Restake Ethereum — get drops in EigenLayer (as well as in Ether.Fi, Puffer, Renzo and more)!

In this article, we will delve into what restaking means, where the liquidity influx in LST projects came from, review the mechanics of EigenLayer, discuss which projects are planning to distribute airdrops for restaking, and how by making a liquid stake in one project, you can receive airdrops in 4 at once!

What is restaking?

Restaking — simply put, is the ability to reuse ETH in the Ethereum main network or in liquidity staking pools as wrapped tokens on platforms that use the EigenLayer protocol.

Unlike regular staking, where tokens are placed in liquidity pools and cannot be withdrawn until a certain period, restaking allows tokens to be re-staked in liquidity pools and used to generate profits and participate in various DeFi projects.

Where did the influx of money into LST projects come from?

Back in April 2023, Ethereum developers introduced the Shapella update, which allowed withdrawing ETH from the deposit contract on the Beacon Chain.

After that, there was a surge of interest in cryptocurrency staking. Over three months, the volume of assets locked in favor of the validation mechanism increased by 130%, surpassing 26 million ETH:

What is EigenLayer?

EigenLayer is a protocol that has created an intermediate layer in the Ethereum blockchain architecture. The development team has revolutionized crypto-economic security, allowing projects to:

• utilize the reliability of the Ethereum main network at the consensus level;
• choose how to support network operability and stability through restaking;
• attract investors by increasing user activity through reinvestment.

Thus, users can restake their LST tokens, receiving a portion of rewards for validation and security provided by security operators AVS (the entire amount of ETH + LST secures them. This is called collective security).

EigenDA — a data availability service built on Ethereum using EigenLayer restaking functionality. Restakers delegate a share to node operators performing EigenDA validation tasks in exchange for service fees, and rollups place data in EigenDA to access lower transaction costs, higher transaction throughput, and secure composability in the EigenLayer ecosystem, with security and throughput scaling horizontally depending on the number of restakes and operators choosing protocol servicing.

In a general sense, EigenDA aims to demonstrate that Ethereum stakers and validators can support critical infrastructure in addition to consensus and that AVS and users can succeed by using tokens on top of the network.

At this stage, EigenDA is capable of achieving a throughput of up to 15 MB/s, which is significantly higher than current Ethereum capabilities. The project team believes it can reach 1 GB/s in the future.

EigenLayer Advantages:

• Ability to enhance economic security through new AVS with existing Ethereum validators;
• Increase in the financial value of all participating networks;
• Costs for enhancing Ethereum security are evenly distributed among multiple AVS;
• Increase in expenses for potential network attacks as the trust system becomes more global.

EigenLayer Disadvantages:

Among the protocol’s disadvantages are the following:

• Single point of failure. If EigenLayer is attacked with a significant amount of staked ETH, there is a risk to the main network;
• Centralization risk. If the security of one application is provided by a multitude of stakers and they are penalized, this may have negative consequences for Ethereum;
• Profitability risk. Protocols use Ethereum to ensure their security. However, EigenLayer stakers may choose the highest yields to maximize their profits, leading to a capital race between protocols;
• Penalty risk. Protocols can change conditions, reducing penalties to attract more capital and thus undermining their own security.

How Does EigenLayer Restaking Work?

EigenLayer includes 2 main ways to participate in restaking:

1. Solo staking. Allows providing protocol verification services or delegating operations to other operators while remaining a validator for the Ethereum network;
2. Trust model. To implement this model, a trusted operator is selected for authorization. If the operator fails to comply with the agreement, they will be penalized.

After launching restaking on the main network, the project team gradually expands the number of pools. If in the first phase, LST equivalent to 9,600 ETH was attracted, then in the second phase, it was 45,000 ETH, and a little later, 100,000 ETH. In January 2024, in the latest expansion to date, more than 500,000 ETH coins were attracted.

Community members can choose the following pools by voting tokens in proportion to 1 vote for 1 ETH. The smart contract mechanism is designed so that when the pool reaches the “staked” funds boundary, a pause is activated, which lasts until the number of pools expands. For each subsequent pool opening, the team announces in advance through its X account.

Initially, the protocol only serviced three pools of liquid restaking and only for users of Lido Finance (stETH), Rocket Pool (rETH), and Coinbase (cbETH) platforms. As a result of the voting at the end of 2023, a sufficient number of pools with relevant LSTs were added, including:

• wBETH (Binance);
• osETH (Stakewise);
• swETH (Swell);
• AnkrETH (Ankr);
• EthX (Stader);
• oETH (Origin ETH).

Based on analytical data, most operations are carried out on liquid staking platforms, which amounts to over $32 billion in TVL, nearly half of the total locked funds. According to DefiLama, since June 2023, EigenLayer has shown TVL growth from $13.3 million to $1.7 billion already in early 2024.

Airdrops for Restaking

Recently, EigenLayer secured $100 million from the top fund a16z, bringing the total investment in the project to $164 million at the moment.

Project Scheme: Currently, there are 4 major projects most related to restaking: EigenLayer, Puffer, Ether.Fi, Renzo Protocol. All these projects are associated with the main “ETH restaking aggregator” as they require almost the same actions — namely, restaking ETH in liquidity pools. Thus, by restaking ETH in each of the protocols: Puffer, Ether.Fi, Renzo Protocol — we also get chances to participate in an airdrop in EigenLayer — the main multiplier for ETH restaking, as well as other related projects with the above three listed.

Below, we will briefly go over each of the protocols:

Ether.Fi — a decentralized and non-custodial LST platform that collaborates with EigenLayer. Over the last 2 months since the beginning of 2024, the project’s TVL has grown from $300 million to $1.5 billion after rumors of Arthur Hayes’ investment in the project. Currently, the project has raised over $5 million in all funding rounds and is likely to delight everyone with a hefty airdrop in 2024.

Activities:

1. To restake ETH in Ether.Fi, simply visit the project’s platform.
2. Deposit ETH for staking and receive eETH by signing the transaction.
3. Then wrap the received eETH tokens into weETH by performing a transaction.
4. For staking and restaking ETH on the platform, you will receive points not only from Ether.Fi but also from EigenLayer.
5. In other words, the more time you lock and restake your ETH, the more points you will receive from the projects and the higher your chances of claiming a large airdrop.
6. Additionally, you can invest eETH in other tokens on the platform to earn additional loyalty points from Ether.Fi and EigenLayer.

We recommend performing activities on weekends or in the morning when gas fees are low to avoid spending too much on fees.

Renzo Protocol — another LST project like Ether.Fi. The platform hosted a well-known airdrop from AltLayer. We wrote about the largest wallet that received the AltLayer airdrop here.

Renzo includes an asset management strategic manager on EigenLayer. The idea of Renzo is to simplify user interaction with nodes on EigenLayer and increase income from ETH staking. Over the last month (January — February), the project’s TVL has grown significantly from $100 million to ~$450 million, indicating that the platform is rapidly gaining traction and attracting large capital.

Regarding investments: The total investment amount is currently $3.2 million, with recent leads from Binance Labs, Robot Ventures, Mantle, and many others.

Activities:

1. Go to the platform, connect your wallet, and transfer ETH to ezETH.
2. Additionally, restake ETH back and sign the transaction.
3. If you are an early platform user, you will receive a special boost for your points.

For such simple activities, we will be rewarded with points both in Renzo and EigenLayer, and presumably the more points accumulated, the greater the potential airdrop.

Puffer — an open liquidity staking project. It’s a decentralized native liquidity restaking protocol (nLRP) built on EigenLayer. It conducts native staking, simplifying the opportunity to become an ETH validator.

According to the project’s documentation, the token will be launched.

In terms of investments, the project has managed to raise $6.2 million from Binance Labs, Animoca Brands, Jump Crypto, and also secured a grant from the Ethereum Foundation.

Of the mentioned trio, Puffer is the youngest project in terms of TVL, as its TVL grew from $100 million to $1 billion+ in just 1 month, sparking discussions about platform quest launches:

Activities:

1. To participate in the project, we first need to stake ETH and obtain stETH. To do this, we need to go to Lido Finance and stake ETH.

2. Then we return to Puffer and complete quests.

3. In the second quest, we will need to convert stETH to pufETH to complete the quest: we convert and sign the transaction.

4. Accordingly, the longer pufETH is farmed, the more points accumulate in your profile. In total, the platform plans 5 quests, for each of which you can earn points, which may soon be converted into airdrops.

Сonclusion

Considering the trend towards decentralization, security, and increasing the capacity of exploited capital, EigenLayer has huge prospects. By using it, developers get rid of the burden of building their own validator network, reducing both initial and ongoing costs required for the successful operation of the network.

The advantages of EigenLayer over other projects lie in the ability to create blockchain systems without the need to set up and maintain their own validator network. This eliminates the need for high token inflation rates to incentivize security provision or the need to launch their own token at all. In this case, developers can focus on specific innovations without the need to deploy the entire blockchain technology stack from scratch to innovate only one part of it.

This capital-efficient model eliminates barriers to entry for new blockchain projects and enhances the security of existing protocols, paving the way for more flexible, decentralized innovations in Ethereum.

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