Introduction

Truly, blockchain technology has changed: from Bitcoin’s simple but audacious peer-to-peer money, to today’s complex multi-chain environments, the expansion has been phenomenal. And with expansion comes a question: how do we scale all these blockchains and not sacrifice any aspect of their core tenets of security or decentralization?

This moment is ripe for the emergence of the concepts of restaking and shared security. These ideas are the basis for a present-day transformation in trust, security, and integration within the blockchain space. Knowing and understanding these types of trust models might even give one an advantage if you're looking to work as a blockchain developer, validator, or lewd technology enthusiast.

This article will discuss restaking and shared security, why they are important now and how they are changing the structure of blockchains.

The Current Blockchain Infrastructure Challenges

Before we get into the future, let’s first go over the problems. Blockchains have great potential but they also have unique hurdles.

Firstly, there is the awkwardness of cross-chain communication: each blockchain has its own unique set of rules and trust models that make secure communication essentially risk prohibitive. This is like walking into a room of a dozen languages and the people in that room are trying to have a conversation with one another but nobody understands anyone.

The second problem is security: each chain has its own validators, staking logics, and risks. This means developers building across chains have to deal with multiple security concepts that's complex and risky.

And then there is state bloat: as more data is stored on-chain, the costs of storage increase, clients synchronize before blocks are mined, and competition becomes an issue for validators all of which typically leads to validator centralization, as only those in the big dinero can afford to stay competitive and, right, that is the opposite of decentralization. Right?

There are options for restaking and shared security!

What is Restaking?

Let's break down restaking. You are an Ethereum validator; you have staked ETH to help keep Ethereum secure; you keep Ethereum secure, gather rewards, then go about your day.

Restaking is when you can use the staked ETH to help keep other networks, protocols, or applications secure as in, accomplish many different things with one effort. Just give your security service to other networks or protocols, don't build every validator into a network or go stake coins.

Restaking permits new protocols to rely on security inherited from Ethereum simply by making it part of the future. That’s a big deal, small projects can launch quickly, safely, and cheaply. They have the potential to borrow trust without having to accumulate trust for months, or years.

Typically, restaking involves smart contracts that allow for an opt-in by the validators, who take on the responsibility and potential rewards of securing additional networks or protocols. If they don't do it correctly, they risk being penalized, or slashed across multiple networks, therefore the accountability and opportunity can be distributed efficiently at scale.

Understanding Shared Security Models

The puzzle involves restaking. Another part is shared security. You've probably heard references to that in the context of either the Cosmos or Polkadot ecosystems. But what is that?

The simple answer is that shared security means several blockchains are using the same validator set, or the chains do not have their own validator set, but share the validators. An analogy is several different communities contract for the same police force. The communities all get the benefit of a professional police force and the safety of a police force, but none can afford their own policing service.

There are a number of different types of shared securities.

  • Native shared security, such as the Interchain Security in the Cosmos, allows smaller consumer chains to tap into the protection of a hub chain.
  • EigenLayer on Ethereum allows the validators of Ethereum to restake and secure other networks for the same staked assets.
  • Hybrid combinations combine flexibility and security.

Shared security connects the ecosystems, which is great. You can share the chain data, asset, and logic easily without using some centralized bridge, which creates unnecessary trust assumptions. If you align the incentives, on one side, is an issue, because when a validator misbehaves, they affect many chains.

Shared Security vs. Restaking

These two concepts are related but separate: restaking means staked tokens are securing many more networks, while shared security is an architecture in which multiple blockchains share the same validator set.

You can think of restaking as a tool and shared security as a system, which facilitates the launch of new blockchains quickly, reliably, and in an interoperable way with the established networks.

Why These Models Matter Now

The timing couldn't be better; security has now become the glue as modular blockchain designs provide execution, data availability, and consensus layers to plug and play.

Restaking and shared security solve one of the largest issues in this modular space; making smaller, or specialized chains as secure as larger chains, without having to recreate the wheel.

Picture a developer launching a new DeFi protocol, game chain, or oracle network that is secured, from day one, by Ethereum's validator network. Restaking enables this to happen—and that basically means you have trust, right at the beginning of your launch.

Restaking and Shared Security Benefits

The main advantage is speed. Developers are able to launch faster, without the need to bootstrap a validator community. Security is provided upfront.

It also improves capital efficiency. Validators can earn more by securing several protocols with one stake (instead of unnecessary overlapping tokens). Validators will be able to earn greater incentives and token holders will get greater flexibility.

The network effect: when blockchains share in security, they become part of the greater interchain web. This allows for easier cross-chain composability, more seamless communication and greater ecosystem development as a result.

And the best part? Everybody wins. Existing validators earn more, new chains have enterprise grade security and users experience a more connected and reliable network.

Challenges and Risks

There aren't innovations without faults. The biggest risk will be slashing. If a validator does something wrong or just has a technical failure, they will be slashed on multiple chains. This would have an ecosystem-wide effect.

Concentration of governance is another one. Large validators or staking pools may have governance power over multiple chains. This has the potential to lead to censorship, collusion, or manipulation of governance at the specific chain level.

And lastly will be validator fatigue. It is difficult to operate on so many networks. It also adds to operations complexity and increases the risk of human and technical error. As this model gets bigger, the validators will need decentralized tooling and automation to create efficiency and accountability.

Real-World Applications

Let's look at the real world applications.

  • EigenLayer is paving the way on Ethereum for ETH holders to secure new services. For example, the new data layers and oracle networks are just a few of the cool concepts making their way to Ethereum.
  • Cosmos Hub lends its validator set to "consumer chains" with Interchain Security.
  • Polkadot offers a shared security pool for applications via its Relay Chain and parachains.

These are the prototypical applications of restaking and shared security and are production ready and ongoing in addressing the functionality and infrastructure contingent for future blockchain applications, and are not just ideas that have been concocted in theory only.

Developer Takeaways

The primary question for blockchain developers and architects is whether to build your own validator network or plug into an existing one.

General rule of thumb: If your project requires separated governance and layered economics, then build your own validation network. If speed, interoperability, and trust are your main desires, consider something with shared security and staking.

Regardless of your option, rewards, slashing, and validator alignment must all be clear and transparent. Security will only come from the rewards.

The Future of Blockchain Security

There could be hundreds of chains that utilize a shared validator backbone, where each blockchain serves a different purpose. In the future, assets and data will be able to move freely, and new chains will launch without worrying about fracturing security.

In the future, restaking may serve as a global "security layer" for Web3 by decentralizing validators who are security providers across many different networks.

This is exciting because it continues to blur the lines between chains and makes for a larger blockchain ecosystem.

Conclusion

Restaking and shared security are conceptual shifts, not simply a technical improvement. They shift trust distribution in blockchain into something that has the potential to be distributed, interoperable, and secure at scale.

These are models that developers and builders ought to be experimenting with. Do it, prototype it, and think about how shared security can help your next project succeed.

Because the blockchain future is a network of connected, trusted, modular networks, not isolated silos.

 

This article is contributed by an external writer: Razel Jade Hijastro.


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