Ethos: Powering Sovereign Chains With ETH Security
Amid the fanfare of a plethora of new AVSs launching on EigenLayer, this novel project introduces exciting new security options for sovereign L1s.
In mid-December ‘23 Ethos made its very first tweet.
It came at a time when the narrative around EigenLayer was kicking into high-gear, and a question was put forward:
“What if we could bring ETH security into Cosmos, and beyond?”
The rest, is history.
Ethos has since drawn a significant following and has gone from a concept, to now being on the cusp of launching on EigenLayer as an AVS.
But this begs the question:
What is Ethos, and why should we be excited?
Up until now those who have wanted to start their own sovereign chains have had to do so by bootstrapping their own validator network, using a native token.
But this posed a number of issues, including high security costs (usually in the form of inflation).
Enter Ethos…
Built to be a validator/security coordination layer, Ethos allows any sovereign L1 to rapidly bootstrap a trust network or adjust its economic security by leveraging restaked ETH on EigenLayer.
This means that Ethereum stakers can restake their ETH, delegate it to node operators that are validating on Ethos, and subsequently earn additional rewards from the bevy of chains that make use of ETH security via the security module AVS.
In other words, Ethos is able to abstract away the complexity that comes from integrating ETH security into trust layers of blockchains.
So how does it work? (Tech Stack)
To understand the technical aspects of Ethos it’s important to be aware of the following terminology:
- Ethos AVS contract:
Deployed on EigenLayer, this contract facilitates the interaction between Ethereum stakers, Ethos operators, and Guardians. It defines the operation parameters including reward and slashing rules and shows the amount of capital delegated to Ethos operators. - Guardian Chain:
This L1 blockchain acts as a security/validator coordination layer. It enables other sovereign L1s to leverage the economic security of restaked ETH. “Guardians” serve as the nodes of the Guardian chain. “Guardians” do this by leveraging EigenLayer restaked ETH that’s allocated to them by the Ethos operators, which then lets them extend this restaked ETH security to other chains. - (Node) Operator:
An Ethereum validator (such as Cosmostation), that’s registered in EigenLayer, and opts in to validate additional services like Ethos and other AVSs. In the context of Ethos, Operators allow stakers to delegate restaked ETH to them, which Operators then allocate to the Guardians.
Looking to integration… Ethos offers two primary types
- Co-Validation:
Also known as “Opt-in Replicated Security” this concept allows an L1 chain to “replicate” the security of another blockchain (akin to Cosmos ICS).
In a nutshell, the validator set of an existing blockchain (Guardian chain) can opt-in to secure another smaller, newer blockchain. In doing so the validator set earns extra rewards in the form of native token emissions from the new chain. Guardians are allowed to choose which chains to validate on.
(Note: In this use case native tokens are utilized predominantly for rewards and governance - NOT security) - Dual Staking security:
This system allows blockchains to utilize both their native tokens and restaked ETH to enhance their chain security. Using IBC the “Guardians” can choose to opt-in to locking their tokens in a smart contract which subjects the locked tokens to slashing conditions based on the other chain’s protocol. The other chain, then mints corresponding virtual tokens. By using this security sovereign L1s mitigate the bootstrapping problem while retaining security and accruing value to their native token.
This security takes places over four distinct processes:
- Operator Commitment: Here EigenLayer operators commit a specified amount of restaked ETH to validators on the native chain.
- Guardian Chain Transfer: The Guardian Chain aggregates this commitment and relays it via IBC to the native chain.
- Oracle Conversion: The native chain employs a price oracle to determine the equivalent value of the restaked ETH in native assets, applying discounts or multipliers as required.
- Power Mixing: The native chain then combines the voting power of native staking with delegated ETH and configures its validator set based on the mix.
Is it worth it though?
In short… yes.
Running a sovereign chain is not cheap.
Aside from paying for security in the form of native token inflation, there exist a number of other costs.
Among them are security maintenance and update costs, as well as opportunity costs that occur when making native tokens illiquid by locking them up in a staking mechanism (bonding/unbonding periods). This is alongside capital risk exposure from the volatility of the staking token.
According to the Ethos team, using their service could cut a chain’s security expenses by as much as 90%.
This is because Guardians validating on them are already earning via their Node Operator services on the EigenLayer side of things (this applies to projects validating on both ends).
Other expenses saved also include the cutting away of massive foundation delegations, testnet incentives, and the pre-allocation of large portions of the token supply to launch validators. All of which have a significant impact on the native token’s value.
To give an idea of just how expensive native security can be, below is a rough snapshot calculation of what it costs to secure Cosmos ($ATOM):
Cost of Security for a chain (PoS):
Amount of bonded tokens x inflation% (as a decimal) x token price = cost (per annum)
Cosmos Eg: (As of ‘24.05.07)
250,530,000 x 0.10 x 9.31(USD) = 233,243,430 USD (per annum)
(*note: Costs fluctuate depending on figure changes in the factors above)
Now considering that using security provided by Ethos costs roughly 5% — 10% of this amount…
The security bill would come to only 23,324,343 USD (per annum), at most.
“Okay… but Matt, what about using ICS instead?”
While ICS is a formidable security option, chains that leverage Ethos are secured with the programmable trust of Ethereum, one of the most secure digital assets in the world.
But isn’t it more straightforward for chains to leverage the (ICS) Hub validator set instead?
Well, both ICS and Ethos offer “opt-in” security, meaning that chains do not need to pass a governance vote if they want to adopt a validator set and simply need to be adopted by their validators instead.
And while ICS is secured using ATOM, Ethos leverages restaked ETH, which has the potential to be much more difficult to attack by a bad actor.
Ecosystem
Now if the tech stack hasn’t got you excited (but it really really should), then take a look at the partners Ethos has already publicly teamed up with:
This is alongside the projects rumored to be in the pipeline, as well as an assortment of Node Operators and Guardians that are already known.
Roadmap:
Now I know a lot of you may be wondering: “Wen mainnet?”
To which the Ethos team has assured me that mainnet will be “Soon ™”.
So definitely this quarter… probably.
Cosmostation in Ethereum
Cosmostation empowers blockchain businesses by providing secure solutions and invaluable infrastructure legos essential for scaling and onboarding users onto blockchain networks. Securing blockchain networks requires continuous operational oversight and since 2018, Cosmostation has been providing a suite of robust solutions that enables businesses to contribute to blockchain network security and visibility without the overhead of managing infrastructure.
Since its inception Cosmostation has served over 500,000 users and has US$ 1.5 bil. in AUM, across 70+ chains. This is alongside its proud role as an Ethereum operator and Cosmos genesis validator, with 99% of uptime and no slashing events. Cosmostation’s experience in the Ethereum arena includes working with EtherFi, Obol, SSV, and the Lido DVT Module.
With this in mind, consider delegating your restaked ETH to one of the most trusted node operators in the space right here!
https://app.eigenlayer.xyz/operator/0x3303fda11d6bafe0833d6a6c44c2b8edbab92e4d
Mintscan
Moreover, Cosmostation offers its own blockchain explorer, Mintscan. It provides insightful interactions with chain data across various networks and also features a user-centric design, with transparency placed at the core of its ethos.
