Introduction to the Base Protocol's Overload project, a rehypothecation ecosystem without diminishing risk.

Base Protocol's ecosystem has introduced a re-staking protocol called Overload, similar to EigenLayer, which allows users to stake any ERC-20 tokens, not limited to ETH. Moreover, this protocol does not diminish the node operators, further reducing the asset risk for re-stakers.

Background: Introduction to Restaking

Restaking refers to the process of restaking the liquid staked token LST, which not only protects the main network but also other external networks. For example, users can choose to stake ETH to the Lido protocol to secure the Ethereum network and stake the proof-of-stake token stETH to EigenLayer to protect more external networks and earn higher returns.

EigenLayer is a protocol that pioneered restaking, allowing node operators to manage stakers' tokens and assist in securing external network projects. The latter is also known as actively validated services (AVS).

Currently, the protocol's Total Value Locked (TVL) has exceeded $16 billion, with nine AVS awaiting collaboration.

As EigenLayer enters the next phase, here are some projects that users should be aware of before the AVS wave arrives.

Introduction to the Restaking Protocol Overload

In the Base ecosystem, a similar restaking project called Overload has emerged. According to the team, this project has three distinct features:

• Accepts any ERC-20 token for staking
• On-chain consensus
• No slashing mechanism
• Enhanced staker permissions

Each of these changes alters the restaking mechanism, as explained below.

Accepts Any ERC-20 Token for Staking

Unlike EigenLayer, which only accepts ETH and its corresponding liquid staked tokens, Overload can accept staking of any ERC-20 token, providing stakers with more flexibility and motivation.

This move aims to address the lack of asset diversity in the Base ecosystem. Furthermore, the design of Overload raises discussions regarding whether the network security for its AVS will be compromised in the future.

On-chain Consensus

Overload introduces the concept of On-chain Consensus, allowing AVS to perform verifications directly on the chain. According to the team, this measure prevents malicious behavior by node operators and greatly simplifies AVS development.

No Slashing Mechanism

On the Ethereum network, there are four actions that can lead to validators being penalized:

• Proposing a different block
• Surround voting
• Double signing
• Inactivity leaks

Validators in Ethereum will lose a portion of their staked ETH through slashing. In the restaking ecosystem, this means node operators causing losses to stakers' assets, seen as a risk and cost for potentially higher returns.

However, Overload does not have a slashing mechanism. Due to AVS using on-chain consensus, only "Inactivity leaks" penalties apply, temporarily excluding validators from the set, causing them to miss out on proof rewards. This penalty does not result in stakers' assets being at risk.

The Overload team believes this approach can increase stakers' willingness to stake assets.

Enhanced Staker Permissions

Compared to EigenLayer's design, where stakers delegate tokens to node operators who can choose which AVS to operate, the actual permissions and operational complexity for token stakers are not high.

Overload diminishes the role of node operators, allowing stakers to choose which AVS to operate their tokens with, and even select multiple validators, enhancing their asset autonomy.

New Point Competition

The Overload team has announced that they will soon launch a restaking-related point competition, following a marketing model similar to EigenLayer, which is expected to attract early adopters.

The first step taken by the Overload team is considered moderate and strategically reasonable. By accepting a diverse range of ERC-20 assets as collateral, they address the lack of funding in the Base ecosystem. Moreover, the absence of a penalty mechanism reduces user concerns about Layer2 and new projects. Lastly, as Layer2 users can perform more advanced operations, granting more permissions to stakers may meet their needs.

However, the market's reception to these changes remains to be seen.

Major Ecosystems Introduce Restaking Facilities

Apart from the Base network, there have been several restaking projects related to Solana this year. Projects like Cambrian, Solayer Labs, and Picasso are preparing to create a Solana-style EigenLayer to strengthen the existing ecosystem.

SOL Version of EigenLayer? Restaking trend heats up Solana ecosystem

Is the Security Adequate?

However, the core of restaking is to share security with external decentralized networks, which requires a solid foundation on the main network.

Compared to ETH's $370 billion or SOL's $71 billion market cap, Base currently has a TVL of only $5.4 billion. Does it have the capability to operate a robust restaking ecosystem? It seems there is still a long way to go.

Is Building a Restaking Ecosystem Necessary?

Another key issue that all restaking teams need to clarify is whether there is a genuine need for a restaking ecosystem on their proposed network. For instance, some users in the Solana community believe that Solana's future development will focus on a single-chain structure, questioning the necessity of dispersing security to external networks.

The Overload team also needs to consider whether it is necessary or feasible to rationalize a restaking ecosystem in the Base ecosystem and whether it will overlap with existing Ethereum ecosystem infrastructure.