Author: Ignas, DeFi researcher; Translator: Golden Finance xiaozou
Mark my words: Restaking will be the fastest growing category in 2024.
Re-staking is the 9th largest DeFi category, with a value of $2 billion on EigenLayer alone (a number that is rising at the time of writing).
Don’t forget that the “liquidity re-hypothecation” category is ranked 13th and is worth $1 billion.
Now, with the release of the first AVS token (ALT) and the opening of Eigenlayer deposits on February 5th, it’s time to get a clear picture of what’s happening in this space What.
In this article, I will briefly introduce Eingelayer re-staking and the new use cases of Active Verification Service (AVS) it supports. Really cool!
Eigenlayerwill be released2monthDeposits are open on the 5th. Here's what you need to know.
They have modified the points system by limiting single deposits and LST/LRT allocations to < strong>33%to encourage decentralization. In order to optimize Eigenlayer points, you can consider avoiding the top three TVL protocols:
· eETH launched by EtherFi (197k ETH)
· < stETH launched by em>Lido (195k ETH)
· swETH (112k ETH) launched by Swell
However, < em>SwellandEtherFioffer double points via native token airdrops. My approach is to use a diverse mix of LSTs/LRTs to balance point accrual and risk.
Concerning the LRT competition, I have hedged bets on several contenders:
· EtherFi: LRT leader, accounting for 51%< em>LRTmarket share.
· Kelp DAO: By re-staking stETH or < em>ETHxobtains Eigenlayer points and KelpDAO miles.
· Renzo: Like EtherFi, use Eigenpods performs native ETH re-staking. LRT market share increased to 21%.
· Swell: You can deposit ETH to get< em>swETH LST, and re-pledge on Eigenlayer. Or get rswETH LRT by direct deposit.
· Eigenpie: new entrant, but already owns 1 Billion US dollars of TVL, supports 6 types of LST, and provides double points in the first two weeks. These points were used for 10% of the EGP token airdrop and were obtained for 3 millionUSDFDV 60%of EGP tokens IDO to incentivize early participation.
I will explain the differences in more depth in my next article.
As early as 2023 In September, I detailed my views on staking and staking Liquidity Re-staking Tokens (LRT). But after that, things progressed a lot. There are multiple LRT protocols now on mainnet, and with AltLayer launching its token, things are heating up.
Many people still don’t know what restaking is, and they often make it too complicated.
In short, restaking allows you to guarantee (pledge) your ETH for various Active Verification Services (AVS), thereby increasing the security of your chosen protocol. sex. Including services such as bridging, oracles, and sidechains, and more innovative concepts are on the horizon.
For example, Optimism and Arbitrum can bypass 7-day fraud protection as long as there is enough economic security (ETH in this case) to support withdrawals Window enables instant withdrawal.
These "safety bridges" provide sufficient redistribution guarantees in the event of validator misbehavior. However, if you re-stake Secured Bridged AVS, you risk losing some ETH if the validator makes a mistake. (As far as I know, a secure bridge cannot protect your funds if there is a vulnerability in the smart contract).
You can re-pledge ETH directly or re-pledge ETH through liquid pledge tokens such as stETH, rETH, cbETH, etc. Eigenlayer has newly added support for LSTs, sfrxETH, mETH and LsETH.
The benefits of re-staking are:
· Multi-protocol rewards: use the same ETH earns rewards from multiple protocols. For example, the cost of securing a bridge.
· More secure: The new protocol leverages the security of Ethereum.
·Developer freedom: No need to build new security layers, saving developers time and resources.
The risks are as follows:
· Slashing risk: losing ETH due to malicious behavior Risks increase.
· Centralization risk: If too many stakers transfer to EigenLayer, Ethereum may face systemic risks.
· Smart contract risks: Such risks exist in any corner of DeFi.
I think the risk is limited at the moment because Eigenlaer is still in the Stage 2 testnet phase and does not enable permissionless AVS deployment. However, I agree with ChainLinkGod that most of these risks will be ignored, and we will have all the fun until at least 2025.
In the current Stage 2 testnet phase, re-stakeholders like you can entrust operators. AVS is verified by these operators. Therefore, you will not re-stake AVS directly!
EigenDA (Data Availability) is the first AVS in Stage 2. Rollup can be integrated to improve throughput. Stage 2 mainnet will launch in the first half of 2024, and Stage 3 will launch more AVS later in 2024 (the real fun will begin then).
Interestingly, among many operators, Deutsche Telekom stands out. It seems that Telekom will use Eigenlayer for its staking service.
Either way, are you ready to manually select AVS and carriers yourself? On the mainnet with high gas fees? And get rewards from AVS? And then sell the rewards for more ETH? If you are not a millionaire, the gas fees will be quite high.
I’m sure you can guess what I’m going to say: Liquidity Recollateralized Tokens (LRT). But I will introduce more about LRT in the next article. Now, let’s look at the use case of the Active Verification Service (AVS), which will airdrop our shiny new tokens.
The first AVS is EigenDA, but I won't go into details because I doubt it will have a separate token (it is a data availability layer, Help rollup save data storage costs).
Don’t be fooled by the name AVS . AVS is a fully mature protocol that uses re-staking ETH to enhance its functionality. I mentioned "secured bridging" above, but the scope and impact of AVS will soon become more apparent.
The most well-known Eigenlayer AVS use case in the community recently is AltLayer, which is a re-pledge Rollup. Currently Coins have been issued.
I have introduced AltLayer in a previous article, so I will not introduce its functions in depth in this article. But you need to know that AltLayer introduces three AVS to achieve fast finality of rollup, decentralized sorting and decentralized verification.
ALT token economics are interesting because ALT needs to be co-collateralized with remortgaged ETH to ensure the security of these three AVS. Many people seem to overlook this.
If you have been farming Pool2 farms during the DeFi summer of 2020, you will understand that it can have a Ponzi effect.
Currently, only 3% of the total supply has been airdropped to the community, but more airdrops are planned in the future. The initial circulating supply is 11%. Can $4.3 billion in FDV (at the time of writing) prove the success of a deal that was no one even talking about a few weeks ago?
Not necessarily, but it makes me more optimistic about the entire re-staking ecosystem.
Also, I suspect AltLayer is reserving liquidity mining rewards for re-stakers. As more AVS become available, various services will compete to attract high-value ETH deposits.
After all, AVS without ETH deposit is worthless.
It's time to look for the next ALT on EigenLayer. Here are 8 noteworthy use cases for EigenLayer AVS.
Ethos brings the economic security and liquidity of Ethereum to Cosmos.
The so-called Cosmos Consumer Chain usually issues its own native pledge tokens to ensure network security. However, it introduces more complexity and inflationary token economics. While Cosmos ATOM stakers provide an inter-chain security (ICS) solution, the Ethereum ecosystem (Ethos + staking) is now expanding into Cosmos itself.
Coupled with the release of Dymension, ATOM fork and now Ethos, ATOM seems to be under a lot of pressure.
Ethos was created inspired by Mesh Security (allowing staked tokens from one chain to be used on another chain), thereby increasing economic security without the need for additional nodes sex.
Which security solution wins depends on adoption. Ethos is starting strong.
Sommelier, an automated revenue vault provider with $60 million in TVL, is the first partner. As far as I know, more "Consumer Chains" are coming soon.
The beauty of this structure is that ETHOS may receive token airdrops (and proceeds) from partner chains. At the same time, ETHOS tokens will be airdropped to ETH re-pledgers on Eigenlayer when we farm EIGEN tokens.
All you need to do is to pledge ETH again and apply for the airdrop. very simple.
Long story short. Espresso focuses on L2 decentralized sequencers. As you know, L2 has been criticized a lot due to the centralization of the sorter. For more information on how Espresso uses their HotShot consensus to solve this problem, check out their website.
AltLayer actually integrates with Espresso, so developers deploying an AltLayer stack can choose to use AltLayer's decentralized validation solution and/or the Espresso sequencer.
Problem: L2 reduces transaction costs, but leads to the fragmentation of the ecosystem. This makes it difficult for builders to reach a wider audience, complicates the user experience, and fragments mobility.
Bridging has also become a necessary condition, but each bridge usually releases a variety of wrapped tokens, which is risky. If the bridge is hacked, there will not be enough underlying assets to support the bridge wrapped token. As a result, wrapped tokens are decoupled.
Solution: Omni
Omni is a "safe re-staking L1 blockchain ”, aiming to unify all rollups of Ethereum.
Omni introduces a "unified global state layer" to ensure security through the re-pledge of EigenLayer. This layer centralizes cross-domain management of various applications.
Use cases include:
· Cross rollup margin accounts and leverage trading: in one Post a margin on a domain and then use that margin to trade on another domain.
· Cross rollup NFT casting.
· Cross rollup lending: Deposit collateral on one domain and then borrow against that collateral on another domain.
There are many more use cases, does this all sound familiar? This is what LayerZero does.
LayerZero's cross-chain messaging supports full-chain fungible tokens (OFTs) instead of wrapped tokens. Manta's STONE token is ETH OFT, and LayerZero issued Lido wstETH OFT.
But what happens if there is a bug in the LayerZero messaging system? Omni will ensure safety by re-staking ETH. If the validator behaves inappropriately, the ETH will be forfeited.
Imagine a typical degen who wants to use his ETH< on Arbitrum /em>Get a USDC loan on Optimism. Transactions of this degen on Arbitrum are monitored by Omni validators, who ensure the integrity of the data transferred to Optimism sex. Validators verify and report these transactions, and they are incentivized by rewards and face the risk of losing their staked ETH due to reporting errors.
LayerZero may use their token staking to achieve cross-message security, but if something goes wrong with the LayerZero contract, the tokens will be dumped, and This kind of security is just...useless. ETH is a hard asset that ensures network security outside the system.
Injective partners with Omni to make INJ the first asset on the Omni open liquidity network. Omni issues xERC20 INJ tokens, bringing INJ into the Ethereum rollup ecosystem.
In addition, Omni has also received US$18 million in support from well-known investment institutions such as Pantera Capital, Two Sigma Ventures and Jump Crypto. So, I think it will go very well.
You think it’s cool that Omni connects to Ethereum rollup. Omni, step aside for now, because the goal of Hyperlane is to connect all L1 and L2.
Using Hyperlane, developers can build cross-chain applications - applications that span multiple blockchains using cross-chain messaging, ensuring their Modular security stack with cross-chain security modules (whatever that means) and the security of re-staking ETH.
Judging from Hyperlane's documentation, it will support Ethereum L2, Cosmos ecological chain, Solana, Move chain, etc. This is really cool.
Hyperlane's permissionless interoperability sets it apart, as rollups can connect to Hyperlane themselves without the need for cumbersome governance approvals, etc. They're really proud of it. However, LayerZero v2 also appears to support license-less deployment.
Unfortunately, I couldn't find any token information about Omni or Hyperlane, so we'll have to wait a little longer.
"To sum up: when you open an app, you naturally provide support for it by using the app, and then the app You’ll be rewarded.” —Twitter
This fascinates me.
In ordinary dapps, we cannot directly contribute computing power, and the app is limited to specific L1 or L2 functions, such as latency, transaction speed, gas fees, etc. .
Therefore, Blockless adopts a network-neutral application (nnApp) that allows users to support them just by using them. It uses "nested nodes" where each user's device acts as a node, contributing its resources to the network. This means that an application’s computing power increases as its user base expands, a significant shift from the traditional model.
In short, you run a node when you use the application.
For example, some dApps may choose to keep governance on Ethereum and data availability workloads on Celestia or EigenLayer. But the intensive calculations for use cases such as machine learning, AI interfaces, and gaming will be performed in faster and more efficient off-chain environments.
This results in computing support for these applications growing directly with the number of users. More users will bring more resources supplied by the community. computing power.
I thought of Grass, an app on Solana that allows you to sell idle Internet bandwidth to train artificial intelligence, although this is not within the scope of Blockless's functionality .
Blockless proof-of-stake ensures network security, so the token will be more than just a meme.
As for restaking, Blockless will provide the network for applications developed on EigenLayer to minimize accidental slashing.
I wonder if nnApps will make my phone overheat...
You can view the complete AVS list on the Eigenlayer website. But AVS worth mentioning is also:
(6) Lagrange: Another competitor of LayerZero, Omni and Hyperlane, its cross-chain infrastructure supports all Create universal proof of state on major blockchains. Recently raised $4 million in seed funding from 1kx and others.
(7) Drosera: "Incident response protocol" to deal with vulnerability attacks. When a hack occurs, Drosera Trap detects the attack and takes steps to mitigate it. Sounds cool.
(8) Witness Chain: Use re-pledge to implement Proof of Diligence and ensure rollup security, and use Proof of Location to Establish physical node decentralization.
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