rewrite this title EigenLayer Rolls Out Redistribution Feature, Allowing AVSs To Repurpose And Distribute Slashed Funds

by
Alisa Davidson

Published: June 06, 2025 at 6:41 am Updated: June 06, 2025 at 9:01 am

by Ana

Edited and fact-checked:
June 06, 2025 at 6:41 am

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Ethereum-based restaking protocol EigenLayer introduced its redistribution functionality on the Holesky, Sepolia, and Hoodi Ethereum testnets, with a mainnet deployment expected in late June or July.

The platform enables users to restake their ETH or liquid staking derivatives—including assets such as stETH, rETH, or frxETH—to help secure additional decentralized infrastructures known as Actively Validated Services, or AVSs. 

The redistribution process refers to the allocation of supplementary rewards generated by these AVSs to the restakers. These rewards, often issued in the native tokens of the respective AVSs like EIGEN, are distributed in addition to the regular Ethereum staking yields. This approach encourages broader participation in supporting decentralized networks, while allowing restakers to derive increased utility and potential returns from their existing staked holdings.

AVSs will have the ability to redirect slashed funds rather than permanently removing them from circulation through burning. This adjustment broadens the functional scope of slashing mechanisms within EigenLayer by allowing these assets to be redistributed under certain conditions, such as in response to a breach of protocol terms or operational changes like liquidations or reimbursements. This development is intended to increase the flexibility of AVS design by shifting from purely punitive measures to a more strategic framework, where slashed funds can be utilized to support objectives such as compensating affected users or incentivizing consistent performance from Operators.

AVSs are now able to initiate Redistributing OperatorSets on the testnet to evaluate the updated slashing and redistribution capabilities. These OperatorSets largely resemble previous versions introduced earlier in the year, with the primary change being the integration of a new parameter that designates a redistribution recipient during the slashing process.

Redistribution Is Opt-In For AVSs And Operators, Supports Multiple Asset Types

The redistribution mechanism is entirely opt-in for both AVSs and Operators. To activate this functionality, AVSs must establish new OperatorSets configured for redistribution, after which Operators may choose to participate by allocating to these sets and accepting their terms, including the associated slashing conditions. Stakers retain the option to delegate to Operators within these redistributable sets; however, it is ultimately the Operators who decide which AVSs to support.

This implementation supports the redistribution of all non-ETH assets, including liquid staking tokens, EIGEN, USDC, and AVS-native tokens. Native ETH is not supported for redistribution at this stage.

In order to maintain protocol consistency, the redistributable status of an OperatorSet must be defined at the time of its creation. This ensures that the redistribution property remains fixed, providing clear and predictable terms for both Stakers and Operators throughout the lifecycle of the OperatorSet.

Eigen Labs has finalized the core functionality of its protocol and is now entering a stage focused on broadening the potential of services that operate on verifiable commitments. Ongoing development efforts will include the release of additional code, deployment templates, and interoperability standards to support service launches across various blockchain networks. 

About The Author

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

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Alisa Davidson

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

More articles