EigenLayer

TradFi Meets DeFi: Publicly-Traded Flow Traders Comes Onchain Through Cap, EigenLayer and YieldNest

EigenCloud

Nov 25, 2025 • 5 min read

Stablecoin protocol Cap goes live as an EigenLayer Autonomous Verifiable Service (AVS), bringing institutional credit markets onchain with slashing, redistribution, and unique stake enabled, with YiledNest operating as a key EigenLayer delegate securing institutional activity on Cap.

Flow Traders (Euronext: FLOW), one of the world's largest liquidity providers and ETF market makers, is now accessing onchain liquidity through Cap, a protected private credit marketplace built as an EigenLayer AVS. As such , Flow Traders goes live as an operator on Cap with EigenLayer's slashing, redistribution, and unique stake features fully enabled, bringing institutional capital to the protocol.

Flow Traders is a publicly-traded, regulated firm that moves billions in daily volume, and they're accessing capital through cryptoeconomically secured protocols in production, secured by EigenLayer's restaking infrastructure.

For years, crypto has sought validation from traditional finance. Cap and Flow Traders flip that script. Institutional capital is flowing onchain because EigenLayer's restaking primitives (slashing, redistribution, and unique stake) enable the same risk management and accountability standards that institutions require, with better transparency and programmability than what can be achieved with smart contracts alone.

Why This Matters: The Infrastructure for Institutional Capital

The significance of this launch extends far beyond a single protocol or partnership. Cap's deployment demonstrates how EigenLayer is becoming the foundational layer for bringing institutional capital flows onchain:

Credible Financial Guarantees at the Protocol Level: Traditional credit markets rely on legal contracts, collateral arrangements, and counterparty risk assessment. Cap uses EigenLayer's slashing and redistribution features to create cryptoeconomic guarantees: commitments that are enforced through code and cryptoeconomic incentives rather than relying solely on legal proceedings.

Enabling “Insured DeFi:” Through EigenLayer's redistribution feature, Cap can redirect slashed funds to protect users rather than simply burning them. When borrowers violate their commitments, restakers' stake gets slashed and redistributed to stablecoin holders as a protective mechanism. This creates a form of protocol-level insurance that's transparent, automatic, and doesn't require trusting a centralized insurance provider.

Institutional-Grade Infrastructure, Decentralized Rails: Flow Traders' participation validates that publicly-traded companies can now interact directly with decentralized protocols while maintaining institutional standards for risk management.

How It Works: Restaking Powers Institutional Credit

At the heart of this deployment are three EigenLayer primitives working together to create an institutional-grade credit marketplace:

Slashing: Economic Accountability

Slashing is EigenLayer's accountability mechanism that ensures promises made are promises kept. When operators fail to meet their commitments to an AVS, their staked funds can be penalized.

For Cap, this means:

Borrowers have skin in the game: Flow Traders and other institutional borrowers must secure their activity with delegated stake from EigenLayer restakers
Commitments are enforceable: Loan terms, collateral requirements, and repayment schedules are backed by cryptoeconomic penalties, not just legal agreements
Transparent risk assessment: Anyone can see exactly what stake backs each borrower and what conditions trigger slashing

Redistribution: Protocol-Level Insurance

Redistribution takes slashing further by allowing slashed funds to be repurposed rather than burned. This transforms penalty mechanisms into protective insurance.

For Cap, this enables:

Automatic user protection: When borrowers default or violate terms, slashed stake is redistributed to stablecoin holders who were exposed to that risk
No insurance premiums needed: The cost of protection is borne by the party that failed to meet commitments, not by all users through fees
Transparent claim process: Redistribution occurs according to predefined conditions. No claims adjusters, no disputes about coverage

This is how Cap becomes "the first stablecoin with credible financial guarantees at the protocol level."

Unique Stake: Risk Isolation

Unique Stake allows operators to allocate specific portions of their delegated stake to specific AVS tasks, ensuring that:

Risk is compartmentalized: An operator's stake allocated to Cap can only be slashed by Cap, not by other AVSs
Operators control exposure: Operators choose exactly how much stake to put at risk for each borrower or loan pool
AVSs get guaranteed security: Cap knows exactly how much slashable stake backs each credit position

Together, these three primitives create something new: programmable institutional finance with crypto-grade verifiability and traditional-finance-grade risk management.

The Players: A New Credit Market Ecosystem

This launch brings together multiple ecosystem participants, each playing a distinct role:

EigenLayer: Supplies the restaking infrastructure that enables this credit market. Restakers delegate their ETH, liquid staking tokens, or other assets to operators who secure specific services. When operators fail to meet their obligations, their delegated stake faces slashing penalties, creating economic accountability.
Cap: Built the credit marketplace infrastructure where capital allocation and risk management operate through automated smart contracts. All rules for capital flow, risk assessment, and enforcement execute without manual intervention.
Flow Traders: Accesses USDC liquidity through Cap's marketplace to fund their market-making operations—much like traditional short-term credit facilities, but with onchain settlement.
YieldNest: Operates as the EigenLayer delegate responsible for securing Flow Traders' positions. They handle the technical operations of stake delegation and monitoring, using OETH from Origin Protocol to back the credit arrangements.

Restakers earn rewards by backing these credit positions, while Cap's systems ensure all parties settle transparently according to predefined rules. The entire arrangement runs through composable smart contracts that bolster traditional legal agreements, demonstrating how institutional finance can operate on decentralized infrastructure.

What This Unlocks: A Blueprint for Institutional DeFi

Cap's launch on EigenLayer with slashing and redistribution provides a blueprint for how institutional finance comes onchain:

For Credit and Lending Protocols:

Use redistribution to create automatic insurance funds that protect lenders when borrowers default
Implement unique stake to isolate credit risk across different loan pools or borrower categories
Deploy slashing conditions that mirror traditional credit covenants

For Stablecoin Issuers:

Back yield-bearing stablecoins with redistributable stake that compensates holders if yield strategies underperform
Create transparent reserve mechanisms where backing collateral is slashable if peg breaks
Enable real-time proof of reserves with cryptoeconomic guarantees

For Asset Management:

Secure fund management activities with operator stake that can be slashed for strategy deviations
Create transparent fee structures where underperformance triggers stake redistribution to LPs
Implement automated compliance through slashing conditions tied to investment mandates

For Derivatives and Structured Products:

Use slashing to enforce settlement obligations in synthetic asset protocols
Create counterparty risk mitigation through redistributable stake pools
Enable institutional-grade risk management for onchain options and futures markets

The common thread: EigenLayer's restaking primitives transform "soft commitments" backed by reputation into "hard guarantees" backed by cryptoeconomics.

The Foundation for Capital Flows

When publicly-traded financial institutions choose to access credit through EigenLayer AVSs, secured by restaking and enforced through slashing, it validates that crypto infrastructure has matured beyond speculation into production-grade institutional finance.

Traditional finance is coming onchain through verifiable rails, backed by cryptoeconomic guarantees. Cap is how they're getting here, and EigenLayer is becoming the foundation for the future of capital flows.

Learn More

Get Started Building

Are you building a credit protocol, stablecoin, lending platform, or institutional DeFi primitive? EigenLayer's restaking features provide the cryptoeconomic enforcement layer you need.

For AVS Developers: → docs.eigencloud.xyz/eigenlayer/concepts/eigenlayer-overview

For Operators: → docs.eigencloud.xyz/eigenlayer/operators/concepts/operator-introduction

For Restakers: → app.eigenlayer.xyz