Research Summary
This report discusses the emerging sectors of Liquid Restaked Tokens (LRTs) and Bitcoin DeFi. It focuses on the potential of LRTs, which are currently under development. The report also introduces a sponsor protocol, ZKX, an omnichain perpetuals DEX powered by StarkWare. The report further explains the concept of restaking, its benefits, and risks. It introduces Liquid Restaked Tokens (LRTs) as a solution to the liquidity problem in DeFi. The report also discusses the potential of LRTs, the upcoming “LRT Wars”, and protocols to watch. It concludes with a playbook for navigating the LRT space and potential risks.
Key Takeaways
Understanding Restaking and LRTs
- Restaking Concept: Restaking is a feature in EigenLayer that allows staking of ETH on multiple protocols simultaneously, thereby securing multiple networks/services with Pooled Security.
- Benefits and Risks: Restaking offers capital efficiency, enhanced security, and developer freedom. However, it also presents slashing risk, centralization risk, and yield risk.
- Liquid Restaked Tokens (LRTs): LRTs offer a solution to the liquidity problem in DeFi by unlocking previously staked tokens and adding another layer of leverage to boost yields.
Why LRTs are Promising
- Higher Yields: LRTs offer higher yields on ETH, potentially earning up to 25% on ETH even before the real bull market starts.
- Airdrops: The report anticipates potential airdrops from Eigenlayer, AVS, and LRT protocol tokens.
- Leverage in DeFi: The liquidity unlocked by LRTs is expected to create more leverage in DeFi, pushing all the TVL numbers and the price of ETH higher.
Tokenomics and The Upcoming “LRT Wars”
- Tokenomics: The tokenomics for LRT protocols look highly promising, and they are expected to evolve in a manner similar to veTokenomics.
- LRT Wars: There’s likely to be fierce competition among AVS vying for DAO votes, boosting demand for LRT tokens.
- Inflationary Tokens: The tokens offered by these protocols are likely to be highly inflationary.
Actionable Insights
- Study LRT Protocols: As LRT is a new concept, it’s important to get acquainted with various protocols and closely follow updates from Eigenlayer.
- Perform Due Diligence: Prior to any protocol launch, it’s crucial to test each one, join their Discord channels, and ask about their roadmaps, upcoming upgrades, and overall strategies.
- Manage Risks: Protect ETH principal by farming conservatively and staying away from anything too exotic.
