LayerZero x EigenLayer: The CryptoEconomic DVN Framework

LayerZero Labs, in partnership with Eigen Labs, is introducing a framework for CryptoEconomic Decentralized Verifier Networks (DVNs).

The CryptoEconomic DVN Framework brings cryptoeconomic security to omnichain messaging, ensuring that verifiers are not only technically sound but also financially incentivized to act honestly. This framework allows projects to easily bootstrap a DVN on EigenLayer using ANY tokens, operators, and slashing rules.

The first DVN to utilize this Framework is the LayerZero Labs DVN, which accepts ETH, ZRO, and EIGEN as staking assets.

This article outlines the CryptoEconomic DVN Framework.

LayerZero DVNs and EigenLayer’s CryptoEconomic Security

LayerZero is an omnichain interoperability protocol that transmits secure messages (i.e., data packets) across 80+ blockchains, enabling the development of applications that exist on many chains at once. Applications using LayerZero can send and receive data between blockchains while having the freedom to choose their own security setup. This includes the selection of Decentralized Verifier Networks (DVNs), which are off-chain infrastructure that verify messages. Currently, 35 entities, including zk-proof teams like Polyhedra and oracles like Google Cloud, operate DVNs, forming a marketplace of verifiers for applications to choose from.

EigenLayer introduces cryptoeconomic security, a primitive built on Ethereum designed to enhance security by using existing staked assets (e.g., stETH) to secure additional services, applications, and verification systems. By creating a decentralized security marketplace, EigenLayer enables applications and infrastructure to leverage cryptoeconomic guarantees for security, without requiring developers to build it from scratch.

The combination of LayerZero’s DVN marketplace and EigenLayer’s economic security marketplace led to the creation of the CryptoEconomic DVN Framework.

Why CryptoEconomic DVNs Matter

With CryptoEconomic DVNs, applications gain guarantees via restaked assets and slashing conditions that backstop the trust previously placed in a DVN’s verification methodology.

Here’s how CryptoEconomic DVNs transform omnichain security:

1. Cryptoeconomic Security: The core innovation in CryptoEconomic DVNs is the introduction of slashing mechanisms. If a DVN acts maliciously or incorrectly, its staked assets are slashed. This shifts trust away from subjective beliefs in verifier integrity toward a quantifiable, economically secured system. Slashing ensures that DVNs have “skin in the game,” making bad behavior costly and, therefore, deterring it.
2. AVS-Defined Security: Each Actively Validated Service (AVS) defines which assets can be staked and the conditions for when the stake can be slashed. This flexibility allows for the economic backing of any DVN, whether it uses zk-proofs, middlechains, POA, or any other mechanism. For example, a zk-proof-based DVN can further strengthen its security by adding restaked collateral that’s visible on-chain, providing an additional layer of economic deterrence to prevent bad behavior.
3. Permissionless Security: CryptoEconomic DVNs allow anyone to contribute to the security of LayerZero messages by staking assets into the DVN’s AVS. The DVN can choose whichever assets it wants to back its network, like ZRO, EIGEN, ETH, or any other asset.

How CryptoEconomic DVNs Work

This open-source framework is available for any third-party DVN to adopt, allowing the DVN to enhance security by incorporating CryptoEconomic security via any tokens.

The CryptoEconomic DVN Framework introduces four essential mechanisms to secure LayerZero’s omnichain messaging: stake, verify, veto, and slash.

• Stake: Stakers lock up assets, such as ZRO, EIGEN, or ETH, into a DVN’s AVS. These assets serve as a financial backstop, ensuring that the DVN acts in the best interest of the applications it serves. The economic collateral is held in smart contracts, and these assets are at risk of slashing if the DVN is found to act maliciously or incorrectly during verification.
• Verify: A user or application can trigger a permissionless round-trip message that travels from Ethereum → Source Chain → Destination Chain → Ethereum. This verifies whether the packet hash transmitted and verified by the DVN matches the packet hash recorded on-chain. If there is no mismatch then the veto process never takes place (step 3).
• Veto: If a discrepancy is found in message verification, a separate veto contract is triggered on Ethereum, where token holders vote on whether the offending DVN’s stake should be slashed. Vetoing is essential to this process since a blockchain reorg could cause a packet mismatch (i.e., indicate malicious activity), even though the DVN was acting honestly and should not be slashed. If the veto determines there is no malicious behavior conducted by the DVN (e.g., reorg which impacts the message packets) the staked assets remain unaffected.
• Slash: If the veto confirms a packet mismatch, then the assets staked in the DVN’s AVS are slashed.

The diagram and steps outlined below illustrate the verification, vetoing, and slashing processes:

Phase 1: Verification

1. Trigger Verification: user or application can trigger a permissionless round-trip message that travels from Ethereum → Source Chain → Destination Chain → Ethereum. Multiple DVNs will be selected, which are different from the DVN in question, to verify the round-trip message. Since the DVNs handling the verification are separate from the DVN being evaluated, that DVN cannot participate in its own “evaluation,” which reduces the risk of collusion and an improper outcome.

2. Ethereum Endpoint: The process begins with a user or application that triggers a round-trip verification message starting with an endpoint on the Ethereum blockchain.

3. Source Chain Endpoint: The verification message is transmitted and interacts with the source chain endpoint to collect and verify data.

4. Destination Chain Endpoint: After processing on the source chain, the message travels to the destination chain, where similar interactions occur at another endpoint.

5. Return to Ethereum: The message returns to the Ethereum blockchain, carrying the source chain and destination chain data packets back for comparison. If a discrepancy between the packets is not found, then the slashing veto contract is not triggered (step 6).

Phase 2: Vetoing

6. Trigger Slashing Veto Contract: If discrepancies are found (e.g., a mismatched packet hash), the slashing veto contract is triggered on Ethereum for voting on whether to slash the DVN. Staked funds are locked for 7 days during the veto process.

7. Veto: Token holders can veto the slashing event. Again, this step is critical because unexpected situations, like a blockchain reorg event, may result in a packet mismatch and indicate malicious activity when in reality the DVN was acting honestly. If a veto is invoked, it means no malicious behavior was found by the DVN, and the staked assets remain unaffected.

Phase 3: Slashing

8. Slashing: If the veto is not invoked, it confirms that the DVN either made an incorrect packet verification or acted maliciously, leading to the staked assets in the AVS contract being slashed.

LayerZero Labs x Eigen Labs DVN

The LayerZero Labs DVN is the first CryptoEconomic DVN to use this Framework and was co-developed by LayerZero Labs and Eigen Labs.

Anyone can stake ZRO, EIGEN, and ETH into the LayerZero Labs DVN AVS staking contract. If a packet discrepancy is detected, ZRO holders can vote on whether staked assets should be slashed.

This setup adds an additional layer of security for applications that rely on this DVN to verify LayerZero messages.

For those interested in using the cryptoeconomically secured LayerZero Labs DVN as part of your application’s security stack, reach out for developer assistance here.

The Future of Omnichain Security

This partnership marks a pivotal step toward building the next generation of omnichain messaging, where cryptoeconomic security and interoperability merge seamlessly.

The significance of this integration can be best viewed from the lens of the internet (built on protocols like TCP/IP) which enabled the standardization of digital communication, but lacked a robust commitment mechanism. Messages could be sent, but there were no strong guarantees of their delivery or integrity.

Blockchains, by contrast, serve as a substrate for global coordination, where decentralized consensus mechanisms ensure the integrity of data. EigenLayer leverages Ethereum’s decentralized trust model to create a credible commitment mechanism for applications. By integrating with LayerZero’s omnichain messaging framework, we are entering an era where the next internet — one where data can flow seamlessly between blockchains — is defined not only by interoperability but by robust commitments.

Conclusion

The LayerZero x EigenLayer collaboration and the CryptoEconomic DVN Framework sets a new standard for cross-chain security by merging omnichain communication with cryptoeconomic guarantees.

Through the CryptoEconomic DVN Framework, LayerZero provides a system where verifiers are incentivized to act honestly, backed by real financial stake. As this Framework is adopted, the future of blockchain communication will be defined by trust, transparency, and accountability — bringing us closer to a world where every message across blockchains is secured by cryptoeconomics.