EigenLayer: Connecting Ethereum and Cosmos to bring unlimited innovation

EigenLayer achieves a symbiotic relationship between Ethereum and Cosmos by connecting them, bringing a new wave of innovation to both ecosystems.

Written by: AVS Research

Translation: Vernacular Blockchain

Ethereum and Cosmos initially had different goals, but their paths are slowly converging. Both face similar technical challenges such as MEV, liquidity fragmentation, and widespread decentralization.

Cosmos thrives as a nexus of experimentation, while Ethereum is proven as a composable settlement layer. Although the two ecosystems learned from each other through informal exchanges, the deeper social and philosophical connections were absent—until EigenLayer came along.

By connecting Ethereum and Cosmos, EigenLayer will bring a new wave of innovation. The Cosmos community can take advantage of Ethereum's most important sources of decentralization, security, and liquidity; Ethereum can take advantage of the unlimited experimental capabilities happening in Cosmos.

1 Introduction

Ethereum’s vision is to become a global settlement layer, while Cosmos imagines a world composed of hundreds of digital city-states. Their different goals are reflected in different design choices; Ethereum adopted Proof of Stake and focused on independent validators, while Cosmos chose Delegated Proof of Stake optimization to enable light client verification and governance.

As these systems evolved, their designs began to converge. With Ethereum opting for a rollups-centric scaling roadmap and Cosmos exploring shared security solutions, the goals and approaches of the two ecosystems are slowly converging. As Ethereum L2 matures, initiatives such as Superchain, ZK Stack, and Polygon 2.0 begin to reflect the tightly integrated economic zones in Cosmos.

Each of these initiatives has unique design trade-offs, but the primary goal remains the same: securely scale cryptographic infrastructure. Therefore, bridging different design learnings is not only desirable but necessary, especially given the common challenges faced by these systems.

2. Cosmos and Ethereum are solving similar problems

Maximum Extractable Value (MEV) has been an important topic in Ethereum since 2020, influencing its future roadmap and protocol design. Proposer Builder Separation (PBS) is designed to offset the concentration pressure caused by MEV.

PBS in Ethereum is currently implemented through an off-protocol design called MEV-Boost, which uses a trusted commit-display scheme. In the future, the fixed PBS (ePBS) design will be integrated into the Ethereum base layer to eliminate trusted third parties.

Vitalik Buterin’s Ethereum roadmap as of December 2021

In Cosmos, MEV is also a key point of discussion. Due to the flexibility of individual Cosmos chains, more advanced ePBS solutions are being implemented. For example, Osmosis is experimenting with block top arbitrage profit sharing, while Skip is testing BlockSDK, a decentralized block builder and proposer commitment design. Likewise, Fairblock is experimenting with encrypted memory pools and commit display schemes for all chains.

More than 1,000 IBC connections facilitate trustless communication between various Cosmos chains. Source: Regional map taken January 2024

The Cosmos developer community, on the other hand, has interoperability as a primary focus, largely due to its modular nature. The Inter-Blockchain Communication (IBC) protocol was conceptualized in 2016 to address interoperability challenges through cross-chain light client verification. The protocol comes into use in 2021 and, as currently stands, secures more than 1,000 IBC connections.

In contrast, Ethereum has encountered difficulties with interoperability as the number of L2 and application chains continues to increase. As it stands, light client validation across L2 is challenging given its mutable sequencer design. However, the implementation of decentralized sequencers (such as Espresso s and others) has begun to pave the way for more dynamic interoperability designs.

Bringing Cosmos technology directly to Ethereum has been a challenge, but L2 now provides a place for new experiments to proliferate.

3. EigenLayer lowers the barriers for L2 to utilize Cosmos innovation

Many innovations in Cosmos involve leveraging sets of validators to perform complementary work. However, currently L2 cannot use operator sets. Maintaining a quorum of validators with strong economic security is a well-known challenge.

EigenLayer solves this problem by providing an economic staking platform - allowing any stake holder to contribute to any PoS network. By reducing cost and complexity, EigenLayer effectively paves the way for expressive innovation in L2 mining within the Cosmos stack.

To learn more about how EigenLayer accomplishes this, check out part one of You Could've Invented EigenLayer.

Cover photo of You Could've Invented EigenLayer by @EigenIntern

4. The integration of two technology stacks breeds a symbiotic relationship with unlimited possibilities: bringing the cutting-edge innovation of Cosmos to Ethereum

The application-specific innovations launched by Cosmos are the perfect complement to EigenLayer’s sophisticated staking community and capital base. We expect deeper collaboration to bring a high degree of creativity to expand the capabilities of Ethereum and create an environment for Cosmos builders to apply their talents to the world's largest on-chain programmable staking economy.

"A wizard uses immense power to bring the universe and Ethereum together"

We also imagine that complex Ethereum projects will continue to outsource specific application functionality to specialized committees. These committees will perform advanced but explicit actions to assist Ethereum applications, such as sealed bid auctions, machine learning inference, ranking mechanisms, and more.

1) Decentralized from the beginning, no Token is used

In the Cosmos-Ethereum combination, decentralization has been prioritized from the beginning. Rather than tying this capability to a native token, EigenLayer allows leveraging the Ethereum network’s vast set of validators from day one. Output Ethereum’s decentralization ensures enhanced security and facilitates permissionless access to network operations, promoting a more resilient ecosystem.

2) Access Ethereum user groups and node operators

Given all the technological innovations in the Cosmos ecosystem, it is very eager for an influx of user base. Ethereum wL2 is the perfect place for new experiments. Additionally, since the launch of the Beacon chain in 2020, Ethereum validators have been trained to operate protocols worth tens of billions of dollars. By inheriting Ethereum's $60 billion in security through EigenLayer, L2 can replicate its expertise to handle node-level operations, ensuring a smooth experience for end users.

5. Economic security of Ethereum in Cosmos

The benefits are mutual. A fantastic team is actively developing solutions to bring Ethereum's tremendous economic security to the universe. Here are three projects (listed in alphabetical order) that deal directly with this.

1) Use Cosmos SDK to build your own AVS

Currently, in the Cosmos SDK, one can easily launch a chain with PoA or PoS configuration using native staking tokens. While security can now be rented by replicating it or sharing it, deployment involves nuanced governance engagement with other chains. In the near future, developers will be able to launch new PoS chains or new PoA chains with targeted security budgets using Ethereum’s security. Chains can customize their security needs and separate network startup from token startup.

2) The spirit of Karthik Raju’s contribution

Interchain Security (ICS) allows chains to borrow economic security from ATOM Token and the Cosmos Hub validator set. Since then, new standards such as Mesh and hybrid security have entered the market.

Ethos is the next step in the shared security narrative for Cosmos. Ethos introduces EigenLayer's re-staking ETH into the new supplier chain center of the Cosmos ecosystem. The Cosmos chain typically pays an inflation rate of over 10% because the underlying trust layer is driven by volatile assets. ETH is the highest quality on-chain asset. Remortgaged ETH is the version with the lowest opportunity cost of ETH, requiring the inflation/cost of the consumption chain to be reduced to single digits.

Ethos will serve as a central source of re-staking ETH from which the Cosmos chain can borrow to bootstrap its trust layer at low cost (inflation). Ethos greatly improves upon the original mechanism of shared security by allowing greater optionality.

3) Lay3r contributed by Jake Hartnell

Lay3r is building a new IBC-enabled stack that supports WASM smart contracts and EVM. While borrowing from the Cosmos stack (most importantly Comet BFT and IBC), it features a modular Rust-based SDK that allows developers to easily spin up their own sovereign high-performance L1 or EigenLayer-backed L2.

Developed by the two creators of Mesh Security, Lay3r L2 (secured via Eigenlayer) will allow ETH re-stakers to earn additional rewards by providing economic security to the Interchain, as well as provide Schelling points and chains to developers building IBC-backed protocols .

6 Conclusion

As Cosmos and Ethereum form a deeper relationship, we expect more creativity and innovation. EigenLayer will continue to serve as a conceptual link between the two ecosystems, adding value to both ecosystems through our commitment to open innovation.