Top Crypto Narratives. You know they can lead to outsized gains. You know an OK project in a big narrative does better than a great project in a narrative no one cares about.
Like for instance the metaverse. Right now, no one cares. But one trend is ripping through the industry. And it’s a tougher trend to explain than in 30-second sound bites. So today, the hot trend of the Data Availability Layer. Or as you might know it, the Celestia effect.
1) Celestia
The reason anyone is even talking about this stuff is Celestia. As a modular blockchain, Celestia and the others on this list are handling some of the blockchain’s responsibilities. But not all. They outsource others like security. In reality, it’s not that different than any Layer 2 that leaves transaction finality and security to ETH to handle. Then transactions settle on the L1 chain.
Celestia mainnet is live ✨https://t.co/Sj7RAfTh4W pic.twitter.com/Sd6CsU2dwL
— Celestia (@CelestiaOrg) October 31, 2023
Celestia was the first major data availability layer chain to hit the market. Data Availability is an important feature of blockchains. The idea is that all of the transaction data is available and accessible on-chain. And all the nodes can access all the data at ANY time. It’s this all-data-at-any-time feature that takes up lots of space on the chain. It slows down the other layers like the consensus layer.
Separating this layer means chains are faster and more scalable. The first to present the data layer separately is Celestia. Celestia makes the managing of blockchain data easier so ANYONE can create their chain easily.
2) Eigenlayer
Now we get to Eigenlayer. Although Celestia is getting a lot of attention, right now, especially on crypto Twitter, where Eigenlayer is even more popular. Restaking is the big reason. I’m sure you’ve seen it. Take your Lido liquid staking tokens and restake them for more gains.
Accelerating Ethereum Together: @eigenlayer ♾ @a16zcrypto
We are excited to announce that Eigen Labs, the core development team contributing to EigenLayer and @eigen_da, has raised $100 million from a16z crypto.https://t.co/M2JQ8HZZ0h
— EigenLayer (@eigenlayer) February 22, 2024
And you seem to love it. It’s already the 6th biggest protocol in DeFi. $5.1 BILLION worth of ETH has been restaked on Eigenlayer already. Like our 3rd pick coming up, Eigenlayer does both data availability and consensus together.
This is a good thing as it reduces some of the restaking risks. But other risks are still there for all data availability layers including increased risk of slashing. One area where Eigenlayer could help ETH, in the long run, is the dependence and dominance of liquid staking protocols like Lido.
Right now though, Lido has much more restaked from Eigenlayer than any other protocol including the ETH Beacon Chain. It’s the only one with more than ETH itself. The numbers are 748,000 ETH for Lido and 625,000 ETH for ETH itself. That shows you how dominant Lido is and how that could present issues down the road.
If you are a heavy ETH user and concerned about this increasing your centralization risk, then you can use Eigenlayer strategically to restake on another smaller validator. Eigenlayer has a points system that helps you estimate what you can earn as well as for airdrop qualification for related projects.
32 hours more! ⏰
Get 50 EigenLayer Points for every new $ETHx minted & restaked till Feb 09, 8 PM UTC.
Valid for the first 20k $ETHx restaked starting Feb 06, 6 AM UTC.
This is on top of extra EL Points daily with EigenBoost 2.0
Get $ETHx now!
🧩 https://t.co/GJreucazFH pic.twitter.com/bfh8CJZ5un
— Stader Ethereum (@staderlabs_eth) February 8, 2024
Thus, we see lots of action on Crypto Twitter like this from liquid staking pool Stader. Celestia might have the most hype and interest overall. But there is no doubt that when it comes to Ethereum and liquid staking, the king of data availability is Eigenlayer.
3) Avail
Avail is a data availability layer for ETH rollups. Avail is built with the idea of building out your blockchain for your purposes quickly and easily. One thing we like about Avail is that it is both the data and consensus layer. This is important and highlights one of the big risks in Data Availability layers generally.
Avail DA helps in addressing more problems than one. We’re building the core infrastructure to scale web3.
Read more here – https://t.co/segXXQoVv0
— Avail | ✈️ ETH Denver (@AvailProject) February 21, 2024
An important feature of data availability layers is they make the data available on-chain in a way that is easy and fast. Other modular blockchains use this layer so they can scale more quickly. When a data availability layer is ONLY data and not consensus too, that is problematic. Avail avoids this issue.
A data availability layer that does not do consensus too means that the blockchain that uses this data can have incorrect or fraudulent transactions in it. Data availability WITHOUT consensus means the data is available. But there is NO guarantee of data accuracy. This matters a lot for Eigenlayer people and those doing restaking.
The risk of slashing by an Eigenlayer-based restaking validator is MUCH MUCH higher than slashing of a normal ETH validator or a basic liquid staking validator like Lido or RocketPool. Even with Eigenlayer doing consensus. The lack of consensus where all nodes agree on what transactions are valid can lead to lots of potential problems. They include lost funds when restaking.
For some reason, no one is talking about this. But we are. It’s important. Now back to our regularly scheduled program. Avail avoids this issue that some others could have by providing data availability AND consensus together. So the risk of working with a data availability layer is far lower when it does both.
Cross-chain capabilities of @DarwiniaNetwork, now on Ethereum. 🤝
The Darwinia community, a leading Polkadot network, is launching an OP Stack L2 built on Avail DA and powered by @alt_layer.
Read more about the partnership here – https://t.co/157ZUJEdRi pic.twitter.com/r8ASLlEuLF
— Avail | ✈️ ETH Denver (@AvailProject) February 20, 2024
Avail offers shared security too. This is a nice benefit. Often these modular chains rely exclusively on ETH for security. A shared security model gives a new chain a chance to positively affect security.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
