I saw that the project launched on the 53rd phase of Binance Launchpool was Renzo, the second project on the LRT track. Basically, I will analyze every phase of Binance Launchpool, one is to buy new shares, and the other is to see the solutions of high-quality projects in each track and enrich my knowledge reserve.
This article mainly focuses on the following points:
What are LST and LRT
LRT profit underlying logic
About Renzo
Renzo Token Distribution and Price Prediction
1. What are LST and LRT?
Before introducing Renzo, let’s talk about the current popular re-staking track. Re-staking is easy to understand, which is to pledge the pledged assets for the second time, but these staking schemes are run on another platform or protocol.
For example, you stake ETH on Lido and get a stETH certificate, then you stake stETH again on EigenLayer to get a new asset certificate, and then participate in other interactions...
Such operations maintain more security for Ethereum and seek more returns for investment.
In this method, ETH is exchanged for LST (Liquid Stake Token) through liquidity staking. LST is a re-pledge certificate that proves "I have indeed pledged ETH". LST is exchanged for a new re-pledge certificate through re-staking to prove "I have indeed re-pledged LST", but from beginning to end, the original asset is only ETH itself.
Simply put, you pledge ETH to get LST, and then pledge LST a second time to get LRT (Liquid Restake Token). Repeating this process is called re-staking. You can use LRT to do more financial operations, such as re-staking and lending. Every additional staking gives you an additional opportunity to earn profits with liquidity.
There are many LST platforms and LRT platforms now, as shown below:
2. The underlying logic of LST and LRT profit
1. POS Mechanism (Proof of Stake)
In order to understand why LST generates income, let’s review the original intention of Ethereum’s transition from POW to POS: the main reason for the Ethereum merger is blockchain security, to prevent the blockchain from being attacked by 51%, and to prevent centralization and absolute computing power from hard forking the blockchain.
In his article “Why PoS?”, Vitalik Buterin discussed that in PoW based on GPU mining, the cost of attacking the network is only the cost of renting enough GPUs to catch up with existing miners, and it only takes a small amount of cost and time to carry out the attack.
In POS, almost all of it is capital cost, that is, the cost of running a node. The cost of launching a 51% attack is very high, so high that no one can afford it. In POS, there is a built-in penalty mechanism, through which most of the attacker's equity (not including others) will be automatically destroyed.
From the above, we can see that in POS, if we want to ensure that the blockchain is not subject to malicious attacks, we can only increase the entire basic plate of funds, such as hundreds of millions, tens of billions, or hundreds of billions of TVL. At this time, if we want to launch a 51% attack, the cost for the malicious actor will be so high that he will want to give up.
2. The Birth of LST
After the ETH merger, it will no longer work to mine ETH with mining machines as before (POW). If you still want to mine ETH, you need to stake at least 32 ETH in the Ethereum network to become a validator node, so that you can get rewards from the Ethereum network.
Setting up a validator node to stake on the network is a complex task, and failing to do so properly can result in the system penalizing you financially.
Due to the cost and technical barriers of establishing nodes, intermediary services came into being. These intermediary platforms undertake most of the pre-technical work. Users only need to put ETH on the intermediary platform, and the intermediary platform will stake ETH on their behalf. The intermediary platform will extract a portion of the ETH income obtained from the stake. This is the underlying logic of LST.
3. LST and LRT
LST（Liquid Staking Derivatives）
For the "intermediary platform" mentioned above (here called LST platform, Liquid Staking Derivatives), the more users stake, the higher the income of the LST platform. In order to obtain more income, the LST platform will offer various incentives to attract users to stake on its LST platform. The usual practice is to issue platform coins to users and give you a staking certificate, such as $xETH, to prove that you have staked ETH. This is the concept of LST. At present, the leader of LST is EigenLayer.
LRT（Liquid ReStaking Derivatives）
After users get $xETH, it is not useless. In order to attract more funds, the LST platform will issue tokens to developers in addition to retail investors. Developers only need to develop a new platform based on the LST platform. All the new platform needs to do is to accept LST's $xETH certificate and let the $xETH certificate be pledged again on the new platform to obtain the re-staking platform tokens and $rETH certificates. This is the concept of the re-staking platform (Liquid ReStaking Derivatives).
Of course, the staking platform will also issue coins and encourage users to stake on LRT, because when users withdraw $xETH certificates in the future, LRT will charge a handling fee of about 10%. This is one of the main benefits of the LRT platform.
The relationship between LST and LRT is like the relationship between a castle and a moat. As long as ETH remains a POS mechanism, the track will always exist.
For a more popular explanation of LRT, please refer to the Twitter master @punk2898's "Shared Bike Theory":
3. About Renzo
1. Introduction to Renzo
Renzo is EigenLayer's Liquidity Recollateralization Token (LRT) and strategy manager. It is an interface to the EigenLayer ecosystem that secures Active Validation Services (AVS) and provides higher returns than ETH staking.
The protocol abstracts all the complexities for end users and enables easy collaboration between them and EigenLayer node operators.
For every LST or ETH deposited into Renzo, it mints an equal amount of ezETH.
Renzo is a strong advocate for EigenLayer and its goal of fostering permissionless innovation on Ethereum and programmatically gaining trust in the ecosystem.
2. Highlights of RENZO
The EigenLayer ecosystem allows Ethereum validators to re-stake their ETH and provide services to the network, such as a data availability layer with a specific type of node software called Active Validation Service (AVS).
The Eigenlayer Operator acts as an AVS Node and elects to validate AVS by running its AVS software. An AVS Node is a node that runs the AVS software as an Eigenlayer Operator.
Renzo operation nodes are professional staking providers that can ensure the security of funds belonging to protocol users and the correctness of re-staking operations.
The protocol distributes the pooled LST among all active node operators based on the weight associated with each operator. This way, a deterministic risk/reward can be set to allow for the best return based on the calculated risk.
4. Renzo’s Token Distribution and Price Prediction
1. Token Allocation
The total supply of $REZ is 10 billion, and the circulating supply after listing will be 1.05 billion (approximately 10.50% of the total token supply);
Of this, 31.56% was allocated to investors;
30% is allocated to the community (of which 5% is allocated to ezPoints in the first season, and the remaining allocation will be used for various community activities such as the second season);
20% is allocated to core contributors and advisors;
13.44% was allocated to the foundation;
2.5% is allocated to Binance Launchpool;
2.5% for liquidity.
2. Online time and off-site points
Binance will list Renzo (REZ) at 20:00 (ET) on April 30, 2024.
Since the airdrop can only be claimed on May 2, $REZ locks the airdrop user tokens during the launch phase, and only investors and the community circulate in the market. Before the airdrop on May 2, the circulation is less than 550 million, which is equivalent to Binance Launchpool. This wave of mining efficiency is extremely high;
REZ has no over-the-counter price yet, only points are traded on whales, and the point price is $0.12, which has a downward trend. It is estimated that the exchange ratio of points to tokens may be around 1:1;
3. Estimated Token Price
Refer to ether.fi (ETHFI) with a total of 1 billion, an initial circulation of 115.2 million, and an online price of 4.3 U;
Combined with the previous Binance Launchpool mining revenue calculation, the RENZO listing price may be relatively high. I personally feel it may be between 0.3-0.6.
V. Conclusion
Ethereum re-staking protocol Renzo (REZ) will be launched on Binance at 20:00 (ET on April 30). Airdrop users can claim REZ through the official claim website on May 2. Don’t make a mistake and get stolen.
Renzo’s first quarter incentive campaign will end on April 26. Users who sell their ezETH holdings before April 26 may not be eligible for airdrops. This is the same as ETHENA. If you sell midway, you will not be eligible for airdrops.
Renzo will linearly distribute 500 million #REZ (5% of the total) based on the users' accumulated ezPoints. The top 5% of addresses will have 50% of their tokens unlocked immediately at TGE, and the rest will be released within 6 months.
2% of the Season 1 5% airdrop (i.e. 0.1% of the total token supply) has been allocated to the following NFT communities: Milady Maker and SchizoPosters.
The second season reward event will start immediately on April 26, 2024. But many people have been confused recently, which may be related to the news of de-anchoring and the distribution of airdrops in the first season.
$SREZ
6. About Binance’s new Megadrop points platform
In addition to the 53rd #Launchpool, Binance has recently launched a new token platform Megadrop. The first project is BounceBit. Users can participate in the BounceBit Megadrop from 08:00:00 (ET) on April 26, 2024 to 07:59:59 on May 13, 2024.
The total supply of BB is 2,100,000,000, and the circulating supply after listing is 409,500,000 (accounting for 19.50% of the total token supply). For this event, a simple web3 interaction is enough.
So here is a revelation for us. When there is no Luanchpool, you can deposit Megadrop to earn interest regularly without withdrawing it, and you can directly get Megadrop points. When there is Luanchpool, participate in Luanchpool, and Binance will provide you with more income for your idle funds.
