Introduction
In the evolving blockchain landscape, EigenLayer represents a significant advancement in building and securing decentralized services. Just as Ethereum separated application logic from the underlying consensus mechanism, EigenLayer further extends this capability by allowing developers to enhance Ethereum’s crypto-economic security without the constraints of its existing infrastructure.
EigenLayer introduces the concept of Actively Validating Services (AVS), which go beyond the Ethereum Virtual Machine (EVM) capabilities, offering greater flexibility and functionality for applications like Dextr that need more computational power and specialized features.
Dextr’s AVS exemplifies this flexibility. It manages off-chain order matching by efficiently matching orders from traders with liquidity positions of LPs based on low latency ‘Price Oracle’ feed updates. With every Price Oracle feed update, the AVS searches the on-chain intent registry for orders intended to be settled at the new price. It identifies liquidity providers who can fulfill these trades based on their liquidity ranges, available liquidity, fee discounts, and LP Rank. The AVS accordingly organizes trades for prompt execution and batches transactions for streamlined on-chain settlement.
Role of Operators
Operators play a crucial role in Dextr’s AVS, acting as the system’s watchdogs. These individuals or entities opt into supporting the AVS by restaking their ETH on EigenLayer, aligning their incentives with the AVS’s success and security. They review each executed trade to ensure no MEV exploits have occurred and must challenge suspicious trades within the first 24 hours. This process contributes to the AVS’s robustness and allows operators to share in the economic rewards generated by its operations, aligning their financial interests with the system’s performance.
Beyond operators, traders and liquidity providers can challenge trades if they suspect discrepancies, including questioning the operator’s validation. After the initial 24-hour review period, there is an additional 24-hour window for community members involved in the transaction to raise challenges. All challenges are addressed through the governance system, ensuring impartial and transparent decisions.
Incentives and Slashing
Operators are incentivized with 33%* of the protocol fee for their role in maintaining robust security and protecting the protocol from MEV exploits. This reward structure aligns operators’ interests with the success of the AVS.
*Figures are subject to change.
To ensure accountability, Dextr employs a slashing system. Operators who fail to challenge valid cases of front-running or raise false challenges face slashing of their staked ETH and forfeiture of their share of protocol fees for that transaction.
Dextr is already exploring strategic partnerships in the EigenLayer ecosystem with listed operators and AVS infrastructure providers. Curious to experience Dextr in action? Join our Test-net beta.
Here is a snippet of what flexibility can be enabled👇🏻
