Discussion on the Reopening of EigenLayer and its Impact on Ethereum Restaking, as well as a Detailed Analysis of Specific Protocol Operations such as EtherFi, Swell, etc., analyzing their respective advantages, potential returns, and airdrop opportunities. This article is sourced from Route 2 FI and compiled, translated, and written by Block Beats.
Index of this article:
The situation with different options
Regarding EtherFi (eETH)
Regarding Swell (swETH/rswETH)
Regarding Mantle ETH (mETH)
Regarding Kelp (ETHx)
Regarding Renzo
Regarding EigenPie
Regarding Puffer
What should you choose?
If you are an airdrop hunter
If you want the highest returns
If you want “safety”
What am I playing:
The Ethereum restaking protocol EigenLayer reopened its staking limit on February 5th, so I wanted to share some thoughts on it and its risks. As you know, I am a Ethereum bull, and restaking is very attractive.
Currently, about a quarter of the circulating ETH is staked. This provides significant security for Ethereum and the smart contracts running on it, as attacking the Ethereum consensus system would require a large amount of ETH.
With the introduction of EigenLayer restaking, Ethereum validators can now use their 32 ETH stake (32 ETH is reused) to secure other protocols. Validators can earn additional income without unstaking or adding additional capital. EigenLayer allows non-smart contract protocols to leverage the security of Ethereum through restaking, which was previously impossible.
EigenLayer is not a DeFi protocol, but a platform that guides a new Proof-of-Stake (PoS) system. Through the EigenLayer protocol, users cannot engage in financial activities such as trading and lending.
However, for decentralized services built on EigenLayer (referred to as AVS, Active Verification Services), these services themselves can be DeFi applications or support key functionalities in other DeFi protocols. These AVS are outside of the EigenLayer contracts.
In addition, another type of protocol built on EigenLayer is called a liquidity restaking protocol (LRT). They can be established on EigenLayer without permission. These are the concerns of degens: Swell Network, Ether.fi, Genesis, Puffer, Kelp, and more.
Swell and EtherFi offer double points through native token airdrops. You can also earn EigenLayer points and KelpDAO points by restaking stETH or ETHx (ETHx offers more points).
First, we need to distinguish between liquid staking and liquid restaking.
Traditional staking involves locking your assets in a smart contract to support blockchain operations and earn staking rewards. Liquid staking allows you to stake your assets using a liquidity staking protocol and receive liquidity tokens representing your staked assets. Liquid restaking is a method for LST (Liquid Staking Tokens) holders to restake by transferring their tokens to the EigenLayer smart contract.
If you want more information, Inception has published a good blog post explaining these differences.
In the screenshot below from DeFiLlama, you can see liquid staking protocols (Lido, RocketPool, Mantle, Frax, Swell, etc.).
In the second screenshot below, you can see the largest liquid restaking protocols (ether.fi, Puffer, Kelp, Renzo, etc.).
In the following section, I will outline what I personally find to be the most interesting opportunities in LST/LRT at the moment.
Deposit ETH -> Generate eETH + Earn EtherFi loyalty points + EigenLayer points. Interact with different DeFi protocols with eETH and earn additional income (e.g. Pendle).
Deposit ETH into Swell to get swETH LST -> Restake it into EigenLayer -> Ultimately generate liquidity rswETH LRT. Assuming the Pearls reward system continues, unless the TGE happens before LRT. Stake your ETH with Swell to earn “Pearls” / airdrop points + additional bonuses through referrals and restaking into EigenLayer and other DeFi partners.
Deposit ETH into Mantle LSP (Liquidity Staking Protocol) to earn a 7.2% annualized yield (they promise this yield for the next 2 months, which may be extended). The mETH you earn can be stored in your wallet. On Monday, when EigenLayer opens, you can deposit mETH to earn additional EigenLayer rewards. The downside of this method is that there is no airdrop since the Mantle token already exists. However, the returns are very good. So if you enter the pool on Monday, you will get double returns + EigenLayer points.
On Kelp, you can choose between stETH, ETHx, and sfrxETH. For all assets, you will earn EigenLayer points + Kelp points (for airdrops). ETHx offers more EigenLayer points than any other LST because Stader (the team behind Kelp) restakes their ETH from their treasury in EigenLayer and gives away those extra EL points.
Stake ETH and earn ezETH. You will also earn EigenLayer points, Renzo ezPoints (for airdrops), and regular ETH staking rewards.
For every LST deposit worth 1 ETH, users will earn 1 Eigenpie point per hour. In the first 15 days, depositors will receive double points as a reward for early support. These Eigenpie points are crucial for sharing 10% of the total EGP supply through airdrops, as well as sharing 60% in the EGP token IDO at a 3 million FDV.
Deposit stETH and wstETH to earn Puffer + EigenLayer points. Lock in double points before February 9th.
puffETh is an nLRT (native Liquidity Restaking Token). nLRT generates its restaking rewards by restaking ETH from Ethereum PoS validators on EigenLayer. This sets them apart from Liquidity Restaking Tokens (LRT) which tokenize restaked LST within Liquidity Restaking Protocols (LRP). While LRP generates rewards from restaking services, these are different from PoS rewards.
It’s a tough choice as they all have their pros/cons and it depends on how you look at it.
Choose Swell, EtherFi, Kelp, Puffer, EigenPie, Renzo.
Choose Mantle ETH (mETH) – 7.2% yield on your ETH + EigenLayer points.
No content in cryptocurrency should be considered absolutely safe. Even stETH, which had a 70% market disconnect in the summer of 2022. However, based on their length of existence, I feel safe with Lido, RocketPool, Binance Staked ETH.
I feel Puffer gives me solid support and security, and I have a feeling it may be considered one of the safer choices after some time.
What am I playing:
I’m doing all the airdrop activities and mETH. Personally, I also like going big, and having a 7.2% annualized yield with mETH is pretty nice.
If you’re a degen bullish on Ethereum, you can buy, say, 10 wstETH, deposit it into AAVE, then borrow against it, say, borrow 50% of ETH (5 ETH). Then buy swETH, mETH, ETHx, and follow the recommendations above to earn airdrop + EigenLayer points.
Also, keep in mind that several LRT tokens are launching soon: Genesis and Inception are two of them. Additionally, Pendle has some degen strategies where you can earn up to 30% returns.
Related reports
TVL over $3.6 billion: Overview of 6 Ethereum restaking protocols: EigenLayer, ether.fi, etc.
Ethereum “restaking race” regaining attention? Overview of 5 potential projects before the launch
IOSG Ventures: Analyzing the Reshaping Restaking Model and Returns of EigenLayer in depth.