➪ ReStaking is an innovative Ethereum protocol first proposed by Eigenlayer founder Sreeram Kannan.
The core mechanism of the re-pledge protocol is based on the unbreakable security of Ethereum, which allows the ETH that has been pledged on Ethereum to be pledged again on other consensus protocols. One pledge cost can reap the pledge benefits of multiple ecosystems.
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1. Problems to be solved
1️⃣ Improve capital efficiency:
Traditional staking mechanisms usually require assets to be locked to ensure the security of the network. ReStaking allows pledgers to pledge pledged assets to other blockchains or protocols again, thereby achieving multiple utilization of the same asset and improving the efficiency of capital use.
2️⃣ Increase income:
Through ReStaking, stakers can receive rewards from multiple staking protocols, increasing the earning potential of pledged assets.
3️⃣ Promote decentralization:
The re-pledge protocol allows pledgers to re-pledge assets to other blockchains. This mechanism encourages more participants to participate in the maintenance of the network, which is conducive to improving the security and decentralization of Ethereum and enhancing Stability and security of the entire ecosystem
4️⃣ Flexible customizability:
ReStaking provides more flexibility and customizability, allowing stakers to choose different re-staking strategies based on their own risk preferences and return goals.
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2. The concise principle of re-pledge
Take Lido, the leader in LSD (liquidity staking), as an example. When you pledge 1 ETH on Lido, you will get 1 stETH token. stETH can be used like Ethereum in the mutual trust Defi ecosystem.
Restaking, as an extension of the LSD narrative, takes this feature to the extreme.
💡 For example:
1️⃣ You stake one $ETH on Lido and get one stETH
2️⃣ Go to another re-pledge agreement that recognizes stETH, and pledge to get one aaETH
3️⃣ Go to another re-staking agreement that recognizes aaETH, and pledge to get one bbETH
...
By analogy, by repeatedly pledging one ETH, you not only get the staking income of the Ethereum main network, but also the staking income of multiple ecosystems. This is the so-called "one fish eats more" 🤩
✨ Specific re-pledge protocols, such as Eigenlayer, will definitely have more complex mechanisms to ensure the stable operation of this logic, but the underlying basic principle is roughly the same.
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3. Risks brought by
1️⃣ Smart contract risks:
ReStaking is usually implemented through smart contracts. If there are loopholes or design flaws in the contract, it may be hacked and cause asset losses.
2️⃣ Liquidity risk:
In ReStaking, staked assets may be locked for a period of time, which may result in illiquidity, preventing stakers from quickly withdrawing assets if needed.
3️⃣ Node delegation risks:
If a staker entrusts assets to unreliable or poorly performing nodes or operators, this may result in reduced returns or loss of assets due to the existence of a penalty mechanism.
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4. Re-pledge project pick
1️⃣ EigenLayer
The leader in the re-pledge concept and the originator of the re-pledge concept, a16z participated in the investment and has now completed US$100 million in financing. It provides basic support for other re-pledge agreements and has in-depth cooperation with many second-tier projects such as Altlayer.
2️⃣ Puffer
One of the representative projects of Ethereum's liquid re-pledge trend, Puffer allows introducing puffETh into EigenLayer to earn points and obtain AVS verification income. The current TVL exceeds 1 billion US dollars.
3️⃣ StakeStone
The full-chain staking protocol that silently provides support behind Manta positions itself as the "safest ETH steward" and promises to configure the safest re-pledge strategy. It has also reached cooperation with EigenLayer, allowing you to mortgage $stone to EigenLayer to earn points.
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➪ The re-pledge agreement proposes to obtain multiple returns in a more direct and efficient way than DeFi lending. Although the benefits are obvious, this seemingly nesting doll approach is essentially an act of increasing leverage.
💡 There is a very interesting saying:
The bull market is a process in which the entire market is constantly increasing leverage, while the bear market is a process in which it is constantly clearing leverage. The endless cycle of increasing leverage and clearing leverage drives the rise and fall of each bull market and bear market.
The re-pledge agreement is just a variant of the leverage method in this bull market. Now is the early stage of the bull market, so there is nothing wrong with increasing leverage. Since bubbles are unavoidable, it is better to embrace the bubble.
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