayer has the potential to accelerate innovation by 100x in areas such as consensus mechanisms, novel virtual machines, decentralized oracles, bridges, and networks with specialized hardware—just as Ethereum achieved a 100x acceleration in innovation at the application logic layer through smart contracts.
We are incredibly excited to partner with Sreeram and his team to help bring this vision to life.
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