PANews, May 9 - According to an official announcement, the Ethereum restaking protocol EigenLayer will launch an upgrade for 'redistribution of slashed funds' on the mainnet in June, which is an advanced feature of its Slashing mechanism. This feature allows Active Validation Services (AVS) to allocate slashed funds to designated recipients instead of directly destroying them. The first batch will support LST, EIGEN, USDC, and AVS tokens (ETH is not included for now). The testnet is planned to be deployed on networks like Holesky in May.
This upgrade is an optional feature, and AVS can design an incentive structure of 'penalizing failed nodes - rewarding reliable nodes', but it needs to be accompanied by strengthened key management (to prevent attacks on the slasher module) and smart contract security (it is recommended to adopt a multi-signature structure / a veto mechanism for slashing). The protocol emphasizes that AVS must carefully design redistribution rules to avoid incentive distortion, such as balancing risk and return through fixed slashing conditions. The redistribution mechanism provides a new paradigm for scenarios that require liquidity, such as lending and insurance, for example, using slashed funds for user compensation or liquidation buffers.
