MilkyWay Docs
  • INTRODUCTION
    • Welcome to MilkyWay
    • Mission and Vision
    • MILK
      • Tokenomics
    • Whitepaper (PDF)
  • User Guides
    • For Liquid Stakers
      • Quick Start
      • For Celestia (milkTIA)
        • Technical Architecture
          • Liquid Staking Process
          • Withdrawal Process
          • Exchange Rate
          • Compound Staking Rewards
          • Claim Process
          • Limits and Restrictions
        • Integrating with milkTIA
          • Contract Specifications
          • APIs specification
        • Using third party apps
          • Camelot
          • Demex
          • Dymension
          • Levana
          • Margined
          • Mars
          • Osmosis
          • UX
      • For Initia (milkINIT)
        • Technical Architecture
          • Liquid Staking Process
          • Withdrawal Process
          • Exchange Rate
          • Compound Staking Rewards
          • Claim Process
          • Limits and Restrictions
        • Integrating with milkINIT
          • Liquid staking module specifications
          • Chains specifications
      • For Bablyon (milkBABY)
        • Technical Architecture
          • Liquid Staking Process
          • Withdrawal Process
          • Exchange Rate
          • Compound Staking Rewards
          • Claim Process
          • Limits and Restrictions
        • User Flow
        • One-Click Stake
        • Integrating with milkBABY
          • Liquid staking module specifications
          • Chains specifications
    • For Restakers
      • Quick Start
      • For Restakers
        • Creating a wallet
        • Restaking your assets
    • Bridging
      • Hyperlane
      • IBC Eureka
  • Infrastructure Operators
    • For MilkyWay Validators
      • Quick Start
      • For Validators
        • Consesus node
        • Validator node
    • For Service Operators
      • Quick Start
      • For Operators
        • Operator Management
        • Opt-in and Opt-out Services
  • For Service Developers
    • Quick Start
    • For Services Admins
      • Service Management
      • Inviting Operators to Join Your Service
      • Creating Rewards Distribution Plan
  • Architecture
    • Modular Liquid Staking
      • Overview
      • Liquid Staking 101
    • Modular Restaking
      • Overview
        • Technical Architecture
        • Design Philosophy
        • Programmable Rules
        • Economic Model
        • Use Cases
      • Restaking 101
  • Modules
    • x/assets
    • x/ibc-hooks
    • x/liquidvesting
    • x/operators
    • x/pools
    • x/restaking
    • x/rewards
    • x/services
    • x/tokenfactory
  • SECURITY
    • Audits
    • Bug Bounty Program
  • APPENDIX
    • Official Links
    • Frequently Asked Questions
    • Glossary
    • Branding Resources
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  • Reward Distribution
  • Free Reward Market
  • Managing Risks
  1. Architecture
  2. Modular Restaking
  3. Overview

Economic Model

Reward Distribution

Each service sets its own reward level for restakers and operators. Distribution can be proportional to LSD amounts, or weighted by a fixed ratio assigned by the AVS. Operators can take a commission on rewards before paying LSD delegators. This open market ensures each AVS finds a security price that matches the perceived risk.

Free Reward Market

MilkyWay does not force a minimum reward rate or inflation scheme. If a bridging module wants $2 million worth of security, it may offer a certain daily reward. Operators see only that daily reward, deciding if it is worthwhile based on how many others also join. Over time, the free market balances supply of restaking with the demand for secure watchers.

Managing Risks

  1. Cryptoeconomic Risk: If restaking collateral is smaller than the total value the AVS controls, an attacker could find infiltration profitable.

  2. Unintended Slashing: Observers might incorrectly accuse an operator. MilkyWay can incorporate a veto system or advanced cryptographic proofs in the future.

  3. Cascading Failures: If restakers allocate LSD to multiple services, a big slash in one can reduce their overall stake for all tasks.

  4. Market Volatility: LSD tokens, being pegged to crypto assets, can see sharp price changes.

  5. Overleveraging: Operators who join many AVSs can be repeatedly slashed if they mishandle responsibilities.

  6. RWA Complexity: Real-world asset modules rely on watchers verifying off-chain claims. The chain can slash watchers for dishonest approvals but cannot enforce physical property laws.

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Last updated 21 days ago