AVS and Ethereum Explained

As Ethereum moves towards a more scalable and decentralized consensus layer, the ability to access and tap into its vast network of nodes becomes pivotal. Since Ethereum’s shift to Proof of Stake and crossing over 1 million validators securing the network, there exists a unique opportunity to tap into this vast network with provably secure and trustless properties. This is where Actively Validated Services (AVSs) come in. You can think of AVS as any compute service running alongside validator software that runs external but critical infrastructure like Oracles and Data Availability (DA), that are outside EVM execution. AVSs can leverage Ethereum’s inherent security and decentralization to bootstrap additional compute services via liquid staking tools. AVSs introduce a new frontier in blockchain technology by providing secure and efficient pathways and staking pools built to scale Ethereum. In this article, you will learn why AVS could be a crucial step in Ethereum's long-term decentralization and how EigenLayer solves security challenges while allowing more people to validate and earn rewards.

The PoS Upgrade, BLS Signature, and AVS Security Functionality  

Ethereum has been actively improving its PoS model since its debut in September 2022, transitioning from Proof of Work (PoW) to PoS. The new PoS model required a minimum of 32 ETH for staking on the network. While this made validating on Ethereum less accessible, the transition was beneficial for socio-environmental concerns, drastically reducing energy consumption by 99.9% compared to the previous PoW model. 

Staking 32ETH, it’s time to verify the signature of a blockchain version of a John Hancock. Enter BLS (Barreto-Lynn-Shacham) signatures.  It's particularly relevant in the context of PoS and AVS in blockchain technology. This unique style of signature makes PoS tick. Instead of each validator signing every block individually, BLS signatures let them team up and create a single, super-efficient signature.  BLS signatures consist of two pairings, the public key (sk) and private key (pk), known as the key pairings, a message ( m), and a signature denoted by a stylish elliptic curve σt . Below is a breakdown of BLS signature process. 

1. Public Key: This is the key used to verify the signature. It's generated by the validator and shared publicly.

2. Private Key: This is the secret key known only to the validator. It's used to create the signature and must be kept secure.

3. Message: The CALLDATA is being signed. In Ethereum, this would typically be a block of transactions or some other piece of network data that needs to be validated. 

4. Signature: The output of the signing process. It's generated using the private key and the message.

5. Aggregate Signature: In the case of BLS signatures, multiple individual signatures can be aggregated into a single signature. This aggregate signature represents the combined signing power of all participating validators.

According to a paper by Justin Blake, “It is the pairing property of BLS signatures that allows us to aggregate signatures, thus making the whole consensus protocol practical.” Not to mention, much faster when it comes to verification.  Overall, BLS signatures were introduced to manage validators and nodes, making staking more accessible and verification faster and more efficient. Ethereum uses BLS signatures to identify validators who voted, hold them accountable for verifying, and slash rewards when network requests are not fulfilled.

What is AVS?

Diagram Source: EigenLayer 

An Actively Validated Service (AVS) integrates with Ethereum's consensus layer via the EigenLayer protocol, enabling blockchain applications to utilize Ethereum's security features. The EigenLayer core contract provides opportunities for Ethereum Node operators to offer services to various AVS Clients. Stakers can deposit in EigenLayers' StrategyManager for Liquid Staking Tokens (LST) and then choose DelegationManager to delegate to a node operator on ETH. Each AVS client has its own set of reward mechanisms and slashing conditions for node operators, written in its own set of contracts called the ServiceManager. AVSs enable Stakers to use their LSTs across multiple protocols, providing flexibility and additional rewards while ensuring economic security.  In addition, the withdrawal process for Stakers is also the responsibility of the  DelegationManager or state through uint256 public withdrawalDelayBlocks and takes a week to complete.

Ethereum’s Ever-Growing Data Management: EigenLayer's Response to Ethereum's Scalability Challenge

When ETH validators can only operate within ETH's staking protocol, fewer people can participate in validating nodes. The reason is that people value scalability and decentralization and if you want both, like the ability to run nodes easily, you have to make additional conditions. Now, while EigenLayer shares some similarities with traditional BLS signatures explained above, it's got its own unique flair.

First up, picture some AVS metadata sprinkled in. 

AVS metadata includes information associated with participating in AVS liquidity within the EigenLayer protocol. This metadata provides context and details about the validators, the type of AVS service being provided, and any specific conditions or requirements related to the validation process, including the “withdrawal process” also known as the “unbonding period.”  This adds extra info about the validator, the type of AVS service, and any interesting conditions they have to meet during validation. Think of it as adding some extra spice to the usual BLS signature process. Then, EigenLayer lays down the law with specific rules for validators to follow. These rules are like the secret sauce that keeps the validation process fair and secure. It also includes reward contract elements like OperatorDetails since multiple Stakers can exist.

Additionally, EigenLayer might jazz up the aggregation techniques or high-level decentralized finance strategies. Picture this: a slick algorithm that combines signatures from multiple validators methods called the StrategyManager and EigenPodManager. It's like watching a symphony of signatures coming together to make magic happen.

Last but not least, EigenLayer might even throw in some Ethereum contract wizardry. This means handling all the nitty-gritty details of interacting with smart contracts, storing data, and executing functions seamlessly. Now, when ETH validators can only operate within ETH's staking protocol, fewer people can participate in validating nodes. This is because people value scalability and decentralization, and you can't have both if running nodes requires storing constant, ever-growing amounts of data. Vitalik Buterin emphasized during ETH CC5 that the protocol wouldn't be directly responsible for storing this ever-growing data, prioritizing scalability and decentralization. This is why EigenDA and AVS are built and deployed on EigenLayer, the key solution to Ethereum's data availability dilemma. By extension, this unlocks Re-Staking opportunities for ETH validators, securing the future of AVS solutions. 

The Future of AVS and DAOs

As crypto enters its sophisticated era, DAOs have become the game-changers in organizational structures, elevating decentralized decision-making like never before. But here's the kicker: when you pair them with AVS and EigenLayer, this is where the magic happens! These integrations let DAOs tap into Ethereum's consensus layer, boosting governance security and efficiency. It's like giving DAOs a shot at B12 for innovation and collaboration, shaping the future of decentralized governance in the Ethereum ecosystem.

AVS Applications and Composability

Since EigenLayer's debut, major ETH Stakers like Lido and Coinbase have supported ETH Restaking initiatives to accelerate the growth of AVSs. If you’re interested in live activity and updates, websites like EthRestaking.com track all the dapps building solutions, including Ethos and Espresso. 

Resources for Further Learning

For more information on AVSs and Ethereum's evolving ecosystem, you can refer to resources like the following glossary:

•  https://docs.eigenlayer.xyz/eigenlayer/overview/key-terms 

• https://eth2book.info/capella/part2/building_blocks/signatures/ 

• https://docs.eigenlayer.xyz/eigenda/overview 

• https://hackmd.io/@benjaminion/bls12-381 

• https://x.com/dabit3/status/1806712132475469855