Ethereum’s New Narrative — Liquidity Re-staking

The long-weak Ethereum ecosystem is finally about to usher in a new wave of narratives. In addition to the DenCun upgrade that benefits many L2s, the trend of re-staking has become the focus of the Ethereum ecosystem since EigenLayer opened up the LST collateral quota at the end of last year. In just one month, EigenLayer attracted more than 500,000 $ETH TVL and exceeded $1 billion. Now it has reached $1.4 billion and is currently the 12th-ranked king-level project in Ethereum TVL. The first AVS to use EigenLayer verification service - EigenDA is also about to be launched. The narrative of DA service has also become a topic of market attention as Celestia's token $TIA soared. EigenLayer not only protects itself, but also brings a new track Liquid Restaking Defi (LRD)/Liquid Restaking Token (LRT) liquidity re-staking service . As the name suggests, the LRD project is to release the LST (stETH, swETH, ETHx) in EigenLayer. Liquidity, by issuing mortgage certificate tokens (LRT) to help users release liquidity, forming a new round of token nesting.

Today, Dr. DODO will take you to understand which projects in the Liquid Restaking service are worth your participation. This article will focus on four projects whose products have been launched but no tokens have been issued.

What is Restaking?

As early as half a year ago, Dr.DODO introduced EigenLayer and its Restaking concept to you. Simply put, it provides you with an extra layer of income for the Ethereum staked in POS.

After understanding EigenLayer, let’s explain the derivative projects under the Restaking narrative. By citing the diagram of Delphi Digital, we can understand the four types of Restaking:

• LSD Restaking: Deposit the LST (stETH, swETH, etc.) you get after depositing into the LSD protocol into EigenLayer and then stake it.

• Liquid-LSD Restaking: Through LRD protocols such as KelpDAO, LST is delegated to the LRD protocol, which deposits it into EigenLayer and then stakes it, and users receive the collateral certificate token Liquid Restaking Token (LRT).

• Native Restaking: Native restaking means that stakers who operate native nodes can also provide ETH to EigenLayer for restaking.

• Liquid Native Restaking: Native liquid restaking refers to projects such as etherf.fi or Puffer Finance that provide small ETH node services, providing the ETH in the node to EigenLayer for restaking.

KelpDAO

KelpDAO is a restaking ecosystem project developed by the LSD project Stader Lab. As mentioned above, it belongs to the Liquid-LSD restaking type. Currently, it is open to deposit two LST tokens, Lido's stETH and Stader's ETHx. However, since the current EigenLayer LST quota is full, deposits are currently suspended. In addition, the official also clearly stated that users who deposit in KeplDAO will be able to obtain EigenLayer points rewards. At present, the TVL of the protocol exceeds 160M, which is the project with the highest TVL in the LRT field.

Source: kelpdao.xyz/restake

Renzo

Renzo is different from KelpDAO and is a Liquid Native Restaking product. This means that it is not subject to the EigenLayer LST deposit limit and deposits are still possible . However, it should be noted that ETH deposited in Renzo is not currently open for redemption, and the collateral certificate ezETH cannot be transferred and is locked in the short term. The same team as KelpDAO also stated that users will be able to obtain EigenLayer points, and the team background or financing information has not been disclosed yet. Early projects need to pay attention to risks.

Source: https://www.renzoprotocol.com/#what-is-renzo

Swell

Swell Network is an established LSD protocol. This time, it also officially announced that it will enter the field of Liquid Restaking. It is also a product of the Liquid Native Restaking type and will not be subject to the EigenLayer LST quota limit. Since Swell has not issued any coins and has airdrop expectations, its LST token swETH has been favored by many airdrop hunters and is currently the second largest pledged asset in EigenLayer.

Source: Binance Research https://public.bnbstatic.com/static/files/research/monthly-market-insights-2024-01

Currently, only part of the LSD product is open for staking, where you can deposit ETH to obtain swETH tokens, while the Liquid Native Restaking product, where you can stake ETH to obtain rswETH, is not yet open.

Source: https://x.com/swellnetworkio/status/1743204726777450672?s=20

ether.fi

ether.fi is the same as the above two projects. It is also a Liquid Native Restaking type product. It has received a $5.3 million seed round of financing from Arthur Hayes, the founder of BitMEX. Unlike LIDO, ether.fi uses a decentralized and non-custodial approach to achieve ETH staking, and announced that it will provide re-staking services. Since it is native ETH re-staking, it is not affected by the EigenLayer LST limit and can still be deposited. Its collateral certificate token eETH (wrapped token weETH) is also one of the few liquid LRT collateral certificate tokens.

Source: https://www.ether.fi/

Author's opinion

The author believes that after the official launch of the Bitcoin spot ETF in Q1 2024, the Ethereum ecosystem will be expected to rebound, and three major narratives will be the main theme of the Ethereum ecosystem. The first is the Ethereum Layer 2 ecosystem that directly benefits from the Cancun upgrade, the second is the EigenLayer re-staking ecosystem introduced today, and the third is the Web3 application projects for Mass Adoption (games, payments, etc.). The Liquid Restaking project introduced today is the most cost-effective way to participate in the EigenLayer re-staking track. You only need to deposit ETH into the relevant protocol to participate in the one-fish-two-kill.

In addition to the four projects introduced above, there are many more that are currently in preparation. For example, Puffer Finance, which was previously introduced by Dr.DODO, recently announced that it will participate in re-staking. However, since its products have not yet been launched, they will not be introduced in this article. However, you can also keep an eye on other projects in this track and participate moderately under controllable risks, and perhaps wait for the relevant protocols to issue coins to make a profit.