On October 1, Binance launched $EIGEN. As the first project launched after CZ's return, the launch of EigenLayer ($EIGEN) has attracted widespread attention. Can Binance reverse the users' criticism of the listing issues some time ago? The launch of EIGEN may represent a new beginning. Let us wait and see.
As an indispensable force in blockchain infrastructure, how EigenLayer and its core technology AVS (Active Verification Service) will promote a new round of blockchain innovation has become the focus of industry discussion. On September 30, 2024, 137Labs, together with a number of industry experts, jointly organized an X Space event with the theme of [What we must know about EigenLayer ($EIGEN)? ]
This event brought together many experts and researchers from the Web3 field, including:
NingNingïœIndependent Researcher
OneOne.ethïœ137Labs  Research Partner
Ivanïœ137Labs analyst
Qiu RongïœKOL
In this discussion, the guests deeply explored EigenLayer's pricing strategy, the development potential of AVS, the application of LRT protocol, the expected market yield, and the future application scenarios of full-chain entry and DVT technology. At the same time, they also analyzed the advantages, disadvantages and uniqueness of two star projects, KelpDAO and Puffer Finance, and discussed the differentiated positioning and potential development opportunities of these projects in the EigenLayer ecosystem. The discussion covered how EigenLayer promotes ecological development through its unique technical paradigm, and how various projects can seize opportunities in this infrastructure and provide innovative solutions.
Through this article, you will learn how EigenLayer implements decentralized services through AVS and its key role in the blockchain ecosystem. This discussion will bring you an in-depth analysis of $EIGEN pricing, technical routes and future development.
Q1
What exactly is Eigenlayer, or what exactly is AVS?
NingNing gave a detailed introduction to the core structure of EigenLayer, with particular emphasis on its two major components: Restaking and AVS (Active Verification Service).
First of all, Restaking means that users stake their staked Ethereum (or other equity tokens, such as LST launched by Lido) again in EigenLayer to obtain additional income. In the traditional staking process, the liquidity of ETH is locked, and users cannot flexibly participate in other DeFi activities. To solve this problem, liquid staking tokens such as LST were born, allowing users to use tokens for trading or investment while receiving staking rewards. On EigenLayer, these tokens not only represent staking rights, but can also generate more income through the Restaking mechanism, such as in the form of token airdrops. This provides an additional source of income for Ethereum stakers while also enhancing the liquidity of their assets.
Secondly, AVS is another key innovation of EigenLayer. AVS is mainly used to help new POS chains improve their economic security. When emerging POS chains are launched, the native tokens tend to have low market capitalization, high volatility, and are vulnerable to economic attacks. Through AVS, EigenLayer allows users to encapsulate staked ETH or other tokens as collateral for these new chains, providing higher economic security. If there are security issues with the new chain, the staked tokens will be slashed to protect the network. This mechanism enables new chains to quickly establish their security with the help of more mature and stable assets, reducing early operational risks.
Overall, NingNing emphasized that EigenLayerâs innovation not only provides more profit opportunities for stakers, but also provides strong security support for emerging blockchain projects. EigenLayer currently supports 19 different types of projects, including processors, cross-chain bridges, and decentralized applications, demonstrating its wide application potential in the Web3 ecosystem.
OneOne provided his own insights on the nature of EigenLayer and AVS. Compared with the traditional Restaking track, he emphasized the importance of the AVS track and deeply analyzed the core functions and practical significance of AVS.
OneOne first pointed out that the infrastructure of blockchain relies on nodes to perform verification and broadcasting, similar to Bitcoin mining machines. For many new public chain projects, especially those based on POS consensus, a major problem in the early stages is the high centralization of nodes and tokens. This centralization brings security risks, such as tyranny of the majority or a minority of people undermining the security of the chain through 51% attacks, Byzantine agreement attacks, etc. Some smaller public chains are easily vulnerable to these attacks, resulting in security issues such as theft of user funds and transaction rollbacks.
OneOne emphasized that Ethereum's pledge system is in a leading position in terms of decentralization and the number of nodes, and its chip dispersion is also the strongest among existing public chains. Therefore, he believes that the emergence of EigenLayer provides an opportunity for other public chains to use the security and decentralization advantages of Ethereum to ensure their own network security. This is the core concept of AVS - through EigenLayer, other public chains and projects can share the security of Ethereum, start quickly and reduce the risk of being attacked.
He mentioned that EigenLayer is the first product in the AVS track, which can lend the security of Ethereum to other projects through the verification mechanism, ensuring that they can operate more safely in the early stages. This innovation is not only an improvement after Restaking, but also a major breakthrough in the blockchain security mechanism.
Overall, OneOne believes that AVS is the key to EigenLayer, bringing greater flexibility and security to the entire blockchain ecosystem by sharing the security of Ethereum. This allows emerging public chain projects to obtain the security support of Ethereum without having to build a large number of nodes themselves, significantly improving their survivability. As a result, EigenLayer has become one of the most innovative tracks after Restaking in his eyes.
Ivan explained the concepts of EigenLayer and AVS with a simple and intuitive metaphor. He compared Ethereum to a top security company with ISO-level security services, which can maintain stable operations in extreme situations such as war zones with its excellent security system.
However, precisely because Ethereum's service quality is extremely high and its service targets are mainly high-end customers, its expansion capabilities are limited. At this time, EigenLayer, as the "marketing minister", proposed a solution: by launching a "weakened" security service system such as AVS, Ethereum's security can be rented to other industries, such as the banking industry or other projects that require high security. In this way, it can expand the scope of business and increase revenue without compromising Ethereum's own high security standards. And with the endorsement of Ethereum's golden signboard, AVS can help emerging projects quickly cold start, achieving a win-win effect.
Ivan further explained why AVS needs to rely on the security of Ethereum. Although Ethereum's block speed (one block every 12 seconds) is not fast enough to meet certain high-frequency needs, such as oracle or processor-related projects, by leveraging existing liquidity pledge notes, it can provide funding and security endorsements for these projects, helping them start and improve security.
In Ivan's view, security endorsement mainly comes from two aspects: one is financial endorsement, and the other is technical iteration. However, he particularly emphasized the importance of financial endorsement. When the project party communicates with customers, customers pay more attention to the financial strength behind the project, which can directly determine the credibility and reliability of the project. Therefore, when EigenLayer's AVS provides security for emerging projects, financial endorsement has become the core pillar.
Through this metaphor, Ivan clearly demonstrated the role of AVS: it is an extended version of Ethereum security, which helps other projects to start quickly and ensure their security through funding and security endorsement. This model not only helps the growth of new projects, but also provides new sources of income and application scenarios for the Ethereum ecosystem.
Qiu Rong deeply analyzed EigenLayer's token economy and market performance from the perspective of on-chain data. He shared some specific data to help the audience better understand the current status of EigenLayer and its future potential.
First, Qiu Rong pointed out that the total supply of EigenLayer tokens is 1.67 billion, while the theoretical circulation is about 200 million, but the actual circulation is only 114 million, which means that a large number of tokens are staked or locked. He further analyzed the current market trading volume, which is about 40 million, which is about 2% of the circulation ratio, which is relatively low. In addition, he also mentioned that more than 60% of the tokens are in a pledged state, which further reduces the number of tokens in circulation.
In terms of market value, according to the OTC price (about $4), EigenLayer's circulating market value is relatively low, and it is not even in the top 100. But if calculated at this price, EigenLayer's FDV is about $6 billion. Qiu Rong compared it with another well-known project, EtherFi, which has an FDV of $8 billion. According to his judgment, although EigenLayer's market value does not seem high in the current market environment, with the adjustment of the market and the arrival of the bull market, it is possible for EigenLayer to reach a valuation of $10 billion to $12 billion in the future.
Qiu Rong also mentioned that EigenLayer is not limited to functions such as Restaking and AVS, and will open more functions in the future, such as Slash mechanism, decentralized identity (DID) sorting and zero-knowledge proof (Zero Knowledge), etc. This means that the application scenarios of EigenLayer will not only be limited to DeFi, but will be expanded to a wider Web3 ecosystem, further enhancing its potential.
Finally, Qiu Rong mentioned a market hotspot worth paying attention to: EigenLayer is the first project released by Binance CEO CZ on Binance after he was released from prison, which has brought it more market attention. He is not worried about the technical capabilities of the project, but is more concerned about how the team can improve the performance of the project through market operations and control when they have a large number of tokens.
Qiu Rongâs analysis provided us with a complete on-chain perspective, from token economics, market performance to future technological development and market operations, helping the audience to more clearly understand the potential opportunities and challenges of EigenLayer.
Q2
What role does the LRT protocol play in AVS?
NingNing gave a detailed explanation of the role of the LRT protocol in the AVS ecosystem, combining the history of EigenLayer and current market demand to explain how LRT plays a role in it.
At the beginning, EigenLayer did not open up the re-staking options of various equity tokens on a large scale. The earliest support was only Ethereum's native staking NFT and Lido's STETH. With the evolution of the DeFi market, people gradually found that projects based on liquid staking tokens (LST), such as STETH and RETH, performed well in CDP stablecoin projects because these tokens can generate lending and Ethereum staking income at the same time. However, many Ethereum holders are reluctant to convert ETH into stablecoins and use leverage, which brings certain risks.
In this context, the LRT protocol has gradually evolved and played a key role in the EigenLayer ecosystem. LRT protocols, such as KelpDAO, Puffer, and EtherFi, allow users to stake ETH in EigenLayer while avoiding excessive leverage risk. With market expectations positive and the bull market approaching, users not only want to hold ETH, but also want to obtain additional benefits through EigenLayer, such as token airdrops. This has made the LRT protocol quickly popular in the EigenLayer ecosystem, meeting the market's demand for double benefits.
NingNing also mentioned that EigenLayer gradually supports more equity tokens of the LRT protocol, allowing these projects to provide users with more benefits through re-staking. This method has attracted a large number of ETH holders to participate. Users can not only obtain native Ethereum benefits through staking, but also obtain token airdrops through the EigenLayer mechanism, achieving the effect of "killing three birds with one stone".
In addition, the rise of the LRT protocol has also helped the Ethereum Foundation achieve its goal of decentralization. Previously, Lido's share of the Ethereum staking market was close to 33%, threatening the Byzantine consensus security of Ethereum. By promoting the LRT protocol and Restaking, Ethereum successfully reduced Lido's market share from 33% to 28%. Therefore, the LRT protocol not only provides users with more staking options in AVS, but also enhances the decentralization and security of the Ethereum network by dispersing staking.
In summary, the role of the LRT protocol in AVS is to help users obtain EigenLayer token airdrops and other rewards while obtaining Ethereum native returns by providing flexible staking options, and to promote the decentralization of the Ethereum network as a whole.
OneOne gave a vivid metaphor for the role of the LRT protocol in the AVS ecosystem and elaborated on its key role in the entire system.
First, OneOne compares the LRT protocol to the entrance for users to enter the EigenLayer ecosystem, while AVS is the exit that ultimately provides security and services. In this framework, the LRT protocol is like EigenLayer's "recruitment company", whose role is to attract users and funds into the system and provide basic liquidity and security for the entire AVS system by re-staking their tokens. LRT is responsible for simplifying this entry process, making it easier for ordinary users to participate, thereby lowering the technical threshold and attracting more users and funds to join.
OneOne further emphasized that another key role of the LRT protocol is to simplify business processes. The development trends of modern DeFi and Web3 are all about how to make it easier for users to get started. The LRT protocol simplifies the operation process of staking and re-staking, so that even users who are not familiar with technology can earn benefits through simple operations, which echoes new technologies such as abstract accounts in the DeFi ecosystem. Users can easily participate through the LRT protocol without having to deeply understand complex financial operations or technical principles.
In addition, OneOne also pointed out that the LRT protocol plays a role in dispersing token concentration in the AVS system. Similar to banks in the traditional financial system, the LRT protocol acts as an intermediate coordinator to help disperse EigenLayer tokens among multiple different projects and users, avoiding over-concentration like Lido and protecting the decentralization and security of the entire network. This decentralized model effectively reduces the risk of the system and improves the network's ability to resist attacks.
In summary, the role of the LRT protocol in AVS is an entry and intermediate coordinator. It simplifies the staking process, attracts more users to participate, and helps disperse the concentration of tokens to ensure the decentralization and security of the network. In the EigenLayer ecosystem, the LRT protocol provides basic liquidity and security for AVS, promoting the operation and development of the entire system.
Ivan gave additional explanations on the role of the LRT protocol in the AVS system, further clarifying the role of LRT in the entire EigenLayer ecosystem.
Ivan explained that the LRT protocol is defined as an Operator in EigenLayer, which is a node that provides verification services for AVS. These Operators play an important role, responsible for performing verification tasks in the AVS system and earning income by providing services. As Operators, they are not only nodes in the EigenLayer verification network, but also need to comply with the operating rules set by each AVS project, especially the online and stability requirements of the nodes.
If these nodes are offline or unstable, the AVS project has the right to fine them, which is similar to the fine rules in Ethereum's Liquid Staking mechanism. This mechanism ensures the efficient operation of the AVS system and guarantees the security and stability of the network.
Ivan used the metaphor of a security company to explain this role relationship again. The LRT protocol is both the HR responsible for recruiting security personnel and the supervisor who ensures that the security personnel perform their duties and do not drop offline. If a node fails to work properly, the AVS project has the right to punish it. This is the dual responsibility of the LRT protocol as an Operator.
In general, Ivan emphasized the key role of the LRT protocol in AVS - they are not only the basic operators of the system, ensuring the stable operation of the nodes, but also play the role of supervisors, responsible for ensuring the normal operation of the verification service and accepting penalties when necessary. The existence of this role ensures the security and sustainability of the AVS system.
Qiu Rong also pointed out the competitive relationship between Lido and Rocket Pool. Qiu Rong pointed out that although Rocket Pool has been gradually eroding Lido's market share, due to the high correlation between Lido and Ethereum, their major holders are almost exactly the same, so it is difficult for Rocket Pool to really challenge Lido's dominance in the market.
Although this view is not directly related to the relationship between AVS and LRT, Qiu Rong's observation reflects Lido's position as a giant in the Ethereum staking ecosystem and its competitive dynamics with other protocols (such as Rocket Pool). This market competition also more or less affects the development of EigenLayer and various staking protocols in its ecosystem.
In summary, Qiu Rong recognized the role of LRT in AVS, and his additional ideas were more about ecological competition in the staking market.
Q3
What is the expected rate of return for AVS and how to estimate it?
OneOne explained the expected rate of return and estimation method of AVS in detail. He first started from the business scope of EigenLayer, introduced the main projects and functions involved in AVS, and gave an estimate of the rate of return in combination with specific calculation methods.
1. Cash income contribution from AVS project
OneOne mentioned that the AVS project mainly generates revenue by processing data availability (DA), oracle, and cross-chain services. He provided the following estimate:
DA income: He calculated the DA project represented by Celestia as an example, and estimated that the processing cost of Ethereum DA is about $900/M, processing about 15,000 M data per month. If all Layer 2 DAs use EigenLayer, then the annualized rate of return of AVS is about 1%.
Oracle income: The eOracle provided by EigenLayer is used as an oracle to protect security, with an annualized rate of return of approximately 0.5% ~ 0.7%.
Cross-chain income: Providing security support for cross-chain projects through EigenLayer, the yield is relatively low, only about 0.1%.
The basis for the calculation is that the current total amount of EigenLayer staked is approximately US$274 million. Taking into account the staked amount and market price fluctuations, the overall AVS yield is approximately 4%.
2. Benchmarking against market interest rates
OneOne further analyzed the AVS yield and the benchmark interest rate of Ethereum staking. He pointed out that staking Ethereum itself has a yield of about 4%, plus the AVS yield of about 4% brought by Restaking, the overall annualized yield can reach 8%.
Regarding future expectations, he said that EigenLayer currently only cooperates with 5-6 projects, and with the addition of more projects (such as Renzo, EtherFi, etc.), the yield of AVS is expected to double to an annualized return of 12% to 20%. This expectation is based on the growth of TVL (total value locked) and the improvement of profitability. If EigenLayer's TVL doubles in the future, its yield will also increase accordingly.
Ivan provides his insights into AVS's return expectations and estimation methods, and explains why it is challenging to calculate AVS's future return expectations directly through models.
1. Cash income contribution from AVS project
Ivan believes that although it is possible to try to use models to predict the future earnings of AVS, this method is very difficult due to too many uncertainties in the market. He pointed out that the variables involved in AVS are too complex and difficult to predict, especially in different market environments, and the factors affecting returns may change significantly. Therefore, Ivan advises against over-reliance on complex models for precise earnings estimates.
2. Benchmarking against market interest rates
Ivan prefers to evaluate the future returns of AVS by benchmarking the Ethereum market interest rate. He pointed out that changes in market interest rates often reflect the behavior of investors and the supply and demand relationship in the market, so it can be used as a relatively stable reference.
Ivan mentioned that the current market is in a bear market, and the annualized interest rate of Ethereum lending protocols is about 3%. In the frenzied bull market, the lending rate of Ethereum once reached 10% to 20%. He believes that the future yield of AVS can refer to the extreme interest rates in these two markets:
Bear market phase: When the market is quiet or inactive, the yield of AVS may be similar to the Ethereum lending rate, maintaining at around 3%.
Bull market stage: When the market is enthusiastic, the yield of AVS may rise to 10%~20%, which is comparable to the level of Ethereum lending rate during the bull market.
This analysis method is partially consistent with OneOne's view that the yield of AVS may increase by 3 to 4 times from the current level, reaching 10% or even higher. He also pointed out that the behavior of large investors has a decisive influence on market interest rates and prices. If AVS cannot provide attractive yields, large investors will turn their funds to other protocols that can provide higher returns. Therefore, AVS must at least match the yield of the lending protocol to attract investors.
Q4
What is the difference between 137labs partner KelpDao and its competitors?
OneOne conducted a detailed analysis of the differences between KelpDAO and its competitors, and explored the advantages and disadvantages of KelpDAO compared to other projects from both the advantages and disadvantages aspects.
advantage
Improved security: OneOne specifically mentioned KelpDAO's vault mechanism. This mechanism can distribute users' assets on different chains, such as Scroll, ZK chain, and OP chain, reducing the security risks when running on a single chain. In contrast, other projects such as Renzo and EtherFi may face the security issue of Permit2, where assets may be maliciously transferred after user authorization. KelpDAO greatly reduces this risk through cross-chain distribution. The probability of security vulnerabilities occurring on multiple chains at the same time is much lower than the risk of running on a single chain, which improves the security of the entire system.
Save Gas Fees: KelpDAO also reduces the Gas fees required for cross-chain operations for users, especially in the early days of high Gas fees on the Ethereum network. Users no longer need to frequently perform complex operations on tokens across chains, thereby reducing costs and operational complexity.
Project ownerâs attitude: KelpDAO has shown a positive attitude, which is to clearly support users to adopt the strategy of âkilling two birds with one stoneâ. OneOne believes that KelpDAO not only recognizes the behavior of users to gain benefits from multiple projects, but also actively designs the system to make this strategy more convenient and safe. This user-friendly attitude has become a highlight of KelpDAO.
Simplify blockchain operations: OneOne mentioned that the design of KelpDAO simplifies complex blockchain operations, making it easier for users to get started and operate. This kind of simplified operation project is very popular, especially in the Web3 and DeFi ecosystems, because it lowers the technical threshold for users and allows more people to participate.
shortcoming
Late launch: OneOne believes that the biggest disadvantage of KelpDAO is its late launch. Compared with Renzo and EtherFi, KelpDAO's launch time is significantly delayed, which makes it lag behind these early projects in TVL (total value locked) and user volume. This means that KelpDAO is relatively weak in business expansion capabilities and has a small TVL scale, which is also an important factor currently limiting its development.
Market Competitive Disadvantages: Although KelpDAO has performed well in some aspects, it is still not competitive enough compared to other competitors, especially in terms of funding and market share. OneOne mentioned that KelpDAO only received more than 3 million tokens, while Renzo and EtherFi performed more strongly in comparison. Even so, KelpDAO performed better in some key areas (such as security).
Ivan analyzed the differences between KelpDAO and a number of competing products, and particularly emphasized KelpDAOâs unique positioning in the LRT track and its future market potential.
Ivan first pointed out that KelpDAO is the only project that focuses on LRT among many competitors. Other projects such as EtherFi, Renzo, Puffer and StakeStone are all projects that extend from Liquid Staking to Restaking. KelpDAO is a pure LRT protocol, which makes it different from other competitors in positioning.
The uniqueness of this positioning means that KelpDAO's market value and future performance can be used as a reverse-derivation indicator of AVS's yield rate. Ivan believes that KelpDAO's market value will directly reflect the market pricing and future profitability of the AVS system. This is because KelpDAO focuses on the LRT field, and its market performance in this field will help predict the potential of AVS in the system.
Ivan also shared an important development: KelpDAO plans to expand its Liquid Restaking service to the BNB chain. Previously, in a Space with Pencils Protocol, KelpDAO had publicly stated that they would expand LRT to the BNB network, not just Ethereum. This expansion makes KelpDAO a project that supports multi-chain Restaking protocols in the future, a move that Ivan believes is a very wise strategic choice, especially when the market potential of the BNB chain is far superior to Solana.
shortcoming
Ivan pointed out that KelpDAO's current TVL is low, which may limit its earnings performance in the short term. Since TVL is one of the important indicators to measure the success of a project, the challenge facing KelpDAO is how to increase its TVL to increase market share and profitability. However, Ivan remains optimistic about KelpDAO's prospects, especially since it has become the first project to provide Liquid Restaking services on the BNB chain, which brings it huge market opportunities.
Qiu Rong made a concise analysis of the differences between KelpDAO and its competitors, focusing on TVL and valuation.
He pointed out that KelpDAOâs TVL exceeded $1 billion in a few months, which is not very high, but it is still a medium level in the case of late development. He specifically mentioned that KelpDAOâs first round valuation was $90 million, which is relatively low, but it provides more room for its future performance in the secondary market. Qiu Rong believes that compared with some high-valuation projects, the low-valuation KelpDAO may perform better in the case of a cold market.
In addition, Qiu Rong mentioned GSR, an investor of KelpDAO, and believed that if GSR became its market maker, KelpDAO's market performance might be better than competitors such as Renzo and ETHFI.
Overall, Qiu Rong is optimistic that KelpDAO will achieve better market performance in the future through a lower valuation and strong market partners.
NingNing gave an in-depth look at the differences between KelpDAO and its competitors, focusing on KelpDAOâs user experience, market expansion strategy, and how it differs from other projects.
NingNing emphasized the uniqueness of KelpDAO in terms of user experience. She mentioned that the KelpDAO team paid special attention to the optimization of liquidity and slippage when dealing with RS ETH. As early as March, KelpDAO provided abundant liquidity for RS ETH and ETH, reduced users' slippage, and met users' needs when trading. This design based on user needs shows the team's sincerity.
However, he also pointed out that although KelpDAO performs well in liquidity management, the market is more concerned about the investment institutions behind the project and its ability to discover new trends, which has caused KelpDAO to encounter development bottlenecks in some areas, especially in the context of Ethereum's shift to Rollup centralization. KelpDAO as an LRT protocol may no longer be the main line of the market, but it still has advantages in some areas.
NingNing also mentioned that KelpDAO is expanding to the BNB chain, which is a positive move and similar to the strategy of projects such as EigenLayer. He believes that while KelpDAO is expanding to more chains, it also needs to explore new market demands and cannot rely solely on parallel expansion. For example, KelpDAO can consider cooperating with projects such as Babylon in the future, or even expand to the Bitcoin chain to find more cooperation opportunities.
In addition, NingNing also mentioned that KelpDAO can learn from other competitors. For example, Puffer is promoting the concept of Based Rollup, and EtherFi is promoting new features such as PayFi debit card. He suggested that KelpDAO should not only consider expanding to more chains, but also find new growth points in the upstream and downstream of the stack, such as providing AVS services for Consumer Chain, or exploring more application scenarios at the DeFi infrastructure level.
Q5
137labs partner Puffer, what is the difference between it and other competitors
OneOne made a concise analysis of the differences between Puffer Finance and its competitors, focusing on the advantages and disadvantages of Puffer Finance.
advantage
Vertical integration: OneOne emphasized that the biggest advantage of Puffer Finance is its high degree of verticalization. Whether it is LST or LRT, users can earn income on the Puffer platform. Puffer not only supports staking and re-staking, but also allows users to participate in node operations, which is difficult to achieve in other projects.
Fragmented node operation: Puffer allows users to operate nodes in a fragmented way, unlike other staking protocols that require 32 Ethereum to run a full node. In Puffer, users only need 1 Ethereum to participate in node operation, which provides new opportunities for users who cannot provide a large amount of Ethereum. This feature positions Puffer as a protocol that combines LSD and LRT, able to play a role in both fields.
shortcoming
TVL is not high: OneOne mentioned that Puffer Financeâs TVL is still relatively low, which is a clear disadvantage compared to some more mature competitors. The low TVL limits its market appeal and scalability.
Recent points issue: Puffer recently had a dispute with zkLink over double points, which forced Puffer to compensate users with its own tokens. Although Puffer showed sincerity and tried to resolve the issue, users expected compensation in the form of EigenLayer points, and Puffer's token compensation failed to meet users' expectations. OneOne suggested that Puffer should better control its token price in the early stages. If the token price can remain stable, users may be more willing to accept the rewards provided by the platform.
Ivan provided a detailed technical analysis of the differences between Puffer Finance and its competitors, with particular emphasis on Puffer's uniqueness in anti-slashing technology and innovations based on Based Rollup.
Ivan mentioned that Puffer is currently the only Liquid Staking protocol with built-in anti-slashing technology, compared to other competing products that mostly rely on SSV's DVT technology or do not have similar functions. Although this technology has little impact on the user's direct experience because the probability of slashing events is low, it provides users with higher security, which is Puffer's unique advantage.
Another significant differentiator of Puffer is its UniFi AVS product, based on Based Rollup technology. Ivan explained that Based Rollup is different from traditional optimistic rollup or ZK rollup in that it gives up sorting on Layer 2 and places all sorting on Ethereum Layer 1. This can unify the differences in different Layer 2 sorting methods, provide the same security as Layer 1, and reduce gas costs.
In order to deal with the problem of slow sorting in Layer 1, Puffer introduced a pre-confirmation mechanism (Preconfs). This mechanism allows users to quickly confirm transactions on the front end, while the actual sorting and final confirmation continue in the background.
Although Puffer's technological innovations are impressive, Ivan also pointed out that it is not yet certain whether these technologies can generate sufficient demand in the actual market. Although Puffer provides a leading solution in technology, whether these innovations can find practical applications in the market still needs further verification.
Qiu Rong added a comment on the difference between Puffer Finance and its competitors. Qiu Rong first mentioned Puffer Finance's performance in the recent zkLink incident. He believes that the Puffer team showed sincerity and was willing to compensate users for 50% of their losses, although they could not directly provide the EigenLayer tokens that users wanted, but provided Puffer's own tokens. This also shows that Puffer, as a project party, still showed a strong sense of responsibility in handling the incident.
Qiu Rong emphasized that Puffer needs to ensure that the price of its tokens does not deviate too far from the price of Eigen tokens in order to maintain user confidence and the smooth development of the market. This is especially important for Puffer because users have high expectations, especially in compensation events. If the token price fluctuates greatly, it may affect users' trust in the project.
Qiu Rong also mentioned that Puffer had a strong momentum in the early stage of financing and had plans to build its own Layer 2, but now it seems to have turned to low-key development. Qiu Rong specifically mentioned that market makers are crucial to maintaining the price of Puffer. He had hoped that Jump would become the market maker for Puffer, but Jump has withdrawn, and it is currently unclear which company is providing market making services for Puffer. If it is a market maker like DWF, it may help the stability of the coin price.
Q6Â
Letâs review other projects in the ecosystem, such as ether.fi renzo, etc. Are there any other interesting or noteworthy projects? For example, how are they developing? Do they still have potential?
Ivan analyzed the two projects, EtherFi and Renzo, and discussed their performance and potential in the ecosystem. Ivan mentioned that EtherFi is currently one of the projects with the best TVL maintenance. Despite the incident of deducting the airdrop of the large EigenLayer, EtherFi's overall performance in the field of Liquid Staking remains solid, especially in the liquidity maintenance of Ethereum staking certificates. This makes Ether.Fi one of the successful projects in the current ecosystem, demonstrating strong liquidity and user support.
In contrast, Renzoâs performance was mainly due to the serious Depeg problem that its ezETH token had experienced. Ivan pointed out that the Renzo team had obvious deficiencies in liquidity management and failed to solve this key problem well, which led to a decline in market trust.
OneOne added some insights on the two projects EtherFi and Renzo. He mentioned that many people complained about the high FDV of these projects, especially EtherFi and Renzo, at the opening. This problem has an adverse impact on the subsequent development of the project, especially for most investors participating in the secondary market, where high FDV affects the performance of the secondary market. OneOne believes that this is an obvious shortcoming of these two projects. However, he also pointed out that it is difficult to judge whether there will be similar problems for projects that have not yet issued coins.
Q7
How is $Eigen priced? What is the reference of pre-market price?
OneOne conducted an in-depth analysis of $Eigen pricing and the reference value of pre-market prices.
He first pointed out that in the early days of this year, many projects were listed on exchanges with high FDV, which led to losses for retail investors in the secondary market. Many high FDV token projects, due to overpricing and the market maker's control behavior, put retail investors in the secondary market at a disadvantage. Therefore, many investors expressed dissatisfaction with these VC coins and expressed their unwillingness to take over. This situation has triggered reflections from some exchanges and project parties, and they have gradually begun to let the market set prices by itself through the Pre-market approach.
OneOne used Binance's Pre-market as an example to explain the role of this mechanism. Through pre-market trading, the pricing power of tokens is given to early users who participate in Launchpad, allowing them to set their own prices based on market supply and demand, rather than being controlled by market makers. This pricing method effectively avoids the situation where the opening price is too high and ensures that the price is more in line with market expectations.
He also mentioned that the pre-market trading price of Eigen on other exchanges is roughly between $4.1 and $4.4, which is a relatively reasonable price. Although it may not meet the expectations of some early participants, it is more appropriate in the current market environment. OneOne emphasized that although Eigen's pre-market liquidity is low, this price formed through market consensus helps avoid the risks brought by a high valuation opening.
In the end, he believes that this price reflects the sincerity of the project party. Although the future market maker operation remains to be seen, at least in the pricing process, the exchange and the project party have shown respect and progress for the market. For participants, according to the current pre-market price expectations, there is still room for profit in the secondary market in the future.
Ivan provides a detailed analysis of $Eigen pricing and the relevance of pre-market prices, citing some key data.
He pointed out that the total circulation of $Eigen is 1.67 billion, while the initial circulation is theoretically 200 million, but the actual circulation is much lower than this number. There are two reasons: first, many holders have pledged Eigen tokens and did not withdraw them immediately; second, some users, especially those in the first phase, have not yet received their $Eigen. This has led to the actual circulation in the market being far lower than the expected 200 million.
Based on this status quo, the current pre-market price of $Eigen is about $4, which means the market value is less than $1 billion. Ivan emphasized that the next large-scale token unlocking will occur at the same time in 2025, which means that the market circulation will remain around 200 million for a long time in the future.
Ivan also mentioned that although the current price is not particularly high, it needs to be analyzed from another perspective: the comprehensive cost price of institutional investment. According to the disclosed data, the A round of financing was US$500 million, but the valuation of the subsequent additional US$100 million financing was not disclosed. By calculating the token economy proportion of institutional investment, Ivan estimated that the comprehensive cost price of institutions is about US$0.33. The current price of US$4 means that these institutions have received more than 10 times the return. He suggested that everyone can refer to the historical data of some other projects to measure the investment return multiples.
Finally, Ivan emphasized that everyoneâs investment operations need to be decided based on personal judgment. He only provided market data analysis and did not provide specific investment advice.
Qiu Rong conducted a detailed analysis of Eigen's pricing and the rationality of its pre-market price. He first mentioned that Eigen's institutional investment cost price is about $0.3, and the current pre-market price is $4, which means that Eigen's market value has increased nearly tenfold. Qiu Rong believes that this price range is reasonable, especially considering that Eigen's TVL itself is not high, and the institutional valuation of it will naturally not be too exaggerated.
Qiu Rong also mentioned that the current FDV valuation of Eigen is about 6 billion US dollars, and if the market develops smoothly in the future, its market value may rise to 10 billion to 12 billion US dollars, and it is reasonable to expect the price to double to 8 US dollars. He believes that 4 to 8 US dollars is the reasonable price range for Eigen, which reflects the market's expectations for it. If the bull market comes in the future and the market liquidity increases, the price may rise further.
He also pointed out that the pre-market price of $4 may not be ideal for short-term "money-grabbing parties" because they expect a larger profit margin. However, from a long-term development perspective, this is beneficial to projects like EigenLayer because it avoids the situation where many high FDV projects are smashed to zero after listing. Qiu Rong emphasized that this pricing strategy is actually a protection for the project party, ensuring the long-term healthy development of the project, so that it will not experience extreme market declines like some VC coins.
In summary, Qiu Rong believes that the price range of $4 to $8 is a reasonable price for Eigen under current market conditions, which not only protects the project owner but also leaves room for growth in the future bull market.
NingNing provides personal insights on Eigen pricing and the relevance of pre-market prices, and shares his investment strategy.
NingNing mentioned that he received an airdrop from Eigen and chose to stake it instead of selling it after pre-market trading. He staked this part of the tokens to Puffer, a project that has not yet issued a coin and has potential development opportunities, especially in the AVS cooperation, which may bring greater opportunities in the future.
From a macroeconomic perspective, NingNing mentioned that the world is currently in a rate cut cycle, and pointed out that the release of liquidity in China and the world will bring a large amount of funds into the market. In this context, the anti-logic of VC coins may no longer apply, because when liquidity is abundant, the market demand for new assets and projects will increase significantly. As an architecture, EigenLayer can generate new assets in batches through its new technology models (such as ZK processors, AVS oracles, etc.). Therefore, NingNing is confident in the future development of EigenLayer, especially in the next bull market, where EigenLayer will play an important role.
NingNing also pointed out that the cyclical changes in the market may affect the short-term performance of the project, but this does not mean that there is a problem with the project itself. Many new things need to go through multiple cycles to grow, and AVS is no exception. Therefore, he chose to stake tokens in the hope of getting more airdrops rather than frequent trading. He also shared his experience as a senior investor, believing that frequent trading often leads to losses, so he prefers to hold for the long term.
In general, NingNing is positive about the pricing of $Eigen and believes that the long-term potential of EigenLayer is worth looking forward to in the context of abundant global liquidity. He demonstrated his confidence in long-term investment through the staking strategy, and is particularly optimistic about the future development of AVS and its related fields.
Conclusion
Through an in-depth discussion of the launch of EigenLayer and its core technology AVS, we can see that EigenLayer not only brings a new technical paradigm to blockchain infrastructure, but also injects new vitality into the entire Web3 ecosystem. However, as EigenLayer gradually lands in the market, the industry is also facing many challenges. From token pricing strategies to liquidity management, to technical integration in cross-chain cooperation, all project parties are exploring how to better balance the relationship between market demand and innovation.
In this discussion, the guests agreed that EigenLayer and AVS are key innovations that drive the evolution of blockchain infrastructure, especially in the context of the current global economic policy adjustments. Although the risks in the market cannot be ignored, especially in the liquidity and pricing of tokens, through the improvement of technical means, the improvement of transparency and prudent risk management, EigenLayer is expected to become an indispensable infrastructure in the Web3 ecosystem. With the gradual maturity of the LRT protocol and AVS technology, more projects will develop around EigenLayer to help the entire ecosystem grow.
Whether you are an investor or a project developer, in this rapidly changing blockchain market, keeping up with technology trends, understanding infrastructure innovations and deploying them in advance will be the key to seizing new opportunities. The launch of EigenLayer marks an important milestone in blockchain innovation. With the entry of more projects and funds in the future, it will play an increasingly important role in promoting the development of the industry and bring users safer and more efficient income opportunities.
The article is for sharing and communication only and does not constitute investment advice.
