Research Summary
The report discusses the potential of EigenLayer, a project that allows Ethereum staking to secure additional protocols, applications, and services. It also explores various strategies to gain exposure to $EIGEN through airdrop farming and highlights four liquid restaking protocols: Ether.fi, Renzo, Swell, and Kelp.
Key Takeaways
EigenLayer’s Role in Ethereum Ecosystem
- EigenLayer’s Impact: The report suggests that EigenLayer could significantly enhance the Ethereum ecosystem by turning ETH into a yield-machine and bedrock of economic value. The success of EigenLayer is seen as synonymous with the success of Ethereum.
- Restaking Concept: EigenLayer introduces the concept of “restaking,” where users change their withdrawal credentials to point towards EigenLayer, allowing their staked ETH to secure more applications/services and earn extra fees/rewards.
Actively Validated Services (AVS)
- AVS Categories: Protocols using EigenLayer restaked ETH as economic security are referred to as Actively Validated Services (AVS). The report identifies five key categories of AVS: Rollup Services, Threshold Cryptography, Co-Processors, MEV Management, and Other General Decentralized Networks.
- Examples of AVS: EigenDA, a Data Availability protocol, and Drosera, a Decentralized Automated Responder Collective, are cited as examples of promising AVS.
EigenLayer’s Fundraising and Total Value Locked (TVL)
- Fundraising: EigenLayer has raised over $160 million from heavy hitters in both Crypto and Traditional VC circles. The founder, Sreeram Kannan, is a faculty member at the University of Washington.
- TVL: Over $10 billion of capital has been deployed into EigenLayer, making it one of the highest quality and most promising projects in Crypto.
Farming $EIGEN
- Strategies: The report outlines various strategies to farm $EIGEN, including depositing a Liquid Staking Token (LST) into app.eigenlayer.xyz. However, liquid restaking deposits are currently paused due to hitting their respective caps.
- Liquid Restaking Protocols: The report highlights four liquid restaking protocols – Ether.fi, Renzo, Swell, and Kelp – as viable options for farming Eigenlayer restaked points and potential liquid restaking protocol airdrops.
Actionable Insights
- Consider Diversification: Spreading ETH/LSTs across all four liquid restaking protocols – Ether.fi, Renzo, Swell, and Kelp – could be a potential strategy to diversify risk while farming Eigenlayer restaked points and farming all four liquid restaking protocol airdrops.
- Monitor the $EIGEN Airdrop: The report suggests that the $EIGEN airdrop could be one of the largest of this cycle, making it worth monitoring for those interested in the Ethereum ecosystem.
- Understand the Risks: While the potential rewards are significant, the report notes that these strategies require accepting a slight increase in risk. Therefore, understanding the risks associated with these strategies is crucial.
