For a crypto founder who’s attracted so much controversy, Sreeram Kannan is surprisingly sanguine.
In a wide-ranging interview after his selection as one of CoinDesk’s “Most Influential” figures in crypto for 2024, the EigenLayer founder was generous with his time, chatting more than an hour beyond our scheduled slot. I was surprised at his openness because the last time we spoke, a colleague and I had just published <a href= »https://www.coindesk.com/tech/2024/08/15/top-crypto-startup-drove-other-projects-airdrops-to-its-employees » target= »_blank »>an investigation</a> into potential conflicts of interest at his company, Eigen Labs, and in the interim Kannan had disavowed our reporting point-by-point <a href= »https://blockworks.co/podcast/bellcurve/51b7a3ba-60ba-11ef-9ea4-273c0c60d3ae » target= »_blank »>on a Blockworks podcast</a>.
This time, Kannan emerged in a different light. Whatever his misgivings about CoinDesk’s past coverage, they didn’t seem top-of-mind.
What emerged wasn’t the portrait of a defensive tech founder, but rather that of a driven, thoughtful academic-turned-entrepreneur still adjusting to a spotlight few in this industry ever enjoy. Instead of bitterness or evasion, I found ambition, reflection and a quiet kind of excitement.
Kannan seemed as astonished as anyone by how swiftly EigenLayer had transformed from a concept into one of crypto’s most talked-about experiments, telling CoinDesk that he continued to view EigenLayer as a “scrappy startup.”
Over the past 12 months, EigenLayer — which allows emerging blockchain applications to borrow Ethereum’s robust security — went from a relative unknown to an industry heavyweight. The platform raised <a href= »https://www.coindesk.com/business/2024/02/22/eigen-labs-developer-behind-restaking-protocol-eigenlayer-raises-100m-from-a16z-crypto » target= »_blank »>more than $100 million</a> from venture firms including Andreessen Horowitz and, before even fully launching, <a href= »https://www.coindesk.com/learn/restaking-101-what-are-restaking-and-liquid-restaking » target= »_blank »>drew hundreds of millions</a> of dollars in deposits from crypto users seeking extra yield. Many were incentivized by a viral points program that investors hoped would translate into a lucrative future token airdrop.
EigenLayer’s success during the bear market was striking, and Kannan may have played a larger role than any other entrepreneur in revitalizing decentralized finance on Ethereum. But not everything went according to plan.
Industry critics took issue with the <a href= »https://www.coindesk.com/business/2024/10/02/eigenlayers-token-launch-draws-scrutiny-over-supply-concerns » target= »_blank »>EIGEN token distribution plan</a> — which locked up tokens for months and barred claimants from certain geographies — as well as the platform’s <a href= »https://www.coindesk.com/tech/2024/04/10/eigenlayer-cryptos-biggest-project-launch-this-year-is-still-missing-crucial-functionality » target= »_blank »>slower-than-expected feature rollout</a> and <a href= »https://www.coindesk.com/learn/restaking-101-what-are-restaking-and-liquid-restaking » target= »_blank »>concerns about “rehypothecation,”</a> or the reuse of collateral for multiple purposes. In August, the CoinDesk investigation (that Kannan disputed in the podcast) raised questions about EigenLayer’s conflict-of-interest policies, which may have allowed employees preferential access to tokens powered by its platform.
None of this seemed to derail Kannan’s intellectual ascent. Beyond running Eigen Labs, he still holds a position as an associate professor of electrical and computer engineering at the University of Washington, though he is currently on leave, and his theory of “restaking” — letting people reuse staked Ethereum assets to secure other networks — has sparked a wave of innovation and copycats. He’s become a familiar face on the conference circuit, where he unpacks his vision of blockchains as tools for solving humanity’s endless “coordination problems.”
Blockchains, Kannan says, “are the biggest upgrade to human civilization since the U.S. Constitution.”
Academia
Kannan grew up in Chennai, in southern India. At first, he was drawn to pure math, staying in India for his undergraduate and master’s degrees. He studied telecommunications, a discipline that would later prove relevant to crypto’s distributed systems.
In 2008, he moved to the United States to earn another master’s in mathematics at the University of Illinois at Urbana-Champaign, followed by a Ph.D. in entrepreneurship. Then, postdoctoral stints at Berkeley and Stanford opened his eyes to new academic frontiers.
At Berkeley, a lecture on “Synthetic Genomics” lured Kannan into the intricate realm of reprogramming living systems. “I said, ‘Okay, that seems much more fun than trying to get people to download more and more data on their phones,’” Kannan remarked.
Computational biology became Kannan’s specialty. As an associate professor at the University of Washington, he worked with his students to develop complex mathematical models to study the structure of DNA. Then advances in artificial intelligence blindsided him. One of Kannan’s students proposed using AI for a particularly tricky DNA sequencing problem, and Kannan balked — surely a neural network couldn’t outperform his finely tuned equations. Yet, in just two weeks, the AI beat Kannan’s best benchmarks.
Kannan came to a disturbing realization: “In five or ten years, all the stuff I was doing — the mathematical algorithms — is all gone,” he said. “AI will do everything.”
Pathfinding
Confronted with AI’s relentless rise, Kannan saw two paths: go deeper into AI-driven computational biology or try something new. He chose the latter.
In 2017, a call from his Ph.D. advisor alerted him to Bitcoin’s meteoric rise. Kannan began dabbling in crypto, and a reading of Yuval Noah Harari’s “Sapiens” offered deeper inspiration. Kannan’s takeaway from the bestseller was that “the reason why humans are special is not that we are intelligent,” or “can innovate. » Instead, humanity’s strength comes from our ability to coordinate at scale.
“Coordination is communication plus commitments,” Kannan said, explaining that while the internet had solved global communication, there was still no digital-native way to ensure trust. To Kannan, the trustless architecture of blockchains could fill that void. “If you don’t trust somebody, you’re not going to be able to coordinate,” he said, framing blockchains as the next evolutionary leap in human cooperation.
He dove deeper into Bitcoin, noting its low throughput and inefficiencies. That felt oddly familiar. “This is what I had studied in my PhD: How do you optimize a peer-to-peer wireless network?” Crypto’s bottlenecks and scaling issues seemed like the perfect place to apply his telecommunications expertise.
By early 2018, Kannan had found his purpose in crypto: not just to tinker, but to use his academic experience to address fundamental human coordination and scaling problems. He was ready, as he put it, “to go all in.”
Founding EigenLayer
Kannan’s early path through crypto founderdom included a few less-than-successful pit stops, among them building a short-lived NFT marketplace. “I realized I can only really build things for which I, or some core team members, are also the consumers,“ Kannan said. He shuttered the project in under a year.
He then began shopping around ideas for new blockchain security models, including one that he proposed to Cardano, the blockchain project helmed by Ethereum co-founder Charles Hoskinson. Kannan’s work in this area eventually culminated in an idea that stuck: “restaking” — the technology that would eventually underpin EigenLayer.
Ultimately, Kannan focused on Ethereum, the most widely used smart-contract blockchain, and he formed Eigen Labs, the company behind EigenLayer. The new platform’s goal was straightforward: let emerging blockchain projects “borrow” Ethereum’s security through restaking.
Ethereum is secured by a system in which users “stake” ether (ETH) as collateral, effectively earning interest in return for helping validate the network. Misbehavior – such as misreporting transactions or going offline – risks having collateral slashed.
EigenLayer builds on that structure, allowing stakers to earn additional returns by “restaking” their ETH pledged on the main chain to secure other networks, known as “actively validated services” or AVSs.
It’s unlikely most stakers (or restakers) really understand how this all works under the hood. Most investors stake ETH because they want to earn interest. EigenLayer promised to boost yields with its restaking.
For AVS developers, EigenLayer provides an easy way to tap into Ethereum’s collateral reserves without building a new security framework from scratch. This concept of “shared security” resonated widely and helped propel EigenLayer’s sudden rise.
“It’s a crazy, 100-year project, and it upgrades the human species,” Kannan told CoinDesk.
Growing pains
As EigenLayer soared, the bright lights brought scrutiny. “There was a lot of uncomfortable attention,” recalls Kannan. The attention was “positive, initially,” but it eventually began to sour in some corners.
“I think the first time the negativity hit was after the token launch,” reflected Kannan.
Before announcing the EIGEN token, EigenLayer gave « points » to depositors, a common tactic in crypto to spark early interest. Officially, the points are just an informal tally meant to gamify the system. But people mainly racked up points because they assumed they’d eventually be able to cash them in for EIGEN crypto tokens — speculation that EigenLayer did little to quell.
Entire markets emerged around these points, even though they were not meant to hold intrinsic value and EigenLayer never directly confirmed that it would release a token.
Early enthusiasm surrounding EigenLayer points <a href= »https://www.coindesk.com/opinion/2024/04/30/why-eigenlayers-airdrop-is-controversial » target= »_blank »>turned into disappointment</a> once the EIGEN token details finally emerged in April. People who expected easy liquidity chafed at EigenLayer’s plan to lock tokens for several months. Some felt excluded by geography-based restrictions, which Eigen Labs imposed to avoid violating U.S. securities laws. Others criticized EigenLayer’s slow feature rollout and fretted over conflict-of-interest issues, including (<a href= »https://www.coindesk.com/tech/2024/11/02/ethereum-researchers-relinquish-eigenlayer-roles-over-conflict-of-interest-concerns » target= »_blank »>but not limited to</a>) those raised by CoinDesk’s investigation.
« We had these features which were coming up. We had more decentralization coming up,” said Kannan. In the EigenLayer founder’s mind, he was “trying to protect the rights of all the people holding tokens” with his conservative regulatory approach, and by blocking transfers until after the platform was ready to release its main features. But, Kannan admits, ”it just blew up in the most negative possible manner. »
Kannan attributes some of the turbulence to his academic roots. He’d stepped into a world rife with hype cycles, tribal spheres, and financialization, and he was still learning its rhythms.
Early on, he realized that building a crypto startup required a more diverse team and skill set than any academic project. In one of his earlier failed crypto ventures, “everybody was similar,” with PhDs from “Stanford, MIT, and the University of Washington.” With EigenLayer, Kannan knew he needed not just brilliant engineers but also clear communicators, community advocates, and savvy business operators.
But Kannan still had to learn how to turn intellectual rigor into practical progress — and how to communicate that progress to a restless audience. The token fiasco exposed a disconnect between Eigen Labs and its community.
Users and developers wanted more transparency, collaboration, and communication. To Kannan, those demands felt extreme even by crypto’s warped, highly financialized standards. But he eventually understood that his perception of EigenLayer, as a scrappy startup, didn’t match how others saw it, as an industry juggernaut.
Kannan recalls being at a crypto conference and having a stranger ask him how the crypto community should address a concerning trend of over-leverage in crypto markets. Kannan was confused. “That doesn’t have anything to do with EigenLayer,” he recalled thinking. “I asked him, ‘Why are you telling me this?’” The answer: “Because you’re an industry leader.”
It was a turning point. Kannan, who once saw himself as “just some startup guy,” began accepting this new reality. Influence comes with responsibility and complexity.
One EigenLayer investor reminded Kannan that as he charted new territory, he would continue facing unexpected hurdles. In founding a startup, Kannan would be forced to reckon with something he was used to from his research days: trial and error. “You will learn,” the investor told him, “So I’m going to let you make your mistakes.”