When it arrived, Liquid Staking shaked the market by introducing a class of assets that allowed users to earn yield and simultaneously remain capital efficient. Now, there’s a new shiny boy in town: Liquid Restaking has arrived and is poised for success. With Liquid Restaking, the process of staking and restaking is simplified, and rewards can be automatically compounded to maximize returns. Is there anything better than more yield for the same assets?
In this post, we will do a deep dive into the different types of staking methods and what is the best choice for your investment needs.
Native Liquid Restaking Tokens (nLRTs)
What is Native Liquid Restaking?
To understand native liquid restaking, let’s first start with what is restaking. Restaking is a new concept introduced by EigenLayer. It allows you to use your staked ETH or ETH liquid staking tokens (LSTs) to add security to another layer of smart contracts.
Native liquid restaking protocols have taken this a step further. By incorporating a staking and restaking module under the same roof, they allow users to enter EigenLayer’s platform with just one click. This makes the entire process much simpler for users, allowing them to earn two layers of rewards while managing only a single asset.
Key Features of Native Restaking:
Increased Liquidity: Unlike traditional staking, where tokens are locked and illiquid, nLRTs keep staked tokens liquid. This liquidity enables users to participate in various DeFi activities without the need to unstake their assets.
Higher Yield: Utilizing nLRTs allows users to compound their staking rewards. The liquid nature of these tokens supports continuous participation in multiple staking opportunities, effectively multiplying potential returns.
Interoperability: nLRTs are highly interoperable with different blockchain protocols, making them versatile tools in a multi-chain DeFi environment.
How Native Restaking Works
Let’s take the example of InceptionLRT. When you stake their ETH, they receive inETH (Inceptions nLRT) representing their staked and restaked position of their ETH. Thus, you are earning both rewards with a single click. These tokens can be used across various DeFi protocols, such as collateral for loans, providing liquidity in decentralized exchanges (DEXs), or participating in yield farming strategies. Essentially, nLRTs simplify the user's ability to maximize returns while maintaining flexibility.
Isolated Liquid Restaking Tokens (iLRTs)
What is Isolated Liquid Restaking?
Unlike the liquid staking market, which only had ETH as the underlying asset, the LRT market offers a wide range of tokens for restaking. This includes native ETH, as we covered above, as well as LSTs like stETH or rETH, greatly expanding the number of assets available.
Isolated Liquid Restaking Tokens (iLRTs) ensure that each staked asset is represented by a dedicated iLRT. This way, users receive a unique iLRT for each asset they restake, making it easy to track individual assets and providing the following benefits:
Key Features of Isolated Restaking
Risk Management: iLRTs isolate restaking activities to mitigate risk. Each restaking action is compartmentalized, ensuring that issues in one of the underlying assets do not affect others.
Security: By isolating restaking activities, iLRTs provide an added layer of security. Users can restake their assets without exposing their entire portfolio to potential vulnerabilities.
Flexibility: iLRTs offer flexibility in managing multiple restaking positions. Users can independently manage and monitor each isolated stake, allowing for more precise control over their investments.
How Isolated Restaking Works
With iLRTs, users stake their tokens in isolated pools. Each pool operates independently, meaning that the performance or failure of one pool does not impact the others.
This compartmentalization is crucial for users who wish to diversify their staking strategies without incurring undue risk. iLRTs are particularly beneficial for risk-averse investors who seek to leverage restaking rewards while maintaining stringent risk controls.
Comparison: Isolated vs Basket Based Restaking
Basket-based liquid restaking solutions, such as those offered by Kelp and Puffer, for example, aggregate multiple assets to provide diversified exposure. While it provides simplifying staking diversification, these solutions are susceptible to different types of risks such as:
Asset Management Complexity: Managing the underlying LSTs within a basket and their weightings introduces additional layers of complexity, which can lead to an overall LRT depegging.
Potential Performance Risks: The performance of a bLRT relies on the combined performance of its basket, making it more susceptible to unpredictable market swings.
For investors seeking a balance between maximizing returns and managing risk, isolated restaking with iLRTs presents the most compelling solution. Isolated restaking focuses on transparency and individual asset tracking to empower users to make informed investments while mitigating potential risks.
Read all about Isolated Liquid Restaking tokens, on InceptionLRTs Blogpost:
> https://www.inceptionlrt.com/blog/isolated-liquid-restaking-tokens-i-lr-ts-all-you-need-to-know/
Meet InceptionLRT: The Best of Both Worlds
By understanding the distinct features and benefits of the different types of restaking, users can now better navigate the dynamic world of DeFi and tailor their staking strategies to meet their specific needs.
The good news is that investors no longer have to choose between native or isolated restaking. Thanks to a recent merger between InceptionLRT and Genesis, investors can now manage both token types on the same protocol. The strategic merger has resulted in a pioneering Restaking SuperDapp, the first to integrate both native and isolated restaking services, designed to optimize restaking rewards while ensuring high security and liquidity.
Explore and enjoy the world of DeFi with InceptionLRT by your side helping you bring the best liquid restaking experience possible.
InceptionLRT Expansion to BNB Chain
Understanding the potential of BNB Chain to become a pillar in the Restaking Industry, InceptionLRT has expanded to the BNB Chain through it’s own native brige. Users can now bridge their inETH and inwbETH tokens to BNB Chain, providing liquidity to Thena's inETH/ETH Pool and earning rewards in the form of BNB and other tokens.
> https://www.inceptionlrt.com/app/bridge/
This Integration is an important milestone for InceptionLRT, as it continues to push the frontiers of DeFi and offer users new and exciting opportunities. In the future, users will also be able to directly Restake on BNB Chain, further improving the protocol's reach and providing even more prospects for growth and rewards.