Earn More by Working More: Ethereum Researchers Are "Restaking" Themselves

Author: Alex Liu, Foresight News

"With over 300 people in the Ethereum Foundation, having a few of them serve as advisors to the Eigen Foundation won't affect its neutrality." This sounds reasonable, unless those "few" include Dankrad Feist and Justin Drake.

Recently, several researchers from the Ethereum Foundation publicly disclosed that they had accepted advisory positions with the Eigen Foundation, the entity behind the restaking protocol EigenLayer, and would receive significant EIGEN tokens as compensation. This has sparked considerable controversy and heated discussions within the community. The author believes that understanding the ins and outs of this incident can help everyone grasp the dilemmas faced by Ethereum developers and the community at the level of "social consensus."

Background: The Ethereum Community Starts Arguing

With influential developers/opinion leaders like Vitalik becoming active on Farcaster, the Ethereum community, unlike Solana's Mert who continuously generates buzz through his opinions and interactions, has been relatively "quiet" for some time. But now, the calm has finally been broken—Péter Szilágyi, the lead developer of Ethereum's main execution client Geth, and Dankrad Feist, a core member of the Ethereum Foundation, have started arguing.

The argument mainly revolves around MEV and development progress, with Péter expressing dissatisfaction with the current state of Ethereum's development. Regarding MEV, Peter believes it is essentially an attack on Ethereum, but by sharing the profits with stakeholders, the problem ceases to be a problem.

This highlights a challenge beyond development: as the protocol grows larger and more decentralized, there will be more participants or stakeholders. How should their interests be coordinated and balanced?

Eventually, Vitalik joined the discussion on X.

Main Issue: Potential Conflict of Interest Sparks Controversy

Vitalik subsequently praised the Ethereum community's "open discussion." But in a thread on this topic, legendary crypto influencer Cobie responded, "What are your thoughts on core developers or researchers of the Ethereum Foundation receiving life-changing amounts of compensation and becoming advisors for projects built on Ethereum? These projects might have conflicts of interest with Ethereum now or in the future, such as—purely theoretically—EigenLayer."

Cobie clearly knew some inside information and did not mention EigenLayer randomly. Shortly after his post, Justin Drake, a core researcher at the Ethereum Foundation, disclosed in a long post on X that he would become an advisor to the Eigen Foundation and receive millions of dollars in token incentives, "worth more than all his other personal assets combined."

Why did this cause such a huge controversy? Can't a person hold positions in multiple organizations simultaneously? The answer is: yes, they can. But what if the entities they work for might have conflicts of interest? Things get complicated.

Restaking, usually considered to introduce additional risks to Ethereum at the protocol level, simply put, may not necessarily benefit Ethereum and could even lead to potential conflicts of interest—for example, additional slashing when providing security guarantees to third parties, which in the worst-case scenario could lead to users who lost assets attempting to fork Ethereum.

A common explanation of restaking is making one asset work multiple jobs to earn multiple returns. In this light, these Ethereum researchers seem to be "restaking" themselves, trying to work multiple jobs. Restaking is risky, and working multiple jobs could backfire (if the company is unreliable, the principal could be slashed).

Although these researchers claim that their advisory roles are personal and do not represent the Ethereum Foundation, and they can fully hold dissenting views on EigenLayer and be ready to end their advisory roles if EigenLayer takes actions against Ethereum's interests, community members have raised a soul-searching question:

"Do you really think receiving huge compensation from an organization with different incentives from Ethereum won't affect your decisions?" Will researchers holding advisory roles in stakeholder projects affect the Ethereum Foundation's neutral stance?

As mentioned at the beginning of the article: "With over 300 people in the Ethereum Foundation, having a few of them serve as advisors to the Eigen Foundation won't affect its neutrality." This sounds reasonable, unless those "few" include Dankrad Feist and Justin Drake. Because Dankrad Feist and Justin Drake are influential figures who can significantly impact Ethereum—Justin Drake is crucial in the layout of Ethereum 2.0, and this year's biggest narrative for Ethereum, aside from the ETF, is the Cancun upgrade, which implemented proto-danksharding, laying the foundation for future danksharding. Yes, the expansion solution ultimately chosen for the Ethereum mainnet was proposed by Dankrad Feist and named after him.

Such individuals receiving millions of dollars in EIGEN tokens to critique EigenLayer. Is the Eigen Foundation doing charity for public welfare? Please judge for yourself.

Later, Péter Szilágyi and Dankrad Feist argued again, with Péter asking, "So who decides what is necessary for the protocol and what is not?" Dankrad replied, "Obviously, I do."

Then Péter Szilágyi sarcastically said, "I thought it was EigenLayer, my bad."

Dankrad did not respond further.

Analysis: EigenLayer Uses Tokens to Recruit Allies

We have no evidence to prove the purpose of EigenLayer offering so many tokens to recruit "advisors," but we can observe an interesting fact.

Ten months ago, Bankless did a podcast titled "Restaking Alignment." Among the seven participants, most held a relatively negative attitude towards restaking (including Justin Drake and Dankrad).

Now, six of the people in the picture below hold stakes in EigenLayer (through angel investments, advisory positions, or employment), and the seventh person in the podcast is Vitalik.

In this regard, Sreeram might be the most outstanding ever.

Reflection: Better and More Transparent Information Disclosure

The Ethereum Foundation is essentially a non-profit organization. In the crypto industry, such foundations are less transparent compared to traditional companies or foundations, lacking basic information disclosure. This incident has exposed this issue, and community members have raised related concerns, pointing out:

Compared to individual employees not disclosing investments, I have bigger issues with the Ethereum Foundation as a whole.

Over the years, the Ethereum Foundation should have disclosed financial reports, organizational charts, and other information.

A well-managed organization would require its employees to disclose.

In the current trust crisis, the Ethereum Foundation should make improvements to bring better and more transparent information disclosure. Otherwise, some have already started discussing: "Should the Ethereum Foundation be dissolved?"

Extension:

Social Consensus and Decentralization

Reflecting on the events, it essentially boils down to a trust crisis faced by individuals and organizations within the Ethereum Foundation. Community members doubted their neutrality, fearing that they might steer Ethereum in the wrong direction for personal gain.

In my opinion, this is actually a good thing. Different groups have different interests, leading to disagreements. An Ethereum that advances through debate is clearly more decentralized at the social consensus level than one that is "tightly united" around the Ethereum Foundation. Questioning leads to reflection, which leads to progress.

Decentralization at the technical and code level is not enough. We should also pay attention to decentralization at the social consensus level. Imagine if the whole world had only one decentralized computer, wouldn't that be a form of centralization?

Ethereum is a pioneer in smart contract platforms, but it also carries historical burdens, such as the not-so-advanced EVM. It now chooses a modular architecture and a Rollup-centric roadmap, aiming to use the mainnet as a foundation, allowing teams with differing opinions to advance through debate and build their own "decentralized computer" solutions, collectively achieving a better decentralized future.