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
Cryptoeconomic Risk: If restaking collateral is smaller than the total value the AVS controls, an attacker could find infiltration profitable.
Unintended Slashing: Observers might incorrectly accuse an operator. MilkyWay can incorporate a veto system or advanced cryptographic proofs in the future.
Cascading Failures: If restakers allocate LSD to multiple services, a big slash in one can reduce their overall stake for all tasks.
Market Volatility: LSD tokens, being pegged to crypto assets, can see sharp price changes.
Overleveraging: Operators who join many AVSs can be repeatedly slashed if they mishandle responsibilities.
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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