Ethereum’s Justin Drake Cautiously Consults on Restaking

Ethereum researcher Justin Drake became a new advisor to the EigenFoundation, a “shareholder-less entity” that supports the EigenLayer protocol and its community. Even though the advisorship was signed a month ago, the details and context were shared only a few days ago.

EigenLayer is a protocol on Ethereum that first introduced a new crypto primitive, restaking. It is a system of rehypothecation for staked $ETH that extends security to additional applications. Users can delegate their staked $ETH to operators (for example, Coinbase), so new protocols don’t have to bootstrap their own security but can instead leverage Ethereum’s security in the form of staked $ETH via special platforms.

The EigenFoundation was announced at the end of April alongside the introduction of the EIGEN Token. The token introduces an extra trust network, a complementary mechanism designed to address “intersubjective” faults that can’t be tracked by restaking alone. 

“Intersubjective faults are instances of misbehavior that cannot be objectively identified onchain, yet any two reasonable observers would agree that a penalty is deserved.”

EigenLayer promised to allocate 15% of the token supply to the community, but the tokens will be non-transferrable until an as-yet undisclosed date. The linear model of airdrop allocation and severe geographic restrictions raised discontent among the community.

Justin Drake is a prominent Ethereum researcher, one of the very few leading developers on the network, and thus one of the key members of the community. In 2022, he played a significant role in executing the famous ETH Merge. In a recent blog post, he shared details about becoming the project’s advisor and outlined that he would focus solely on researching restaking risks and would not be included in any marketing materials. Drake says he accepted the advisorship primarily because of the outstanding character of the company founder, Sreeram Kannan. Among other reasons for accepting the position, he listed his desire to positively impact the future of restaking. He also mentioned a controversial EIGEN token incentive potentially worth millions of dollars that Drake nobly promised to reinject towards worthy projects within the Ethereum ecosystem. Primarily a researcher and Ethereum enthusiast rather than a businessman, he expects collaboration with competitors Karak and Symbiotic, supported by the industry’s giants, to do great things for restaking.

In fact, Drake promised to quit the position if the project development goes against Ethereum's interests. The tone of his message is very cautious, giving an impression of uncertainty about the move. Drake even confesses that accepting this advisorship was a complicated decision that eventually could go against him. 

“Given my focus on restaking risks you can expect my default public stance to continue to lean critical of EigenLayer… I do acknowledge that accepting the EigenFoundation advisorship inevitably comes with downside risk beyond my personal reputation. I hope the above shows that it is at least a considered move with calculated risks,” - he stated.

Following Drake's disclosure, another Ethereum researcher, Dankrad Feist, followed up with an announcement that he has also become the project's advisor. We expect that others will follow their strategy of transparency soon.

"I think Eigenlayer will be a major benefit to Ethereum, if it is done by someone with high integrity... Clearly, I would never take this position if I did not also see significant benefits to Ethereum that come from restaking when implemented well," - Dankrad Feist.

The most controversial topic is that Drake and Feist are both working at the Ethereum Foundation, and EigenLayer was earlier accused of trying to systematically bribe the EF. Some suggest these accusations pushed Drake to disclose his new role, a claim he later denied. The researcher insists that only 3EFers have formal connections with the project, which is 1% of the Foundation members. Although most users praised the researchers' transparency, some still expressed doubts and discontent on the matter of the conflicting incentives.

The conflict of interest is not solely about money. Sharing his thoughts on restaking, Drake admitted that it might eventually destroy the whole Ethereum ecosystem:

"Restaking plausibly is to Ethereum what AI is to humanity: a wonderful paradigm-changing tool in the short- and medium-term which may be powerful enough to introduce systemic risks that ultimately lead to our demise."

Feist and Drake's views on restaking and its main risks differ, which is expected to create better synergy from their collaboration on the project. The researchers are positive about the tasks ahead and are excited to have the possibility to work on restaking risks and possible mitigations, thus ensuring that restaking "sustainably supercharges Ethereum without undermining it."