Restaking Alignment with Vitalik, Sreeram, Tim Beiko, Justin Drake, Dankrad & Jessy

Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today on Bankless we are going deep into the frontier of re-staking. We are going so deep, in fact, that we are bringing in some extra help to guide us down the very thorny and unmapped landscape of restaking.

What is restaking? If you don't know what restaking is, this episode might not be for you. This is not an afternoon hike of a conversation. We are not strolling around the park. We are going so far into the unknown that we need a guide to make sure that we don't get lost. Tim Baco on this episode is tapping in as our technical moderator for this conversation, our guide for the journey into restaking. So, not every bankless listener will be prepared for this conversation. This one is a hard one. If you want to be adequately equipped for the conversation that awaits, I recommend listening to the bankless episode with Sri ROM about the restaking meta that we are embarking upon. That we did that episode with Svree ROM just a few weeks ago. That will get you up to speed and ready to understand some of the nuances and problems that we are going to suss out here on today's episode. Because today on the show, we have one of the largest and most gigabrained panels that we've ever had on bankless. We have Dankrad Feist, we have Jesse, aka 13 year old VC, that is her pseudonym, Justin Drake, Vitalik Buterin, and of course Sri Ram Canon himself, the founder of Eigenlayer, and perhaps the creator of Resaking, all moderated by Tim Bako.

Bankless Nation, I'm going to be with you in the audience on this one. This one is well above my pay grade, but you are in good hands with Tim. So I'm going to sit back and get my learn on, and I'm sure that you will as well. So let's get right into our conversation with one of the most brainiac panels that we've ever had on Bankless. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Bankless Nation, welcome to our Restaking Deep Dive. This episode is not meant to be an introduction to restaking. This will be a much more technical conversation as to the current frontier of thought from the ETH Core devs and other restaking enthusiasts about how the meta of re staking might interact.

Interfere with the goals of the Ethereum execution later. For an explanation of restaking and what restaking is, there is a 101 or 201 level content that we did with Sri ROM not too long ago. So see that previous episode if you need to get downloaded as to the state of Eigenlayer, what restaking is and what it does. We hopefully want to go very deep in this episode. So deep, in fact, that I am only able to guide us so far in this conversation. So moving forward, I am tapping in Tim Baco as our guide into the frontier of the staking meta and the Ethereum protocol. Tim, welcome back to Bankless and thank you so much for taking the reins here.

Yeah, thanks for having me again.

Before we bring on the largest panel that we've ever had here at Bankless, I want to pick up a little bit of your brain, Tim.

What are you hoping to accomplish in this episode? And what context and frame of mind should listeners have as they enter this conversation?

Right. So um we're gonna have people from both uh eigenlayer and then the research uh side of Ethereum and and kind of the broader community. And my goal is like if everyone can understand everyone's perspective a bit better by the end of the call, I'll be happy. And I think as a byproduct of that, we're gonna have to dive into all of the issues around restaking. Um so folks can expect, you know, discussion of like the technical issues, the trade offs, uh, the general roadmap and um the potential risks around restaking.

And then hopefully the folks on the panel have uh better understanding of each other's perspective

by the end of the hour.

Why would you say that this has captured the attention of so many of the Ethereum core devs and surrounding Ethereum community? Like what why, in simple terms, is this a big deal?

Yeah, I think it's because it introduces uh

changes to the incentive landscape, which the protocol uh

Is not aware of, you know, natively. So obviously we have all these incentives in the Ethereum protocol, like how much stake do we issue, or sorry, how much rewards do we issue to stakers? What are the penalties? Um, what do we do with transaction fees? And, you know, those sort of all work really well if you think of Ethereum as a closed system where, you know, there's not uh too much interference with it. But then when you see something like restaking, um, you know, which fundamentally changes the reward landscape for stakers, and um

it might end up changing sort of the decisions they make around the risk they're willing to take. If they uh if they take risk and uh things go poorly, then it might change the decisions they make with regards to their role as a staker on the Ethereum mainnet. So it's really this intersection of like um the incentive design and the edges of the protocol and how they interact together. Um, I think that's something that people in recent years have become much more attuned to. And um, yeah, it's why it causes so much conversation.

All right, Tim, are you ready for me to hand over the reins to you?

Yeah, let's do it.

All right, Tim, I'm gonna let you go, but first I'm gonna introduce you to Dankrad, the father and father of modern dang sharding, uh researcher at the Ethereum Foundation. Dankrad, welcome back to Bankless.

Thank you for having me.

We also have Justin Drake, father of Ultrasound Money. He's been on the show a large number of times before. Justin, also welcome back to Bankless.

Thanks for having me too.

And first time on the show, we have Jesse, who I think has posed some of the biggest questions about restaking, is definitely on the frontier of restaking thought. Jesse, welcome to Bankless for your first time.

Thank you for having me.

And then, of course, we have Vitalik Buterin, just some guy on Twitter and also famous for having the most ignored EIPs in Ethereum. Vitalik, welcome back to Bankless.

Hello everyone, it's good to be here again.

And last but definitely not least, we have Sri Ram, the father of modern restaking himself. Sri Ram, welcome back to your second time on Bankless.

Thank you so much, David. Excited to be here. Thanks to all the EF uh friends for coming here and Jesse.

Tim, I am out of here, my man. This is all you.

Awesome. Thank you, David.

I guess one place to kick this off uh to make sure that we we sort of dive into the deep end pretty quickly is if uh the four of you, uh Denkrad, Justin, Jesse, and Vitalik, maybe just want to take a minute to share like

Your current brain dump of like where your head is at with regards to restaking. We can kick it off from there. And then Sri Ram, I'll make sure to give you some time after to uh respond to the comments that'll come up. Um I think yeah, quickly, uh Jesse, I don't know if you want to kick us off. Um

yeah,

when you think restaking, like what are the things that are coming through your mind right now?

Uh yeah, so I think to me, restaking is that one simple, elegant idea that's inevitably coming true. Um, I think it has real yield for users that come from a real utility. It has real excitement and traction behind it. I think there's in the process real value capture as well. Um, however, it's also an opportunity that I believe has been slept on because I probably talk to hundreds of developers one-on-one and tens of ecosystems. And some of our most like smartest people are working on ZK on-chain games, MEV, but restaking is, I think, uh some of the biggest upcoming nerds type that there's just not that many experts in. Um, there's many interesting topics to be explored that comes out of this Pandora's box. My friend Kaido, you know, once said that you could probably get a PhD just studying any of the of the rabbit holes into restaking. And there's just that, not that many experts uh in this space. So I would encourage everyone to study.

and become an expert.

Awesome. Thanks. Um, Justin,

you want to go next?

Sure, yeah. So my perspective is that restaking is a little bit like AI. On the one hand, there's an opportunity to really upgrade Ethereum, kind of make it the center of economic security and really strengthen its network effects, have more applications, more cash flows. But on the other hand, there's systemic risks, there's big, big downsides, there's a large blast radius. And what we potentially could be losing is the decentralization of the staking operators. That's what I'm most worried about. And that could have ripple effects around losing credible neutrality, losing monetary premium, and things like that.

Now, I guess personally I've been digging into r staking very seriously for the last two months. And I feel good about it as a researcher because it kind of extends my runway.

But on the other hand, I must say that thinking about these systemic risks deeply has made me a bit more gloomy and doomy. But I'm trying to remain optimistic in my research.

Thanks. Uh Vitalik, you want to go next?

Yeah, I think uh I have pretty much the same perspective as Justin on this.

Okay. Uh Denkrad, anything from you?

Um yeah, I mean, I would just like to continue what Justin was saying. I think it's super interesting because

um to me, like restaking in many has many similarities to uh liquid staking, and like I think the risks are in many ways quite similar. So it is

very interesting in that at the same time

um it could actually

help decentralization in that it makes uh solo staking.

More competitive and more uh capital efficient, but at the same time runs the risk of like

completely compromising the protocol by

rehypothecating basically all the stake and like um yeah, removing our

uh security by by uh using the stake for something else. So it's a super interesting topic to think about.

Thanks. And yeah, Sriram, I guess we've heard it's almost like a barbell of opinions, right? Like it could make solo staking better, uh, super uh super interesting problem for builders, new source of yield, but then it's like AI could destroy centralization and affect the credible neutrality. So

how do you think about uh restaking like from your vantage point now?

No, this is uh I think we do agree that there are uh complex risks. And that's why I think uh it's important to take a constrained approach in building ristaking.

The constraints being like what is really good for the ecosystem

and uh

having constraint on that, you know, building what new innovation can be unleashed based on.

You know, this concept. So that's how we are thinking about it. Our driving value is permissionless innovation, the idea that anybody can come and build new things on top of

this massive trust source.