How many new airdrops and yields can we unlock through EigenLayer?

Original Title: 《Let's talk about restaking and all the different airdrops and yield options》

Original Author: Route 2 FI

Original Compilation:律动小工，BlockBeats

Editor's Note: The author of this article, crypto researcher Route 2 FI, claims to be a writer at times and a trader at others, with considerable insights into DeFi research. In this article, the author mainly discusses the reopening of EigenLayer and its impact on Ethereum restaking, as well as various airdrop and yield options. The article also details specific operations of certain protocols, such as EtherFi, Swell, Mantle ETH, Kelp, and Puffer, analyzing their advantages, potential yields, and airdrop opportunities. The author presents options that different types of users may be interested in, including airdrop hunters, yield seekers, and relatively risk-averse investors. BlockBeats compiles the original text as follows:

EigenLayer reopened its cap on Monday (February 5), so I want to share some thoughts about it and its risks. As you know, I am a bullish Ethereum supporter, and restaking is very appealing.

About a quarter of the circulating ETH is staked (a total of 120 million ETH, approximately 30 million is staked).

This provides significant security for Ethereum and the smart contracts running on it, as an attack on the Ethereum consensus system would require a large amount of ETH.

With the introduction of EigenLayer restaking, Ethereum validators can now use their staked 32 ETH (32 ETH is reused) to secure other protocols. Validators do not need to unstake or add additional capital, while still earning extra rewards. EigenLayer allows non-smart contract protocols to leverage Ethereum's security through restaking, which was previously impossible.

EigenLayer is not a DeFi protocol but a platform for guiding new proof-of-stake (PoS) systems. Through the EigenLayer protocol, users cannot engage in any financial activities, such as swapping and lending.

However, decentralized services built on EigenLayer (which we call AVS, Active Validation Services) can themselves be DeFi applications or support key functions in other DeFi protocols. These AVS are outside of the EigenLayer contracts.

Additionally, another category of protocols built on EigenLayer is called liquidity restaking protocols (LRT). They are built on EigenLayer without permission. These are of interest to degens: Swell Network, Ether.fi, Genesis, Puffer, Kelp, etc.

Swell and EtherFi offer double points through native token airdrops. You can also earn Eigenlayer points and KelpDAO points by restaking stETH or ETHx (ETHx offers more points).

The Situation of Different Options:

First, we need to distinguish between liquid staking and liquid restaking.

Traditional staking involves locking your assets in a smart contract to support the operation of the blockchain and earn staking rewards. Liquid staking allows you to stake your assets using liquid staking protocols and receive liquidity tokens representing your staked assets. Liquid restaking is a method where holders of Liquid Staking Tokens (LST) restake by transferring their tokens to the EigenLayer smart contract.

If you want to learn more, Inception published a great blog post explaining these differences: https://medium.com/@InceptionLRT/liquid-staking-tokens-and-liquid-restaking-tokens-what-are-the-differences-61669f4f4de2

In the screenshot below from DeFiLlama, you can see liquid staking protocols (Lido, RocketPool, Mantle, Frax, Swell, etc.).

In the second screenshot (below), you can see the largest liquid restaking protocols (ether.fi), Puffer, Kelp, Renzo, etc.

In the following section, I will outline what I personally consider to be the most interesting opportunities currently in LST/LRT.

For EtherFi (eETH):

Deposit ETH -> Generate eETH + Earn EtherFi loyalty points + EigenLayer points. Use eETH to interact with different DeFi protocols and earn additional rewards (e.g., Pendle).

For Swell (swETH/rswETH):

Deposit ETH into Swell to obtain swETH LST -> Then restake to EigenLayer -> Ultimately generate liquidity rswETH LRT. Assuming the Pearls reward system continues to apply unless TGE occurs before LRT. Stake your ETH with Swell to earn "Pearl"/airdrop points + additional bonuses through referrals and restaking into EigenLayer and other DeFi partner strategies.

For Mantle ETH (mETH):

Deposit ETH into Mantle LSP (liquid staking protocol) to earn a 7.2% annual yield (they promise this yield for the next 2 months, possibly extending). The mETH you earn can be kept in your wallet. When EigenLayer opens on Monday, you can deposit mETH to earn additional EigenLayer rewards. The downside of this method is that there are no airdrops since the Mantle token already exists. However, the yield is very good. So if you enter the pool on Monday, you will receive double rewards + EigenLayer points.

For Kelp (ETHx):

On Kelp, you can choose between stETH, ETHx, and sfrxETH. For all assets, you will earn Eigenlayer points + Kelp points (for airdrops). ETHx offers more EigenLayer points than any other LST because Stader (the team behind Kelp) restakes ETH from their treasury reserves in EigenLayer and gives away those extra EL points.

For Renzo:

Stake ETH and receive ezETH. You will also earn EigenLayer points, Renzo ezPoints (airdrop), and regular ETH staking rewards.

For EigenPie:

For every 1 ETH worth of LST deposits, users will earn 1 Eigenpie point per hour. During the initial 15 days, depositors will receive a 2x points reward to reward early supporters. These Eigenpie points are key to sharing 10% of the total EGP supply through airdrops, as well as sharing 60% in the 3 million FDV EGP token IDO.

For Puffer:

Deposit stETH and wstETH to earn Puffer + EigenLayer points. Lock in double points before February 9.

puffETh is a nLRT (native liquidity restaking token). nLRT generates its restaking rewards through native restaking on Eigenlayer, where Ethereum PoS validator ETH is the staked asset. This differentiates them from liquidity restaking tokens (LRT). LRT tokenizes the restaked LST within liquidity restaking protocols (LRP). While LRP generates rewards from restaking services, these are different from PoS rewards.

What Should You Choose?

This is a tough choice, as they all have pros and cons depending on how you view them.

If you are an airdrop hunter:

Choose Swell, EtherFi, Kelp, Puffer, EigenPie, Renzo.

If you want the highest yield:

Choose Mantle ETH (mETH) - you have a 7.2% yield on your ETH + EigenLayer points.

If you want "safety":

Nothing in cryptocurrency should be considered absolutely safe. Even stETH decoupled from the market by 70% in the summer of 2022. However, based on their time in existence, I find Lido, RocketPool, and Binance Staked ETH to be safe.

I believe Puffer gives me solid support and security, and I have a feeling that after a while, this may be considered one of the safer options.

What I Am Playing:

I am participating in all the airdrop activities and mETH. Personally, I also like to scale up, and having mETH with a 7.2% annual yield is quite nice.

If you are a bullish degen on Ethereum, you could buy, say, 10 wstETH, deposit it into AAVE, and borrow against it, for example, borrowing 50% of ETH (5 ETH). Then purchase swETH, mETH, ETHx, and follow the suggestions above to earn airdrops + EigenLayer points.

Also, keep in mind that several LRT tokens are about to launch: Genesis and Inception are two of them. Additionally, Pendle has some degen strategies where you can earn up to 30% yield.