MIIX Capital: Expected Restaking is activating the ETH bullish trend

Author: MIIX Capital

Introduction

Recently, after the approval of the Bitcoin spot ETF, the market adjustment mechanism was triggered, leading to a temporary market pullback. However, the staking volume of ETH has been continuously increasing, and the demand for Restaking is surging. Clearly, this reflects people's expectations for ETH to lead a new round of market trends.

Under this expectation, Restaking has begun to gain traction and is attracting more attention, especially after ALT was listed on Binance, with a 24-hour increase of nearly 58 times. The airdrop target anchored by ALT (AltLayer) is users participating in Restaking, which fully demonstrates the expected potential of the Restaking business.

ETH ShowTime: Narrative and Expectations Complement Each Other

If the recent upward trend belonged to BTC, then the next phase is ETH's Showtime. After all, the approval of the BTC spot ETF and the performance of expected market trends have set a good example for ETH to take over. Compared to BTC, ETH seems to meet all the necessary conditions to activate expected market trends:

• BTC is about to halve, while ETH is about to welcome the Cancun upgrade;
• The BTC spot ETF has been approved, and the ETH spot ETF is facing approval;
• BTC is the strongest consensus in the crypto market, while ETH is the strongest application domain in the crypto industry;
• BTC is the highest value carrier in the crypto market, while ETH has the most vibrant ecosystem for industry narratives;

Narratives and expectations must complement each other. The only thing missing in the above is that the expectation for BTC's market trend has officially launched the power of inscriptions, enriching the narrative possibilities for the industry. However, in ETH's existing ecosystem, there has not yet been a focal point like inscriptions that can provide additional boosts to new market expectations or even lead the market trend.

The main theme of the ETH ecosystem going forward will be the Cancun upgrade, which directly benefits the Layer 2 sector, as well as the Restaking ecosystem led by EigenLayer. However, if we talk about strong relevance to ETH, it must still be Restaking, especially the financial attributes of Restaking, which not only can carry and expand the existing business framework of LSD but also further activate the market's capital enthusiasm, bringing market expectations closer to us. Therefore, Restaking is most likely to become the key focus of the narrative during ETH's Showtime.

Leading by Example: EigenLayer Ignites the Restaking Trend

Recently, EigenLayer has been very popular. In just over a month, EigenLayer has absorbed over 700,000 ETH, with a TVL reaching 515.92K ETH (approximately 1.8 billion USD), becoming the 12th top protocol on the Ethereum chain. As EigenLayer increases the LST staking limit, ETH staking has become the market focus, and the Restaking trend has been thoroughly ignited.

Let's take a look at the recent developments related to EigenLayer:

• On January 11, EigenLayer announced it would bring its talents to Cosmos, providing Restaking services for Cosmos subchains to gain Ethereum's security;
• On January 21, the TVL of the Ethereum Restaking protocol EigenLayer exceeded 1.8 billion USD (DefiLlama data);
• On January 23, EigenLayer planned to provide a "shared security" model for DApps, allowing protocols to join the network by utilizing public ETH staking pools;
• On January 24, AltLayer announced the airdrop rules for EigenLayer participants: ETH direct staking users, LST Restaking users, and LRT staking users;
• On January 25, EigenLayer announced the introduction of sfrxETH, mETH, and LsETH into the ecosystem and removed the individual limit of 200,000 ETH for LST;
• On January 26, Polyhedra Network collaborated with the Ethereum Restaking protocol EigenLayer to build a cross-chain protocol from Ethereum to Bitcoin;

Since the beginning of the month, developments related to EigenLayer have been continuous. Whether for marketing hype or to support the construction of Restaking business, everyone has begun to focus on EigenLayer. In fact, these are all laying a solid foundation for the subsequent efforts of Restaking, making it easier for Restaking to leverage the entire industry ecosystem and user market.

The Rise of Restaking: Demand and Inevitability

Essentially, Restaking is a common practice in traditional finance. Applying it in the crypto market, Restaking based on ETH2.0 will further financialize ETH2.0. This can be seen as another recognition of ETH's financial attributes, but this recognition is also strongly related to market demand.

First, in the crypto market, financial attributes and characteristics are key factors in attracting incremental users and funds, as well as effective tools for promoting market and industry activity. When people have expectations that ETH will lead a new round of market trends and continuously reinforce these expectations, financial strategies will be prioritized, which is driven by market demand.

Second, in the LSD field, the related businesses based on ETH2.0 appear too simple and thin compared to traditional finance, lacking in both risk resistance and support for market demand, especially in supporting the narrative capability of ETH expectations. At the same time, as LSD businesses are essentially already financialized, it becomes inevitable to take this opportunity to expand around the business and build structured finance.

Therefore, against the backdrop of people continuously layering expectations for ETH's market trends, the rise of Restaking is both a market demand and an inevitability, ultimately driven by the need to enhance self-narrative capabilities under expectations.

Starting with Restaking: Positive for ETH's Market Trends

Just as inscriptions leveraged the BTC market trend to open up a new narrative branch for the industry, Restaking will also become a key player in this Showtime. With ongoing actions, Restaking has become a highly cost-effective investment choice, allowing participants in Staking to benefit multiple times. Looking at the directions that have already begun to take effect, AltLayer, as a Layer 2 hotspot, has already bundled and interacted with EigenLayer, and EigenLayer's removal of the individual limit for LST is providing greater operational space for the market and users, seemingly laying the groundwork for ETH to dominate a new cycle.

Combining market expectations for ETH's trends, the evolution of expectations and narratives indicates that the Restaking wave initiated by EigenLayer is inevitable. Restaking is indeed activating a new round of market cycles, igniting ETH's Showtime, and benefiting the ETH cycle.