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.
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.
- 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.