The Aethos Network is a decentralized policy engine for smarter contracts. It enables developers to abstract away and seamlessly maintain their protocol’s rule system, ensuring that their smart contracts are always up-to-date with the latest requirements. Liquid restaking is a new primitive, providing a platform for novel use cases and structured financial products that can onboard new users and generate additional yield for them. Policies, however, are necessary to realize the full potential of restaking—one immediate example is offering new gamified models. As an actively validated service (AVS), the Aethos Network is uniquely situated to service liquid restaking protocols and foster a bi-directional relationship to both advance the mission of liquid restaking, while also bolstering underlying cryptoeconomic security for the Aethos Network and other AVSs. We at Aethos are excited to build the policy infrastructure for liquid restaking and collaborate with partners like EtherFi to support permissionless DeFi products that meet the needs of users around the world.

Aethos Powers Pre-transaction Policies for Liquid Restaking

Liquid restaking protocols consist of globally sourced ETH liquidity. In this model, users deposit ETH (or a liquid staking token) and in turn receive a liquid restaking token that represents their respective position. True to the building blocks of decentralized finance, liquid restaking is a starting point upon which more complex financial products can be built. For this to be realized, however, pre-transaction policies for liquid restaking will be necessary in order to drive greater adoption.

The Aethos Network verifies inbound transactions to ensure that they adhere to liquid restaking protocols’ policies. A distributed network of Aethos operators, economically secured via EigenLayer, issue signatures that attest to the fact that the transaction adheres to the destination protocol’s policy. These signatures are submitted alongside the transaction, and are verified by the liquid restaking protocol’s smart contract in order to be processed. Most importantly, the policy is fully owned and maintained by the liquid restaking protocol’s core team or community and can be updated permissionlessly. From our preliminary research with EtherFi, we highlight an initial example of a pre-transaction policy:

Gamifying restaking to build power users

Liquid restaking generated billions of dollars of activity through excitement for EigenLayer and potential airdrops. There is an opportunity to make the entire restaking experience more engaging, which can create sticky user activity across liquid staking communities. Thus far, users are rewarded through loyalty points and NFT badges based on the amount and duration of ETH or staked ETH deposited into liquid restaking protocols. The process risks becoming bland. These systems treat normal users and power users similarly, routing them all to the same rate of rewards. All users, however, are not equal nor should they be treated the same. A true experience is needed in which users take on more active membership roles. The Aethos Network makes this possible by enabling access control policies to create custom vaults.

At a high level, a liquid restaking protocol can use the Aethos Network to gamify restaking through power user vaults, which offer higher reward opportunities for members (e.g. governance token emissions or access to more exclusive NFT communities). Membership in power user vaults would be ascertained based on a dynamic ranking of prior onchain activities, such as participation in related applications (e.g. Ether.fi Liquid for EtherFi users), NFT badges from partners’ projects, use of certain AVSs, and even activities on other chains. The Aethos Network, in this case, references users’ onchain data to deem if they meet the vault’s policy requirements. If they do, they are given access to the vault. Over time as the type of power users change, the vault policy can also be seamlessly updated by the liquid restaking protocol developers or community without updating the underlying smart contract itself.

Of course, the policy example detailed above is just one of many possibilities. The Aethos Network is generalizable and built to enforce diverse and complex rules defined and owned by its users. We can imagine future policies as liquid restaking evolves, from mitigating or preventing exploits to embedded token policies to customizable smart contracts via points systems—this is only the beginning. At its core, the Aethos Network is defined by the industry. As liquid restaking becomes more complex, future developer and ecosystem needs will require decentralized infrastructure to make policies possible.

Building for the Future, Together

Liquid restaking offers a new paradigm for users and institutions to secure protocols, like the Aethos Network, and earn rewards, without compromising on decentralization. The future of restaking is not static though, and will continue to become more complex as new products are built on its foundations, such as automated strategy vaults. Aethos is building the decentralized policy engine to meet the evolving needs of restaking protocols, like EtherFi, that can onboard the next wave of capital. The Aethos Network is positioned as an AVS to not only receive shared security from liquid restaking protocols, but also service them through the decentralized policy engine. This is an infinite sum game at its best.

To join us on our research, reach out by email and follow us on Twitter!