Celestia: The biggest competitor to Ethereum DA? Can EigenLayer turn the tide?

Author: YBB Capital Researcher Ac-Core

Introduction

According to the definition by the Ethereum Foundation, Ethereum's Layer 2 = Rollup. Following Vitalik's recent perspective, if other EVM chains use non-Ethereum as DA (Data Availability), then it is Ethereum Validium (moving the data availability layer of the blockchain off-chain and using validity proofs to ensure the integrity of off-chain transactions). Although there is still some controversy regarding the precise definition of Layer 2 due to DA issues, Ethereum's upgrade path remains centered around Rollup, with DA playing an important role in preserving or uploading Rollup transaction data during Ethereum's upgrades.

Whether Optimistic Rollup and ZK Rollup can access relevant data through DA will affect their own security to some extent, even though their dependency levels differ. In the face of innovations in Cosmos shared security and Celestia's DA penetration, along with market makers driving the market, can EigenLayer, which is based on native Ethereum, regain market sovereignty by elevating middleware to Ethereum-level security narratives?

EigenLayer

Image source: EigenLayer White Paper

Simply put, EigenLayer is a re-staking protocol based on Ethereum, providing Ethereum-level security for the future entire Ethereum crypto-economic system. It allows users to re-stake native ETH, LSD ETH, and LP Tokens through EigenLayer smart contracts to earn validation rewards, enabling third-party projects to enjoy the security of the ETH mainnet while also gaining additional rewards, thus achieving a win-win situation.

The reason Ethereum can attract a large amount of transaction volume and liquidity is that it is currently recognized by most as the most secure Layer 1 blockchain after Bitcoin. EigenLayer directly connects to Ethereum's security and liquidity through Actively Validated Services (AVS), essentially delegating the security validation of its token model directly to Ethereum nodes (which can be simply understood as node operators). This process is called re-staking. This article only illustrates the first AVS project developed by the EigenLayer team: EigenDA.

EigenDA: Rollup Data Availability

Image source: EigenDA Official

According to official explanations and introductions (currently lacking actual relevant data as support), EigenDA is a decentralized data availability (DA) service built on Ethereum using EigenLayer Restaking and will be the first actively validated service (AVS) on EigenLayer. Restakers can delegate their stakes to EigenDA and the node operators executing validation tasks, receiving service fees in return, and Rollups can publish data to EigenDA, thereby reducing transaction costs, achieving higher transaction throughput, and enhancing the overall security of the EigenLayer ecosystem. The security and transaction throughput during this development process will expand with the amount of staking, related ecological protocols, and the overall development of operators.

EigenDA aims to provide innovative DA solutions for Rollups, allowing Ethereum stakers and validators to enhance security through mutual connections, achieving the goal of reducing costs while increasing throughput, with EigenLayer's shared security system adopting a multi-node approach to ensure decentralization.

According to EigenDA's tweets, its currently integrated Layer 2 solutions include Celo, which transitions from L1 to Ethereum L2; Mantle and its associated products outside the BitDAO ecosystem; Fluent, which provides a zkWASM execution layer; Offshore, which provides a Move execution layer; and the OP Stack in Optimism (currently used in the EigenDA testnet).

EigenDA is a secure, high-throughput, and decentralized data availability (DA) service built on Ethereum, developed based on EigenLayer Restaking. Below are some key features and advantages that EigenDA is designed to achieve:

Features:

Shared Security: EigenDA utilizes EigenLayer's shared security model, allowing validators (Restakers) to participate in the validation process by contributing ETH, thereby enhancing the overall security of the network;

Data Availability: The primary goal of EigenDA is to ensure data availability on Layer 2 networks. It verifies and guarantees the validity of Rollup network data through validators, preventing malicious behavior and ensuring the normal operation of the network;

Decentralized Ordering: EigenDA employs EigenLayer's decentralized ordering mechanism to ensure that transactions in the Rollup network are executed in the correct order, thereby maintaining the correctness and consistency of the entire system;

Flexibility: The design of EigenDA allows L2 developers to adjust various parameters as needed, including the trade-off between security and activity, the staking token model, and the erasure coding ratio, to adapt to different scenarios and needs.

Advantages:

Economic Efficiency: EigenDA achieves shared security for ETH through EigenLayer, thereby reducing potential staking costs. By decentralizing data validation work, it lowers the operational costs for each operator, providing a more economically efficient validation service;

High Throughput: EigenDA is designed to have horizontal scalability, with its throughput increasing as more operators join the network. In private testing, EigenDA demonstrated throughput of up to 10 MBps, with a roadmap to scale to 1 GBps, providing possibilities for applications with high bandwidth demands, such as multiplayer games and video streaming;

Security Mechanisms: EigenDA employs multi-layer security mechanisms, including EigenLayer's shared security, Proof of Custody mechanisms, and Dual Quorum, to ensure the security, decentralization, and censorship resistance of the network;

Customizability: EigenDA offers flexible designs, allowing L2 developers to adjust various parameters according to their specific needs and use cases, thus finding a balance between security and performance.

Re-staking Model

Image source: Delphi Digital

• Native ETH Re-staking:

Applicable to independent ETH stakers, who can point their staked ETH to EigenLayer smart contracts via withdrawal certificates to re-stake and earn additional rewards. If independent stakers behave improperly, EigenLayer can directly confiscate their withdrawal certificates;

• LST Re-staking:

LST (Liquid Staking Token) is an abbreviation for liquid staking tokens. Ordinary investors, even without 32 ETH, can "carpool" through liquid staking protocols like Lido and Rocket Pool, depositing ETH into staking pools and receiving LST representing their ETH and staking yield claims. Users who have staked ETH in Lido or Rocket Pool can transfer their LST to EigenLayer smart contracts for re-staking to earn additional rewards;

• LP Token Re-staking:

LP Token re-staking is divided into ETH LP re-staking and LST LP re-staking.

• ETH LP Re-staking: Users can re-stake a pair of DeFi protocol LP Tokens that include ETH to EigenLayer.
• LST LP Re-staking: Users can re-stake a pair of DeFi protocol LP Tokens that include lsdETH to EigenLayer. For example, the stETH-ETH LP Token of the Curve protocol can be re-staked to EigenLayer.

Celestia in Cosmos

Image source: Celestia Official

Currently, no blockchain can truly solve the blockchain trilemma of decentralization, security, and scalability. Cosmos believes that only a multi-chain design architecture can somewhat overcome the trade-offs between them. Before discussing Celestia, let's briefly review Cosmos, where blockchains achieve interoperability through the IBC (Inter-Blockchain Communication) protocol. Below is a detailed discussion of security among Cosmos chains:

IBC Protocol Security: IBC is the protocol that ensures communication between chains in the Cosmos network. It ensures the confidentiality and integrity of messages through mechanisms such as encryption and signatures. The IBC protocol includes a series of verification steps to ensure the credibility of cross-chain communication. Through IBC, Cosmos chains can securely transmit messages and assets, preventing fraud and tampering;

Consensus Mechanism Security: Various blockchains in the Cosmos ecosystem may adopt different consensus mechanisms, the most common being Tendermint. The Tendermint consensus algorithm ensures consistency among nodes through Byzantine Fault Tolerance (BFT). This means that the system can still operate normally in the presence of a certain number of malicious nodes. The security of the consensus mechanism is crucial for the stability and security of the entire network;

Hub Security: There is a centralized blockchain in the Cosmos network known as the Hub, which acts as a bridge between different chains. The security of the Hub plays a critical role in the stability of the entire ecosystem. If the Hub is not secure, it could lead to problems for the entire network. Therefore, ensuring the security of the Hub is an important task in the Cosmos ecosystem, involving strict control over its consensus mechanism and node management;

Asset Security: Since assets can be transmitted between Cosmos chains, ensuring the security of assets is crucial. By using cryptographic techniques, Cosmos chains can guard against malicious activities such as double-spending attacks. At the same time, the design of the IBC protocol makes cross-chain asset transmission more secure and reliable;

Smart Contract and Application Layer Security: The Cosmos network allows for the development of smart contracts and distributed applications. Ensuring security at this level is achieved by ensuring the code quality, auditing, and vulnerability fixing of the smart contracts and applications running on the blockchain.

Celestia achieves scalability and flexibility through a modular design that separates consensus and execution, promoting a customizable ecosystem suitable for various blockchain solutions. In contrast, Cosmos promotes blockchain collaboration with a neutral ecosystem, emphasizing the interconnectivity between independent blockchains, and uses Tendermint to integrate consensus and execution, providing a cohesive environment, which intuitively leads to the negative impact of losing its own flexibility. The modular approach of Celestia offers enhanced scalability and development flexibility, providing customized solutions to meet different application needs, with some voices claiming that Celestia + Cosmos is the ultimate form of application chains in the future.

Celestia's ICS and EigenLayer's EigenDA

Image source author X: @Gods1

However, it is worth noting the recent proposal in Celestia mentioning ICS (Interchain Security), which differs from EigenLayer, a data availability layer built on Ethereum. By comparing ICS with EigenLayer, we can understand their relationship from the following aspects:

• Shared Security: The proposal in Celestia discusses the possibility of using ICS, employing validators from the Cosmos ecosystem (such as validators from Cosmos Hub) as Rollup sorters for Celestia. This approach allows multiple Rollup networks to share the same set of validators, achieving shared security. This idea is somewhat similar to the shared security concept in EigenLayer, both leveraging validators from the underlying blockchain network to provide security. The difference is that ICS utilizes Cosmos Hub's validators to provide validation services for connected blockchains, enhancing the security of the entire ecosystem through a shared security model, while EigenDA provides validation services through EigenLayer on Ethereum, using ETH validators (Restakers) to verify the data availability of the Rollup network;

• Decentralized Sorters: The concept of decentralized sorters mentioned in Celestia utilizes the ICS approach. This is somewhat similar to using EigenLayer's Restaking Primitive (re-staking mechanism) to build decentralized sorters in EigenLayer. Both aim to achieve a more decentralized sorting mechanism through the characteristics of the underlying protocol;

• Rollup Composability: Celestia mentions that by using the same sorter across multiple Rollup networks (possibly through ICS), cross-Rollup composability can be achieved. This is somewhat similar to EigenLayer's goal of having multiple AVS (actively validated services) collaborate within the EigenLayer ecosystem to achieve a higher level of composability and interoperability;

• Economics: Setting aside the technical aspects of Celestia and EigenLayer, from a market perspective, users are more concerned about their returns. EigenLayer's layered returns on LST and the expected airdrop value for the entire EigenLayer ecosystem are slightly stronger than those of Celestia.

Comparison of DA Layers

Image source: Researcher@likebeckett

Data Availability (DA) is currently primarily focused on Rollup in Ethereum's upgrade path, where DA plays the role of preserving or uploading all transaction data of the entire Rollup. The emergence of Rollup aims to solve the scalability issues of Layer 1, but accessing Layer 2 data through DA will affect the overall security and TPS levels. For Layer 2 to inherit Ethereum's security, Ethereum needs to optimize the entire protocol's security mechanisms to upload a large amount of Layer 2 data.

In consensus mechanisms, there is a fundamental dilemma between validity and security, with the former ensuring rapid transaction processing and the latter ensuring the accuracy and security of transactions. Different blockchain systems make different choices to achieve a balance that meets their actual needs. Ethereum, Celestia, EigenLayer, and Avail solutions all aim to provide scalable data availability for Rollups. Based on relevant data provided by Researcher@likebeckett and Avail's official sources, I have summarized the following.

Image source: Avail Team Official

Celestia:

Decentralized Sorter Proposal: Celestia discusses a proposal by COO Nick White to use Interchain Security (ICS) from the Cosmos ecosystem to achieve a decentralized sorter for Celestia, thereby leveraging Cosmos Hub's validators to provide shared security for the DA layer;

Atomic Cross-Rollup Composability: Celestia can achieve atomic transactions between multiple Rollup networks through ICS, thereby improving composability. The same sorter allows multiple Rollup networks to work together, addressing liquidity fragmentation and declining composability;

Multi-Rollup Interoperability: By utilizing the same sorter, Celestia can facilitate interoperability between multiple Rollup networks, achieving better liquidity and data availability.

EigenLayer and EigenDA:

Shared Security Data Availability Service: EigenLayer provides data availability services through EigenDA, differing from traditional blockchains as it is a set of smart contracts built on Ethereum, fully utilizing the concept of shared security. EigenDA can be part of the Celestia ecosystem, providing efficient, secure, and scalable data availability;

Decentralized Ordering: EigenLayer emphasizes its decentralized ordering mechanism, which essentially incorporates ETH tokens and penalty conditions into the PoS process of Rollup sorters, providing higher security for Layer 2 networks. Through this mechanism, EigenLayer achieves an efficient sorting process;

Data Availability Service: EigenDA focuses on providing data availability services for Layer 2 networks, leveraging EigenLayer's shared security and decentralized ordering to provide high-performance data transmission for on-chain applications.

Avail:

Data Availability Design: Avail focuses on the design of data availability, introducing data availability sampling technology. This technology allows light nodes to verify data availability by downloading only a small portion of the block, rather than relying entirely on full nodes for data, thus improving the scalability of the network;

Interoperability Between Blockchains: Avail's design aims to enhance interoperability between blockchains. Light nodes supporting data availability sampling make increasing block sizes more flexible, improving overall throughput;

EIP 4844 Adaptability: Avail actively participates in the implementation of Ethereum's EIP 4844, which is an important part of Polygon's modular blockchain vision. This proposal aims to increase block sizes and lay the groundwork for implementing Danksharding, enabling Avail to adapt to upgrades in the Ethereum ecosystem.

Conclusion

For Rollups, in 2024, aside from the certainty narrative brought by the Cancun upgrade, the debate over DA issues has also raised questions about the precise positioning of Layer 2. Setting aside the orthodox, security, and cost issues that Ethereum's DA currently faces, the debate between Celestia and EigenDA prompts a reflection: under the confrontation between Ethereum killers and Ethereum's protective walls, will this lead to more market competition in the direction of composable modules, resulting in a new round of blossoming expansion methods for Ethereum?

Although blockchains inherently have many limitations, from the perspective of financial markets, a significant portion of the upward momentum in all markets comes from the "imaginary space," as there must be fresh stories to feed on. As for innovation itself, aside from maintaining its correctness, "side paths" also represent a narrative direction that breaks out of the original framework.