Frequent capital injections and project airdrops have made staking LRT a "new gold mine."

Author: Grapefruit, ChainCatcher

Editor: Marco, ChainCatcher

In just one month, Binance Launchpool has consecutively launched two projects in the Restaking track: Etherfi and Renzo. The latest round of Renzo (REZ) mining will end on April 30 and will begin trading. This time, the assets participating in staking exceeded $15 billion, with the number of users surpassing 400,000, indicating an unprecedented level of participation.

Since the beginning of 2024, the Restaking track has been favored by capital, with projects securing millions of dollars in funding one after another. In late April, the Restaking track secured two large financing rounds: on April 16, the Restaking protocol Puffer completed a $18 million Series A financing at a $200 million valuation, followed by YieldNest, a liquidity restaking protocol, which completed a new round of financing of $5.2 million on April 23.

With frequent capital injections, projects launching new coin mining on Binance, and a wave of airdrops, the Restaking track has become a new gold mine.

Restaking refers to the process of taking ETH that has already been staked on the Ethereum PoS chain and re-staking it on other blockchain networks to provide validation services, thereby earning additional rewards beyond those provided by Ethereum's mainnet PoS staking.

In simple terms, Ethereum stakers can use their staked ETH for staking on other PoS networks, earning dual staking rewards from both the Ethereum mainnet and other networks.

Since Ethereum transitioned to a PoS mechanism, over 32.5 million ETH have been staked on the Ethereum mainnet, accounting for more than 26% of the ETH supply, with a value exceeding $100 billion.

Common liquidity staking protocols (LST protocols) like Lido and Rocket Pool have released the liquidity of ETH staked on the Ethereum mainnet through staking certificates (LST assets), but they cannot be used as staking assets on other networks.

Restaking protocols aim to allow ETH staked on Ethereum to also be used to secure other blockchain networks, unlocking new revenue opportunities for ETH stakers and maximizing the utility of staked ETH.

From this perspective, restaking protocols create a staking asset marketplace for ETH stakers, where network or DApp developers requiring staking and validation services are the demand side, and ETH stakers are the supply side. Through this marketplace, users can re-stake their ETH or LST assets staked on Ethereum to other networks for additional rewards.

As of April 29, the total value locked (TVL) of ETH and LST assets on the EigenLayer platform, a pioneer in the restaking track, has exceeded $16 billion.

Around the hundreds of billions of dollars in liquidity on the EigenLayer platform, multiple liquidity restaking LRT protocols have emerged, such as Etherfi and Renzo. These products simplify the complex restaking process of EigenLayer, allowing users to participate in staking by simply depositing ETH or LST assets without needing to focus on the underlying node operation choices.

Currently, restaking products in the market can be primarily divided into two categories based on their logic: one category is native restaking protocols, such as EigenLayer; the other category consists of LRT protocols built around restaking protocols, such as Etherfi and Renzo.

EigenLayer: The Pioneer of Restaking Protocols

EigenLayer is the originator of the Restaking concept, allowing users to re-stake their LST assets to earn staking rewards beyond Ethereum PoS.

On April 10, EigenLayer announced the launch of its mainnet.

According to Rootdata, EigenLayer has publicly completed three rounds of financing, raising a total of $164.5 million. Notably, in February of this year, a16z announced an investment of $100 million.

On the EigenLayer platform, there are three main roles: stakers providing ETH or LST assets, node service solutions (AVS), and application chains and DApps with staking needs.

Among them, the node service solution AVS, which stands for Actively Validated Services, is the core concept of EigenLayer. It provides secure and decentralized node service solutions and systems for blockchain networks or DApp projects. Users can view it as middleware that connects Ethereum stakers or LST asset holders with project parties needing node services, providing node operation and validation services, and extracting profits from the rewards and fees provided by the project parties.

EigenLayer provides node operator services, allowing application chains, cross-chain bridges, oracles, Rollups, and other project parties to avoid the complexities of building and operating nodes from scratch, enabling them to rent EigenLayer's node validation services directly, saving time and resources to focus on what they do best.

In addition to node services, EigenLayer has also developed a data availability service called EigenDA, which handles data availability and transaction execution, functioning similarly to the data availability layer of modular blockchains like Celestia.

Currently, multiple application chains and Layer 2 solutions, such as Layer 2 networks Mantle, Cyber, Celo, and Treasure, have integrated EigenLayer's AVS services and EigenDA data availability layer; Rollup service solutions like AltLayer, Brevis, and Xterio utilize AVS validators.

Users can participate in restaking on EigenLayer in two main ways: first, by directly staking ETH; second, by using LST staking certificate assets to participate in restaking. Currently supported LST assets for staking include stETH, swETH, mETH, stETH, wbETH, rETH, etc.

On April 16, EigenLayer announced the removal of all LST token deposit limits, resulting in a $3 billion increase in TVL within a week. Currently, users staking ETH or LST on EigenLayer can earn points.

As of April 29, the value of ETH and LST assets locked on the EigenLayer platform is close to $16.2 billion, accounting for over 15% of the total ETH staked, with 3.26 million native ETH staked, and the remainder being stETH, rETH, cbETH, and other LST assets. EigenLayer has distributed approximately 4.5 billion points to all restakers, with each EigenLayer point trading at $0.14 on the secondary market, Whales Market.

LRT Protocols Simplifying the EigenLayer Staking Process

Due to the complex product mechanisms on the EigenLayer platform, users face difficulties when participating in the AVS node services, as they need to choose the projects they want to participate in and perform related node selection operations. This led to the emergence of the one-stop Staking platform LRT protocol built around EigenLayer.

Users only need to deposit ETH or LST assets into the LRT protocol, which helps them perform restaking on EigenLayer, similar to a liquidity pool or yield aggregator in DeFi protocols. Users can choose to restake through the LRT protocol platform without directly engaging in the complex staking process.

Once ETH or LST assets are staked on the LRT platform, users will receive an LRT restaking certificate asset (Liquidity Restaking Token), which can be freely traded in the market and used for staking, lending, LP, and other DeFi applications to further increase yields.

Although it appears similar to LST, LRT assets truly achieve "one fish, multiple meals," encompassing dual staking rewards and multiple platform token and point rewards: Ethereum mainnet staking rewards + restaking AVS service node rewards + LST platform token rewards + EigenLayer points or token rewards + LRT platform token or point rewards.

Currently, representative projects in the LRT track include: Renzo, Ether.fi, Kelp DAO, EigenPie, YieldNest, Swell, Pendle Finance, etc.

1. Renzo

Renzo is a liquidity restaking protocol built on EigenLayer that simplifies the complex restaking mechanism for users, replacing them in operating EigenLayer's restaking-related services, so users do not need to understand, choose, and manage the node operation AVS services and their reward strategies, allowing them to directly participate in EigenLayer restaking.

Users only need to deposit their ETH and LST assets on the Renzo platform to receive the restaking certificate ezETH, which allows them to earn Ethereum PoS staking rewards and other AVS node service rewards.

In January of this year, Renzo completed a $3.2 million seed round financing at a valuation of $25 million, and in February, it announced an investment from Binance Labs. On April 23, Binance announced that Renzo (REZ) would be its new coin mining project on Launchpool and released the REZ token economic model, with a total supply of 10 billion REZ tokens and a circulating supply of 1.05 billion tokens at launch, officially starting trading on April 30.

During this period, Renzo launched an early points reward program, ezPoints, where users can earn ezETH by locking ETH or LST assets and receive ezPoints, while also obtaining EigenLayer points.

As of April 29, the value of assets locked in Renzo has exceeded $3.51 billion, with over 930 million points distributed by EigenLayer and 1.53 billion ezPoints issued by Renzo.

Compared to other LRT protocols, Renzo's advantage lies in its early support for multiple Layer networks such as Arbitrum, Base, Blast, BNB Chain, Mode, and Linea, allowing users to participate in restaking using Gas.

2. Ether.fi

Ether.fi was originally a liquidity staking protocol LST on Ethereum. After integrating the EigenLayer restaking protocol in November last year, the scale of assets locked in the protocol entered a rapid growth phase, rising from tens of millions to $3.86 billion, making it the current leader in the LRT track. Its token ETHFI was launched on Binance Launchpool in March, with a total supply of 1 billion, currently priced at $4.44.

According to Rootdata, Ether.fi has publicly completed two rounds of financing, raising a total of $32.3 million, with the most recent round occurring on February 28, raising $27 million led by Bullish and CoinFund.

Currently, users staking ETH or LST assets on Ether.fi will receive the restaking certificate eETH and earn EigenLayer points. The platform has distributed over 1.1 billion EigenLayer points to date.

Compared to native LRT protocols, Ether.fi has its own Ethereum PoS staking service and has been deeply engaged in addressing the decentralization issues of staking. On April 22, SSV.Network announced a partnership with Ether.fi to launch the latest distributed validation technology (DVT) integration, aiming to avoid centralization issues in restaking node operations through diverse solutions.

3. Puffer Finance

Similar to Ether.fi, Puffer Finance was originally a liquidity staking LSD platform on Ethereum, lowering the staking validator startup threshold from 32 ETH to below 2 ETH, and received funding from the Ethereum Foundation. By integrating EigenLayer, it provides more AVS rewards for stakers.

According to Rootdata, Puffer Finance has publicly completed four rounds of financing, with a disclosed total financing amount of $21.45 million, including an announcement on April 16 of raising $18 million at a $200 million valuation.

In January of this year, Puffer Finance announced the launch of a staking points reward program, stating that users could earn Puffer and EigenLayer points by staking ETH, stETH, USDT, and USDC. However, currently, Puffer Finance only supports users depositing stETH and wstETH.

As of April 29, Puffer Finance's TVL stands at $1.41 billion, with approximately 2.44 billion points issued, and 650 million points distributed by EigenLayer.

4. YieldNest

YieldNest is a liquidity restaking protocol supported by EigenLayer, currently in the testing phase, with users only able to participate in the early community on Discord.

On April 23, YieldNest announced the completion of a new round of financing of $5.2 million.

5. Kelp DAO

Kelp DAO is a liquidity restaking protocol based on EigenLayer, built by members of the multi-chain liquidity staking platform Stader Labs team. Users can stake ETH and LST assets such as stETH and sfrxETH on the platform to obtain their restaking certificate rsETH.

Unlike other LRT protocols, Kelp DAO has launched the EigenLayer points (EL points) token KEP, allowing EL points to be exchanged for KEP tokens at a 1:1 ratio, i.e., 1 KEP = 1 EL point. KEP point tokens can be traded on secondary markets and used in other DeFi applications, such as forming LPs.

Currently, users can earn EL points and Kelp Grand Miles rewards by locking ETH and LST assets on the Kelp DAO platform. On April 2, Kelp launched the "Billion Miles" campaign, offering an additional 5 million EL points to users minting rsETH.

As of April 29, Kelp DAO's TVL has reached $863 million, with 438 million EigenLayer points earned and 370 million Kelp Grand Miles rewards accumulated, with over 50 million KEP point tokens claimed.

6. EigenPie

EigenPie is an LRT protocol based on EigenLayer created by the Magpie community subDAO, supporting users to stake LST assets to obtain LRT restaking certificates.

Initially, EigenPie focused on the restaking of LST assets and issued corresponding LRT assets for each type of LST asset to isolate risks between different LST assets.

However, on April 26, EigenPie announced that it now supports the restaking of ETH. Currently, users can earn EigenPie and EigenLayer points by staking ETH or LST assets on the platform. As of April 29, EigenPie platform's TVL is $323 million.

7. Swell

Swell is also a liquidity staking protocol LST on Ethereum, allowing users to stake ETH to obtain the LST liquidity staking certificate swETH. In January, it announced the launch of the restaking service LRT product rswETH based on EigenLayer.

Currently, the Swell website displays both LST products swETH and LRT rswETH, with the former managing assets exceeding $700 million and the latter having a TVL of $398 million.

In March, Swell announced the launch of its Rollup network Swell L2, specifically built for restaking, with rswETH as the native GAS token on its chain, expected to launch in the second half of 2024.

Additionally, Swell launched a pre-deposit activity for Swell L2 in April, clearly stating that participating users will receive SWELL airdrops when L2 launches. Currently, it supports deposits of ETH, LST, LRT, and other assets, with a total of $379 million deposited.

8. Pendle Finance

Pendle Finance (Pendle) was originally a DeFi yield protocol on Ethereum that separates the principal and yield of income-generating assets and tokenizes them to meet different user investment needs.

With the development of the LST and LRT tracks, Pendle Finance's platform has seen explosive growth in asset management, currently boasting a TVL of $4.41 billion, ranking seventh among all DeFi applications, with its token PENDLE increasing by over 50% in the past 30 days, currently priced at $5.5.

In Pendle, income-generating assets are divided into two parts: one part is the principal of the income-generating assets, PT (Principal Tokens), and the other part is the yield portion, Yield Tokens (YT). YT and PT can be traded on Pendle AMM, allowing users to purchase assets at discounted prices, participate in various yield strategies, or earn yields by providing liquidity to pools.

Pendle Finance now supports ezETH, eETH, pufETH, and other LRT restaking certificate assets, splitting their potential point earnings into YT-Token tokens, with the principal portion being PT-Token tokens. Users can then choose to hold yields or sell for immediate cash based on their risk tolerance and future expectations.

For example, regarding the LRT asset ezETH on Renzo, Pendle Finance splits its potential point earnings into YT ezETH, with the principal being PT ezETH, allowing users to freely trade these tokens. If they are optimistic about future point earnings, they can buy YT ezETH; if their outlook is poor, they can choose to sell for cash.

Additionally, Pendle Finance distributes EigenLayer points and Renzo points to users holding YT tokens (YT-ezETH) of ezETH.

EigenLayer Competitor: Karak Network

Karak Network is a restaking protocol created by developer AndalusiaLabs (formerly an asset risk insurance service provider for the LUNA protocol). Its working principle is similar to EigenLayer, allowing users to re-stake ETH already staked on Ethereum on other blockchain networks, earning multiple staking rewards from a single staking cost.

In December last year, it completed a $48 million Series A financing at a $1 billion valuation, with investors including Pantera Capital, Framework Ventures, Digital Currency Group, Coinbase, and Nima Capital.

The difference between the two lies in that EigenLayer refers to the process of serving DApp security with re-staked ETH as AVS (Actively Validated Services), while Karak calls its process Distributed Security Services (DSS).

Moreover, Karak supports a wider variety of assets for restaking, hoping that any asset can be restaked. Currently, restakable assets include not only ETH and LST assets but also ezETH, pufETH, and other LRT, as well as stablecoins like USDT, USDC, and DAI.

Karak has also developed its own Layer 2 network, K2, which has launched its mainnet.

In February of this year, Karak launched an early user points reward program, KarakXP, which is invitation-only, allowing users to cross-chain ETH, USDC, and other assets to Karak to earn XP. However, this did not attract much attention in the market, and data did not show significant changes until the launch of Private Access on April 8, after which the TVL began to surge, now reaching $490 million.

Currently, users staking assets on Karak can enjoy "one fish, multiple meals": earning PoS staking rewards + re-staking rewards + EigenLayer points + LRT protocol points + Karak XP. For example, if a user stakes Renzo's ezETH on Karak, they will receive rewards including Ethereum PoS staking rewards, Karak platform re-staking rewards, EigenLayer points, Renzo protocol points, and Karak XP points. However, currently, participation in staking on the Karak platform requires an invitation code, with each address having only five invitation codes.

Additionally, the ability of restaking protocols to attract DApps or blockchain networks to integrate AVS/DSS is an important indicator of future potential, as more AVS/DSS DApps mean higher returns for restaking participants (more airdrops), increased protocol revenue, token valuation, and higher TVL. Currently, EigenLayer has several AVS partners, but Karak has not publicly disclosed its cooperative projects, with officials stating that they will reveal them in the coming weeks.