After the EIGEN airdrop, what will be the future of LRTs?

Author: hitesh.eth

Compiled by: Deep Tide TechFlow

LRTs provide users with a simple interface to re-stake ETH and LSTs for additional yield. Now that the LRT, Eigenlayer, and the Points meta activities of over 10 AVS have concluded, we need to shift our focus to LRTs like EzETH and eETH, considering how to achieve additional yield on a 3.21% native ETH yield.

In the design of EL, AVS operators run hardware for computation and validation, delegating the re-staked ETH to AVS—AVS is essentially a web3 service protocol guided by the economic security pool of Eigenlayer.

Since they borrow economic guarantees from EL, they need to pay some fees, which are the promised additional yields.

In the early stages, most AVS struggled to gain project adoption, making it nearly impossible to earn revenue in the form of Rev shares. For them, the only way was to launch a token out of thin air.

Nowadays, venture capital firms are blindly investing in AVS, so I wouldn’t be surprised if some AVS tokens achieve valuations in the billions at TGE.

Web3 service protocols like Graph, Pyth, and Axelar allocate a certain percentage of their supply for node rewards, and there is annual token inflation specifically for node rewards. The supply allocation for node rewards typically ranges between 5-10%, but if you look at the economic security scale they gain from Eigenlayer, that is subjective. For example, AXL has $750 million in economic security, while AVS like Witness Chain and Lagrange have amassed over $5 billion in economic security in less than a month.

Ideally, they will allocate over 10% of the supply to provide fair rewards to AVS operators, who will share a portion of that with re-stakers.

Initially, before these AVS launched Points programs, you could earn AVS points by investing ETH in Renzo, Puffer, and Etherfi… and this will continue until we reach a saturation phase for the Points meta.

For LRT tokens, they currently have governance utility, so purchasing these tokens makes little sense unless they start sharing something like fees from stakers or other revenues.

The entire EL ecosystem is a dreamland for venture capitalists.

For retail investors, it is purely about capital dilution to gain some extra yield on ETH.

You can also optimize yields in other DeFi strategies, so this game can only be played with an understanding of the rules and risks.

Finally, the original poster has also compiled a comprehensive dashboard on the operational status of EigenLayer, covering real-time data on various metrics such as LRTs, AVS, and user indicators, providing useful references for readers interested in the EigenLayer ecosystem.

EL ecosystem data dashboard link （click here）