Kelp DAO Discusses Economic Model and TGE: Interview Transcript on ETHE's Impact on the Restaking Track

Author: 137Labs

On July 26 at 10 PM (UCT+8), 137Labs and Kelp DAO jointly held an X Space AMA themed "The Impact of the Launch of ETH Spot ETF Trading on the Re-staking Sector." This event focused on the potential impact of the launch of the ETH spot ETF in the U.S. on the Ethereum ecosystem and the re-staking sector, as well as how Kelp DAO is responding to this change and discussed its future development plans and strategies. Additionally, Kelp DAO mentioned the $KELP economic model and TGE-related initiatives for the first time during the AMA. Below are the detailed content and key points from the AMA.

1. What impact does the launch of the U.S. ETH spot ETF on July 23 have on ETH liquidity, price, PoS mechanism, and ecosystem?

The launch of the U.S. ETH spot ETF on July 23 has already had a significant impact on Ethereum's liquidity, price, PoS mechanism, and overall ecosystem. Drawing from the experience of the Bitcoin ETF launch, which saw an initial price drop followed by a rise over the subsequent months, Ethereum has shown a similar trend. Initially, funds flowed from existing financial products to the new ETF, enhancing liquidity. Although there may be price fluctuations in the short term, the long-term outlook remains optimistic, with expectations of a price increase for Ethereum by the end of the year. This development indicates that Ethereum's acceptance in mainstream finance is increasing, which may strengthen its PoS mechanism and solidify its position in the broader crypto ecosystem.

In terms of capital flow, the ETH ETF is expected to attract 20-30% of the BTC ETF funds, aligning with the market sizes of both. Therefore, despite the initial price drop, the medium to long-term outlook for ETH remains bullish.

2. What opportunities and challenges does the re-staking sector face in the context of the ETH spot ETF launch?

In the context of the ETH spot ETF launch, the re-staking sector faces various opportunities. Firstly, the approval and success of the spot ETF open the door for future innovative products, such as staking Ethereum ETFs. This will attract traditional financial investors, converting their passive holdings into yield-generating assets by offering 3-4% staking rewards. The concept of re-staking, which involves using Ethereum to provide collateral for projects outside the Ethereum network, further amplifies potential returns through mechanisms like re-collateralization. Platforms like EigenLayer have successfully re-staked over $15 billion in assets, demonstrating strong market demand and product fit, emphasizing the importance of economic security in new projects.

Kelp DAO is collaborating with Nomura's crypto division, Laser Digital, to create and promote a re-staking ETF. This could enable these ETF holders to achieve higher returns than simply holding the spot ETF.

3. What are Kelp DAO's core advantages? How does it differ from other projects in the same sector?

Kelp DAO's core advantage lies in its comprehensive approach to optimizing re-staking rewards, along with its rigorous due diligence and risk assessment framework. Compared to other projects in the same sector, Kelp DAO allows retail investors to participate in re-staking without extensive research by outsourcing the complex and time-consuming risk assessment and project evaluation processes. Kelp DAO plans to implement a clear risk framework to analyze the risks associated with various projects, ultimately relying on Kelp token holders' decisions to determine which projects should be serviced. This decentralized decision-making process ensures that the community has the final say, similar to other DAOs like Aave, but with a focus on re-staking and economic security.

Additionally, Kelp DAO plans to expand beyond re-staking in the future, offering other innovative products to provide more value to users. This multifaceted approach not only simplifies the re-staking process but also aims to maximize returns while minimizing risks, making Kelp DAO stand out among projects in the same sector.

4. How is Kelp DAO adjusting its strategy to maximize benefits for users and the platform in the context of the ETF launch?

In the context of the ETF launch, Kelp DAO plans to adjust its strategy by establishing a strong risk framework and preparing for the upcoming activation of penalties to maximize benefits for users and the platform. Penalties are expected to be activated by the end of the year, and Kelp DAO will need to implement its comprehensive risk framework to ensure that only legitimate and secure projects with a good risk-reward ratio are selected for re-staking.

By carefully evaluating and validating projects, Kelp DAO aims to protect its over 40,000 re-stakers from unnecessary risks while optimizing staking rewards. This adjustment is crucial for maintaining user trust and maximizing the benefits brought by re-staking activities, ultimately establishing Kelp DAO as a reliable and user-centric platform in the ecosystem.

5. What important milestones are included in Kelp DAO's mid-term roadmap? What does supporting other blockchains (such as BSC, Solana, and BTC) mean?

Kelp DAO's mid-term roadmap includes several key milestones aimed at expanding and enhancing its re-staking capabilities and overall platform functionality. One important milestone is responding to community demand for low-cost re-staking solutions by supporting native re-staking on nine different L2 chains, including zkSync, Arbitrum, and Blast. This native re-staking approach is more robust than merely bridging tokens across chains, allowing users to earn various tokens such as ZK, Blast, and Linear while benefiting from rewards offered by chains like Arbitrum and Optimism.

Another significant milestone is researching and potentially supporting re-staking on other blockchains (such as BNB, Solana, and BTC). This expansion aims to diversify the re-staking options available to users, enabling them to optimize staking rewards across multiple blockchain ecosystems. Furthermore, Kelp DAO is developing innovative products to simplify the lives of users who participate in airdrops, allowing them to stay updated on market activities without constantly monitoring their wallets. These upcoming products are expected to be launched within the next month and are anticipated to significantly increase Kelp DAO's total value locked (TVL), positioning it as a leader in the market.

6. We have seen recent collaborations between Kelp DAO and Arbitrum, Optimism, zkSync, Scroll, and Blast. How does Kelp DAO's multi-chain re-staking service achieve a win-win-win for public chains, projects, and users? What strategies do we have to attract and retain users? Are there any recommended strategies for maximizing returns from numerous joint activities?

Kelp DAO's multi-chain re-staking service achieves a win-win-win for public chains, projects, and users by integrating multiple Layer 2 (L2) solutions (such as Arbitrum, Optimism, zkSync, Scroll, and Blast). This strategy allows users to enjoy the benefits of re-staking on Ethereum while taking advantage of the low transaction costs and additional rewards offered by these L2 networks. By providing native re-staking support on these chains, Kelp DAO enables smaller users to participate without incurring high miner fees, making the process accessible and cost-effective. This, in turn, increases the user base and activity of these L2 networks, promoting their growth and adoption. Projects benefit from attracting user participation, enhancing security and interactivity, while users gain more rewards through additional airdrops and incentives.

To attract and retain users, Kelp DAO employs various strategies. One key approach is to create a comprehensive incentive system that rewards users not only through traditional staking rewards but also through participation in additional airdrops and tokens offered by L2 projects. This multi-layered incentive structure ensures that users receive substantial returns on their re-staking activities, making the platform more attractive than traditional staking options.

7. The economic model of $KELP has not been disclosed. Can you share insights on the $KELP economic model?

The economic model of $KELP includes ensuring that the portion of the supply allocated for airdrops is meaningful and attractive to users. This means that the airdrop allocation is designed to provide significant value to the community, encouraging participation and interaction. Additionally, a substantial portion of the supply is allocated to community initiatives, highlighting Kelp DAO's commitment to fostering an active community around its ecosystem.

The $KELP token will have multiple uses, with governance being the primary function. In the context of re-staking projects, governance is crucial as it allows token holders to choose projects with a good risk-reward ratio. This is particularly important for ensuring that the community can make informed decisions about which projects to support, thereby enhancing the overall security and profitability of the ecosystem.

In addition to governance, other functions such as revenue sharing and participation in the profits of the re-staking ecosystem will be introduced at the appropriate time. These features will enable $KELP holders to benefit directly from the financial success of the platform, aligning their interests with the growth and sustainability of the Kelp DAO ecosystem.

Kelp DAO plans to launch several new projects in the coming months that will further clarify the value of the $KELP token. The first product is set to launch in less than a month and is described as a unique offering that has never been seen in the market. A second product is also in preparation, with its release date yet to be determined. The TGE will occur after the launch of these products to maximize their impact and integration with the ecosystem. However, the specific timing is relatively flexible and may take place after the first product launch and the announcement of the second product. We will provide timely updates, so please stay tuned.

These new projects will position Kelp as an aggregator of various re-staking-related products, enhancing its overall valuation and helping it stand out in the market. By building a suite of innovative products, Kelp DAO aims to create a comprehensive platform that offers a range of services to enhance the user re-staking experience compared to other projects. This multi-product strategy is expected to significantly boost Kelp's valuation and establish its leadership in the re-staking space.

Overall, the $KELP economic model is designed to ensure long-term growth and community engagement through meaningful airdrops, community-focused allocations, and various token utilities that benefit both holders and the ecosystem.

8. What is Kelp's view on high FDV and low circulation? What specific measures will be taken?

Kelp DAO takes a cautious approach to high FDV and low circulation. The team behind Kelp is clearly focused on maintaining streamlined operations and prioritizing the interests of the community. Although they have the capacity to raise more funds, Kelp DAO has chosen to raise only $9 million to avoid excessive dilution and retain more control over the project. This approach contrasts sharply with many projects that allocate large amounts of tokens to private investors and venture capitalists.

The founders of Kelp, who are also the founders of Stader, have learned valuable lessons from previous experiences. Stader raised $40 million in 2021 and reached a valuation of $1 billion at the peak of Luna's price. However, they found that managing a crypto company does not require such a large amount of funding. Applying this insight to Kelp, they decided not to relinquish a significant amount of equity and token holdings to venture capital and private investors.

Kelp DAO's strategy is to ensure that the community remains at the core, avoiding large amounts of tokens being held by venture capitalists, which could lead them to prioritize their profits over the community's well-being. The exact figure for the fully diluted valuation will depend on the macroeconomic outlook at the time of the token generation event (TGE), making it a time-sensitive decision. However, it is clear that Kelp DAO is committed to designing a token that does not harm the interests of retail investors.

By prioritizing a community-first approach and controlling token distribution, Kelp DAO aims to create a sustainable and fair economic model that benefits all stakeholders.

Conclusion

This AMA event delved into the impact of the U.S. ETH spot ETF on the Ethereum ecosystem and the re-staking sector, showcasing Kelp DAO's response strategies and future development plans in this context. Kelp DAO is committed to providing users with safe and efficient re-staking services through its innovative re-staking solutions and robust risk management framework. At the same time, it analyzed current market pain points and shared strategies to address them. Will Kelp DAO continue to explore upgrades, drive the development of the re-staking field, and bring more benefits and value to users? Let's wait and see. What are your thoughts on this? Feel free to discuss in the comments.