Why an Auction?
For the detailed answer, have a look at our General Documentation on Auctions.
As you might know, native restaking requires Ethereum Validators to first deposit ETH on the Beacon Chain before delegating it to Eigen Layer Operators to secure different AVSs.
Byzantine abstracts away all the technical complexity of spinning up an Ethereum Validator in order to let stakers only focus on their restaking strategy.
Since native restaking also includes staking on the beacon chain, the Byzantine Finance protocol handles the creation of Ethereum Validators and leverages the Distributed Validator Technology (DVT) of Obol to reduce the risk of slashing and inactivity penalties.
The auction is a core mechanism of the Byzantine protocol to fairly and efficiently match stakers with operators of Distributed Validators (DV) in a framework that is beneficial for both of them. Operators bid for the right to work as part of a DV - they set their bid parameters (which work like a limit order on an exchange) when they join the protocol and "win" an auction when their bid is selected.
To simplify the staker UX as much as possible, the Auction
contract pre-creates complete DV clusters so that a staker, when entering the protocol, can directly deposit their stake in the Beacon Chain and activate their cluster validator in one transaction.
The only required steps for the operators are to pay a 1ETH bond and set their auction bid parameters. The resulting bid price, when an auction is won, is used to prepay the stakers' rewards - operators of a Distributed Validator keep 100% of the Proof of Stake rewards.
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