Exploring the Reopening of EigenLayer and Its Impact on Ethereum Restaking, as well as a Detailed Discussion on the Specific Operations of Some Protocols such as EtherFi and Swell, Analyzing Their Respective Advantages, Potential Returns, and Airdrop Opportunities. This article is sourced from “Route 2 FI” by Block Beats.
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Different Options
For EtherFi (eETH)
For Swell (swETH/rswETH)
For Mantle ETH (mETH)
For Kelp (ETHx)
For Renzo
For EigenPie
For Puffer
What Should You Choose?
If You Are an Airdrop Hunter
If You Want the Highest Returns
If You Want “Safety”
What I’m Playing With:
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 appealing.
Currently, about one-fourth of circulating ETH is staked. This provides great security for Ethereum and the smart contracts running on it, as an attack on 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 being reused) to secure other protocols. Validators can earn additional rewards without unstaking or adding extra capital. EigenLayer allows non-smart contract protocols to utilize the security of Ethereum through restaking, which was not possible before.
EigenLayer is not a DeFi protocol, but a platform guiding a new Proof-of-Stake (PoS) system. Through the EigenLayer protocol, users cannot engage in financial activities such as exchanging and borrowing.
However, for decentralized services built on top of EigenLayer (referred to as Active Validation Services or AVS), these services themselves can be DeFi applications or support key functionalities in other DeFi protocols. These AVS exist outside of the EigenLayer contracts.
Additionally, another class of protocols built on EigenLayer is known as Liquid Restaking Protocols (LRPs). They can be established on EigenLayer without permission. These are what “degen” traders are interested in: Swell Network, Ether.fi, Genesis, Puffer, Kelp, etc.
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 differentiate between liquid staking (LST) and liquid restaking (LRT).
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 token holders to restake their tokens by transferring them to the EigenLayer smart contract.
If you want to learn more, Inception has published a great blog post that explains these differences.
In the screenshot below from DeFiLlama, you can see the 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 the most interesting opportunities in LST/LRT currently in my opinion.
Deposit ETH -> Generate eETH + Earn EtherFi loyalty points + EigenLayer points. Interact with different DeFi protocols using eETH and earn additional rewards (e.g., Pendle).
Deposit ETH into Swell to receive 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 with EigenLayer and other DeFi partner strategies.
Deposit ETH into Mantle LSP (Liquidity Staking Protocol) to earn a 7.2% annual yield (they promise this yield for the next 2 months, may extend). 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 approach is no airdrop since the Mantle token already exists. However, the returns are very good. So if you enter the pool on Monday, you’ll get double rewards + EigenLayer points.
On Kelp, you can choose between stETH, ETHx, and sfrxETH. For all assets, you’ll receive EigenLayer points + Kelp points (for airdrops). ETHx offers more EigenLayer points than any other LST because Stader (the team behind Kelp) restakes ETH from their treasury in EigenLayer and gives away those extra EL points.
Stake ETH and earn ezETH. You’ll also receive EigenLayer points, Renzo ezPoints (airdrops), and regular ETH staking rewards.
For every LST deposit worth 1 ETH, users will earn 1 Eigenpie point per hour. Within the first 15 days, depositors will receive double points as a reward for early support. These Eigenpie points are crucial as they represent 10% of the total EGP supply shared through airdrops, as well as 60% shared in the EGP token IDO at a 3 million FDV.
Deposit stETH and wstETH to earn Puffer + EigenLayer points. Lock in double points until February 9th.
puffETh is a native LRT (Liquid Restaking Token). nLRTs generate their restaking rewards by restaking Ethereum PoS validator ETH natively on EigenLayer, whereas LRTs tokenize the restaked LST within a Liquidity Restaking Protocol (LRP). While LRPs generate rewards from restaking services, these are different from PoS rewards.
It’s a tough choice as they all have pros/cons, depending 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 had a 70% market drawdown in the summer of 2022. However, based on their longevity, I feel safe with Lido, RocketPool, and Binance Staked ETH.
I think Puffer gives me solid support and security, and I have a feeling that it may be considered one of the safer choices down the line.
What I’m playing with:
I’m doing all the airdrop activities and mETH. Personally, I also like the scale and the 7.2% APY on mETH is really nice.
If you’re a degen bullish on Ethereum, you can buy, for example, 10 wstETH, deposit it into AAVE, and then borrow against it, say 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 about to launch: Genesis and Inception are two of them. Additionally, Pendle has some degen strategies where you can earn up to 30% returns.
Related Reports
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Is Ethereum’s “Restaking Race” Regaining Attention? A Review of 5 Undistributed Coin Potential Projects
IOSG Ventures: Analyzing EigenLayer’s Reshaping of Restaking Models and Returns