Rewards Distribution

Distribute rewards to Operators and Stakers

Deposit Rewards into AVS Treasury

Deposit sufficient amount of tokens into the AVS Treasury before distributing rewards.

Othentic CLI enables depositing rewards into the AVS treasury. It supports both ERC-20 tokens and native ETH, ensuring an automated approval check before initiating the deposit process.

othentic-cli network rewards deposit --l1-chain <chain> --amount <amount>

• Based on the chain where rewards are configured, replace <chain> with the appropriate L1/L2 chain name. Find the corresponding values for the Supported chains here.

• Replace <amount> with the desired reward value in Wei you wish to deposit.

• When prompted, enter the private key of the AVS governance multi-sig address.

This will initiate the transaction to transfer the specified rewards into the AVS Treasury.

Usage

othentic-cli network rewards deposit \
--l1-chain holesky --amount 1000000000000000000

At the end, the CLI will display the transaction hash.

Using contracts

Alternatively, you can directly deposit rewards into the L1/L2 AVS Treasury using contract methods.

• Get Reward Token Address: Retrieve the Reward Token address, set during the AVS contracts deployment.

• Approve Token Transfer (ERC20): In case the Rewards token is ERC20, approve the token transfer to the AVS Treasury contract.

• Deposit Rewards: Execute depositNative or depositERC20 on the AVS Treasury contract, with the desired amount.

• Once the transaction is confirmed, the deposit is complete.

depositERC20 and depositNative

// For ERC-20 deposits
const approveTx = await rewardTokenSmartContract.approve(
      avsTreasuryContractAddress,
      amount
    ); 
const depositTx = await avsTreasuryContract.depositERC20(senderAddress, amount); 

// For ETH deposits 
const depositTx = await avsTreasuryContract.depositNative({ value: amount })   

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AVS Rewards Distribution

There are two main reward distribution flows, and the choice depends on the rewards token and the chain.

1. EigenLayer Rewards V2: This method supports ERC20 tokens for rewards distribution on L1 and does not support ETH. 2

2. Batch Reward Distribution: This method supports both ERC20 tokens and ETH rewards and supports rewards on both L1 and L2.

Important Considerations:

• You can only use one of these flows at a time, not both.

• Othentic CLI allows you to pause or unpause rewards payment flows. To process payments , the relevant payment flows must be unpaused. By default these flows are paused.

• Ensure that sufficient reward tokens are deposited into the L1/L2 AVS treasury using the rewards deposit command before initiating the distribution process.

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Operator Directed Rewards Submissions

This method includes integration with EigenLayer's Rewards coordinator to process and distribute rewards. Operators and Stakers can claim their rewards from EigenLayer UI.

This method can only be called by the AVS governance MultiSig address

I. Using the Othentic CLI

To distribute rewards effectively using the Othentic CLI, follow these two key steps:

1

Unpause Eigen Payments Flow

By default, Eigen Payments rewards distribution is paused. Unpause EIGEN_PAYMENT_REQUEST_FLOW by running the following command:

othentic-cli network unpause-flow

When prompted enter the private key of AVS governance multisig and select > Eigen Payments. If you have already unpaused, Skip this step.

2

Calculate Batch Parameters

This step calculates time range for EigenLayer Rewards Request Submission. It automatically determines the optimal startTimestamp, duration, fromOperatorId, and toOperatorId for each reward batch. It considers factors like retroactive reward limits, reward duration, and the total number of operators.

othentic-cli network rewards calc-eigen-rewards-params

• When prompted enter the private key of the AVS Governance Multisig.

• If the AVS was deployed prior to this update, the cli will prompt for the AVS deployment block number.

Review Output

This command will output a series of ready-to-use commands for submitting the EigenLayer rewards requests `othentic-cli network rewards eigen-batch-request`, with the calculated parameters for each batch.

Copy and paste each command into your terminal and run them individually to complete Step 2.

Example

othentic-cli network rewards calc-eigen-rewards-params

? Enter your private key: *****************************
Last Timestamp: 1735776000
Total Operators: 168

use for batch number 1: othentic-cli network rewards eigen-batch-request --startTimestamp 1735776000 --duration 1814400 --fromOperatorId 1 --toOperatorId 100

use for batch number 2: othentic-cli network rewards eigen-batch-request --startTimestamp 1735776000 --duration 1814400 --fromOperatorId 101 --toOperatorId 168

3

EigenLayer Batch Request

This command submits the actual request for EigenLayer rewards. It is is designed to handle large numbers of operators by breaking down the request into manageable batches. Before running the command please ensure

• If rewards are available on L1.

• The rewards are in ERC20 tokens (ETH is not supported).

• EigenLayer rewards flow EIGEN_PAYMENT_REQUEST_FLOW is not paused in the Attestation Center smart contract. If paused, unpause it before proceeding.

• This command should be called on a Weekly basis.

othentic-cli network rewards eigen-batch-request [options]

Options

• --startTimestamp <startTimestamp> (required): The rewards start timestamp (in seconds) of the epoch. Must be a multiple of one week (604800 seconds).

• --duration <duration> (required): The duration (in seconds) of the rewards to claim. Must be a multiple of one week (604800 seconds).

• --fromOperatorId <fromOperatorId> (required): The operator ID to start the rewards request batch from.

• --toOperatorId <toOperatorId> (required): The operator ID to end the rewards request batch at.

Example

Submit an EigenLayer rewards request for operators 1 to 10, starting from timestamp 1672531200 for a duration of 604800 seconds (one week):

othentic-cli network rewards eigen-batch-request \
--startTimestamp 1672531200 --duration 604800 \
--fromOperatorId 1 --toOperatorId 10

Important Considerations for AVSs:

• Optimal Calling Times: EigenLayer requires calling rewards functions with rounded parameters where both startTimestamp and duration must be multiples of ONE_WEEKtime. The duration can be 1, 2, or up to max 10 weeks. Since rewards accumulate continuously and not per epoch, it's advised to check optimal calling times, which are slightly after the end of the each epoch.

• Designated Claimers: Earners can set designated claimer addresses on the RewardsCoordinator contract. If not configured, the Earner address can claim their earnings.

II. Contract Flow: requestEigenBatchPayment Method

The `requestEigenBatchPayment` method on the Attestation Center contract enables the rewards v2 distribution to operators. This method can only be called by the AVS governance MultiSig address.

1. Token Validation: If the reward token is ETH, it returns NativeCoinNotSupportedForEigenRewards and exits without processing.

2. Time Range Validation:

   1. Ensures the duration does not exceed MAX_REWARDS_DURATION.

   2. Ensures both startTimestamp and duration are multiples of CALCULATION_INTERVAL_SECONDS.

   3. Confirms that startTimestamp is not too far in the past, checking against MAX_RETROACTIVE_LENGTH and GENESIS_REWARDS_TIMESTAMP.

   4. Confirms that the rewards period is entirely in the past by comparing with the latest block timestamp (startTimestamp + duration < block.timestamp).

   All the above values can be found here on chain basis.

3. If the reward token is an ERC20, the function withdraws the necessary tokens from the avsTreasury and approves the rewardsCoordinator to spend the withdrawn tokens.

4. The specified range of operators is validated to ensure it falls within the allowed limits.

5. Maximum Rewards Limit: This check ensures that the total rewards being distributed in this batch do not exceed the predefined MAX_REWARDS_AMOUNT.

6. For each eligible operator:

   1. The payment status of each eligible operator is updated to COMMITTED.

   2. A message is sent to L1 to initiate the payment and createOperatorDirectedAVSRewardsSubmission function is executed on the AVS governance contract.

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Batch Reward Distribution

1

Unpause Batch Payments Flow

By default, Batch Payments request flow is paused. Unpause BATCH_PAYMENT_REQUEST_FLOW by running the following command:

othentic-cli network unpause-flow

When prompted enter the private key of AVS governance multisig and select > Batch Payments. If already unpaused, skip this step.

2

Request Batch Payment

The requestBatchPayment method on the Attestation Center contract enables the rewards distribution to multiple Operators simultaneously. This method can only be called by the AVS governance MultiSig address.

When registering with the AVS, Operators have the option to set Rewards address. If not specified, the Rewards address will default to the Operator's address. It is recommended to use a dedicated smart contract as the rewards address to ensure secure and reliable distribution of rewards to Stakers.

Process Flow:

1. The specified range of Operators is validated to ensure it falls within the allowed limits.

2. For each eligible Operator:

   • The Operator's payment status is set to Committed.

   • Based on the AVS Treasury in use:

     • L2 AVS Treasury: The withdrawRewards function is executed to process the payment directly on L2.

     • L1 AVS Treasury: A message is sent to L1 to initiate the payment and then withdrawBatchRewards function is executed on the AVS governance contract.

3. Upon successful execution, the rewards are transferred to the operator and the payment status is updated to Redeemed.

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Change Rewards Token

To change the rewards token in the AVS Treasury (CLI support coming soon), follow these steps:

1. Execute the queueTokenReplacement method.

2. Wait for the 1-week cooldown period.

3. Finalize the replacement by calling the completeTokenReplacementWith method.