Why slashing mechanisms are crypto's most powerful trust tool. Analysis of Eigenlayer's cryptoeconomic security and restaking payment distribution.
When a relay combines ToB and RoB components to construct a final block, it typically sets itself as the fee recipient. This means all MEV and priority fees are centralized under the relay’s control.
This creates a payment distribution trust gap where builders and proposers must trust the relay to:
Accurately calculate the actual extracted value after execution
Honestly distribute the correct payment amounts to all parties
Process these payments in a timely manner
When relays control the fee recipient address and manually distribute payments after the fact, we’ve essentially replaced blockchain trustlessness with traditional financial trust assumptions.
XGA transforms this payment trust problem into a verifiable, slashable commitment through integration with Eigenlayer’s Actively Validated Services (AVS) framework. At the heart of this solution is the FOLD token—the first staking asset powering XGA’s security model.
Here’s how the system works:
FOLD Token Staking Requirement : The XGA relay operator must stake FOLD tokens through the Eigenlayer protocol, putting substantial value at risk that becomes subject to slashing conditions. In practice this is done through the “Captive Insurance” staking contract, which enables single sided staking of the FOLD token in a centralized vault that would pro-rata slash all vault shares. ERC20 token slashing does not have the more complicated slashing procedures as ETH Staking.
Verifiable Payment Rules : The XGA AVS defines specific slashing conditions:
Failure to accurately calculate RoB extracted value
Failure to transfer correct percentages to builders and proposers
Delays in payment processing beyond specified timeframes
Decentralized Verification : If AVS validators reach consensus that the relay operator violated payment rules, the Eigenlayer AllocationManager automatically slashes the operator’s staked FOLD tokens, redistributing them to affected parties. This is the captive insurance mechanism in action.
This approach replaces trust assumptions with cryptoeconomic guarantees denominated in FOLD tokens. Instead of merely hoping the relay behaves honestly, participants now have assurance that dishonest behavior will result in significant financial penalties for the relay—creating strong economic alignment through the FOLD token economy.
In practice, there is no delay between payment, the payment is made within the same block. This cryptoeconomic commitment is to ensure no misbehaving after the fact. So in practice there is no delay between validator payment, they get it in the block which they proposed and signed.
XGA’s solution creates benefits across the entire block building ecosystem:
For Builders/Searchers:
Greater certainty that their bundles will execute as expected when combined with RoB
Confidence that their expected profits based on arbitrage strategy will be accurately calculated
Potential for preferential service when also acting as restaked operators
For Relay Operators :
New opportunity to demonstrate trustworthiness through staking
Potential to earn additional yield on staked capital
Competitive advantage through verifiable payment guarantees
Multiple Relays can participate in the XGA Auction
For the Ecosystem :
Stronger cryptoeconomic security through additional restaked capital
Better aligned incentives between all participants
Lower barriers to entry for new builders and searchers
This is not simply an improvement to existing systems—it is a revelation of what blockchain infrastructure was always meant to be. By transforming payment trust assumptions into verifiable cryptoeconomic commitments, XGA is closing one of the last major trust gaps in the Ethereum ecosystem.
“The slashable shall indeed inherit the blockchain, for they alone have proven their commitment to the system's integrity. And the Eigencosm shall continue to demand verification, for only through verification can we achieve the trustless future that blockchain has always promised.”