Interview: Peng SUN, Kean, Foresight News
"The next cycle is still Ethereum," Renzo founder Lucas Kozinski said firmly in an interview with Foresight News. Although Web3 applications have not yet seen explosive growth, Lucas believes that the reduction in Rollup costs and the upcoming AVS service on EigenLayer have made it possible for the application layer to explode.
The Renzo team is different from what we imagined. Maybe you have seen their $3 billion TVL, maybe you have seen that they have received investments from VCs such as Binance Labs, Maven11, OKX Ventures, and IOSG, but these are just glamorous appearances.
The restaking narrative started in January 2024, but Renzo, as the first LRT protocol to go online, was launched in December last year. Although the three founders are all old leeks in the cryptocurrency circle, Renzo can be said to have started from scratch and worked hard. Since starting the business last summer, it has relied entirely on its own funds to support Maven11 in Turkey in November, and no one has ever received a salary. This is the second LRT project I have heard of this year that could not pay salaries for several months last year, and they all received investment from Binance Labs this year.
The survivor bias in the Crypto industry is always large, but Renzo's success is no accident. Open the Renzo website and you will find that it is integrated with many DeFi protocols and Layer2 networks. Behind all this is Renzo's three-step strategy and the pursuit of liquidity, efficiency and risk management. "We will start with the Ethereum mainnet, expand to L2, and then enter the decentralized exchange from L2 and integrate with CEX. Users will eventually be able to buy and hold ezETH on Coinbase, OKX, and Binance." "ezETH will be everywhere," this is Lucas' vision for Renzo.
Modularity brings challenges to Ethereum, but in Lucas's view, this is an incremental game rather than a zero-sum game. When EigenLayer's AVS is launched one after another, it will reduce the development costs of developers on Ethereum and allow the sharing of the economic security of the Ethereum mainnet, "everything will return to Ethereum."
1. The entrepreneurial history of the old leeks in the cryptocurrency circle
Foresight News: Thank you for accepting the interview with Foresight News. Please first introduce yourself, your team, and your experience in the Crypto industry.
Lucas Kozinski: Renzo has three founders: me, James Poole, and Kratik Lodha. All three of us have 6-7 years of full-time experience in Web3. James has been working full-time as the head of engineering since 2016, I joined Web3 full-time since 2017, and Kratik Lodha is our head of research and product and joined the industry in 2018.
I was born in Poland, and my family moved to New York when I was five years old. I first started trading cryptocurrencies in 2014, but lost a lot of money in the Mt. Gox incident. At the end of 2016, I re-entered the circle and experienced the bull market from 2016 to 2017. In early 2018, I joined the Tezos Foundation as project leader, and in early 2020, I joined Tokensoft as business strategy and COO.
At the end of 2021, I left Tokensoft to become the founder of Moonwell, a lending protocol we launched on Moonbeam and Polkadot Kusama. It is still the largest DeFi protocol on Polkadot and the largest mining protocol on Base.
Kratik worked at Woodstock Fund, which invested in Moonwell, and we met. Kratik left Woodstock in May last year, and I left Moonwell in May. Then until July, we started discussing starting a project on EigenLayer. In August, James joined us as the third founding member, so we started building Renzo last summer.
Foresight News: I’m glad that you have come this far. Why did you choose the Restaking track? What prompted you to create Renzo? What kind of project do you hope Renzo will become?
Lucas Kozinski: The reason why I am very excited about developing on EigenLayer is that this is the first time I noticed that there will be an open market in the Web3 field. The importance of an open market is that it allows open innovation and competition.
Historically, when a new ecosystem is launched, foundations usually do two things. One is to select or establish relationships with projects that they hope to be very well positioned in the ecosystem, and then give them grants in the form of liquidity rewards. There are some difficulties with this structure, the most important of which is that it is difficult to innovate, and only the top projects can grab liquidity and funds. With the open market of EigenLayer, there will not be a situation where the foundation only provides liquidity incentives for DeFi protocols. EigenLayer will allow innovation. Whoever occupies the market share first, whose liquidity and liquidity distribution channels are the safest, and whoever is the most efficient will be the final winner.
Also, as long as there is complexity and fragmentation, we have the opportunity to create value for users. So when you think about Eigenlayer's relationship with all the AVS and operators, it brings a whole new ecosystem and technology stack. There are a lot of opportunities for us to add value by solving these problems and making users more efficient.
Foresight News: What is the structure of the Renzo team? Where are they located and how do they collaborate?
Lucas Kozinski: Renzo now has 15 members and we are growing very fast. Since December, our team has tripled. Most of the members of Renzo are people we have known and worked with for many years, which is very important because the team is self-organized. Therefore, other projects may only have a CEO or a leader who has the final say, but Renzo is very unique. It is a decentralized group. We have industry OGs who have been in the circle since 2016 and 2017. They are very professional and have strong execution. If there is a CEO or a leader who is responsible for managing daily work, we think it is easy to create bottlenecks and it is difficult to develop quickly.
Currently, Renzo has three departments, the engineering department now has 10 full-time engineers, the product and research department has two people, and the BD marketing and operations department has three people. We set up a foundation from the beginning, and most members are paid directly from the foundation, and they are all foundation members.
We are distributed all over the world, with 4 people in India, 1 person each in Hong Kong, Australia, Budapest, and a few people in the United States. This is a completely decentralized team. We have a synchronous meeting every Monday morning to unify everyone's opinions and discuss the problems they encounter. The team will self-organize for the next week because everyone is in a different time zone. At the beginning of each day, they will write down the work content and problems they encounter on Slack. Half an hour before leaving get off work, they will do a simple summary so that we know they are leaving get off work.
Foresight News: What do you think is the biggest resistance/difficulty you have encountered in Renzo’s entrepreneurial journey?
Lucas Kozinski: The most difficult time was when we first started building and running. At that time, no one really understood what Renzo was. They thought that the total volume of this market was not large enough and they didn’t know what value it had. So for a long time we had a hard time. We had no investors, no community, and no products. But this is exactly Renzo’s advantage and the reason why Renzo can succeed.
Due to the stress and struggles of the last year, we did have a hard time with funding. It wasn’t until November that we met Maven11 in Turkey. Renzo has a very humble culture and we were completely bootstrapped, so we were able to make sure that we spent our money wisely and survived without taking a salary for several months. Everyone worked for free and actually used their own money to bring Renzo to market.
It’s hard to imagine how difficult it is, especially when you have to start from scratch, from nothing to finding financing, and then to what we have today. But we know how to work under pressure, we have the instinct to survive, we dare to fight, we have strong execution, and we can quickly adjust the strategic direction. We launched the product on December 18th, and in 13 weeks we obtained more than $2 billion in TVL, and developed into the fastest growing liquid re-staking protocol and the top EigenLayer project.
2. Renzo’s three steps: liquidity, efficiency and risk management
Foresight News: Please introduce Renzo’s current main products and business progress.
Lucas Kozinski: Currently Renzo’s plan is divided into three phases. The first phase is to increase liquidity and allocate liquidity, the second phase is to improve efficiency, and the third phase is portfolio construction risk management. The three phases will take approximately one to one and a half years.
Renzo is currently in the first phase, which is TVL and DeFi integration. Renzo has integrated more than 50 DeFi protocols in 13 weeks and launched native restaking on 5 Layer2s: BNB Chain, Mode, Linea, and Blast, with three more to be launched soon. Historically, the projects that do the best in liquidity distribution have captured a large market share and won the trust of users through liquidity distribution and integration. Without better products or higher yields, it is difficult for other projects to enter the market. If Renzo has a high yield, it means that the cost of other projects coming in to grab market share will be high. Secondly, we know that liquidity is king. Whoever has the strongest liquidity and the highest degree of integration will get the widest adoption. In fact, Renzo has very strict requirements for liquidity. We can provide Chainlink price feed services, and no LRT protocol can provide Chainlink price feeds. The market has always paid great attention to TVL as a leading indicator, and we use liquidity and DeFi integration as indicators to measure who is first.
The second phase is efficiency. Eigenlayer is very complex, it runs on the Ethereum mainnet, and every transaction incurs a gas cost, which greatly reduces the yield and the return to the stakers, which is what we call efficiency. Next month AVS will start to be launched on EigenLayer, which is an efficient solution to return the rewards generated by AVS to the stakers. The traditional LST protocol is difficult to expand after switching to the LRT protocol, but Renzo is able to capture the rewards and return them to our stakers efficiently.
The third phase is to build a portfolio after AVS enables the "Slashing" feature in the next 6 to 12 months. We have also worked with companies such as Gauntlet for more than three years, and they have helped us build some risk and portfolio construction frameworks.
Foresight News: You have supported networks such as Arbitrum, Linea, Mode, Blast, BNB Chain, etc. in a very short period of time. What are the considerations behind this?
Lucas Kozinski: ETH holders earn income from the Ethereum mainnet, and users will cross-chain to the Ethereum mainnet for arbitrage. If these are not supported, Layer2 users and TVL will be lost. Renzo will migrate Restaking to L2, allowing users to continue to natively re-mortgage Eigenlayer at lower gas fees on Arbitrum, BNB Chain, Linea, Mode and Blast, providing the same DeFi integration as the Ethereum mainnet. Renzo will cross-chain these ETH to the Ethereum mainnet to contribute to the economic shared security of EigenLayer.
Foresight News: Renzo is the first Restaking project launched after EigenLayer. How is Renzo different from similar competitors? What are its biggest advantages, including technology, products, and markets?
Lucas Kozinski：We are the first Restaking project built from scratch, with a brand new team, brand new investors, brand new community, brand new TVL, brand new integrations. Renzo does not have LST tokens, but can provide native ETH returns. The difference is that we do not have to issue notes for the floating part, which is outdated technology.
Most importantly, Renzo uses a single-coin model, not a dual-coin model. We have no rebases and reward-bearing tokens, and we don't need to improve efficiency through LST and LRT tokens. Renzo scales very well, the integration is not fragmented, and the liquidity is high. Fundamentally, we have an efficient clean technology stack that can effectively protect AVS and effectively return these rewards to our users with lower risk.
Foresight News: Many projects in the restaking track are rolling deposits and points, but liquidity is critical for public chains, DeFi, and LRT. As an LRT asset, what are the uses of ezETH? What other application scenarios will there be in the future? Will there be various DeFi applications built on Renzo/ezETH?
Lucas Kozinski: The ETH re-staking market has determined that ezETH is the most liquid asset. ezETH will integrate many protocols, and use cases and adoption will gradually increase. What we are really excited about is the decline in Rollup costs. Rollup and L2 on Ethereum will usher in explosive growth. Now we have to build the entire ecosystem, integrate with more projects, and expand our use cases. In the future, there will definitely be many customized Rollups focused on DeFi or user applications. Just like AltLayer today, you can launch a Rollup in 3 to 5 days. These Rollups will use LRT, especially ezETH as their Gas token.
Foresight News: You recently partnered with Polyhedra Network to provide $1.8 billion in cryptoeconomic security for its Bitcoin interoperability protocol. Can you tell us in detail how you will expand into the Bitcoin ecosystem?
Lucas Kozinski: Renzo will focus on securing Bitcoin services and providing them with economic security. There is a lot of interest in projects like Babylon, and Renzo will serve as a re-collateralization token for those ecosystems. We are having a lot of conversations, but nothing is committed yet. But those conversations are ongoing and relationships are being built.
Foresight News: Cobo previously published an article introducing "Risks and Best Practices of EigenLayer Restaking", which mentioned that the current Restaking protocol has contract risks, LST risks and withdrawal risks. So how does Renzo manage and protect user assets?
Lucas Kozinski: Just like any other DeFi protocol, I have always made sure that community members know that there are risks in using default values. From day one, Renzo hired an auditor and open sourced the smart contracts, and each contract upgrade is re-audited. We launched the Immunefi bug bounty program and use institutional-grade node operators. Renzo also uses on-chain monitoring services such as Hexagate to identify malicious activities. If there is any suspicious activity on the chain, deposits are automatically paused and withdrawals are quickly made.
We have been very cautious and gradually introduced new features and new risks. Withdrawals are currently disabled because Renzo has only been online for 14 weeks, and EigenLayer is still deployed on the M1 contract and is being upgraded to the M2 contract in preparation for the AVS mainnet. All other withdrawal protocol changes have a 10-day time lock and now must upgrade the contract, including upgrading the withdrawal logic, re-audit, and then enable it on the mainnet.
Because we have to update the code again and introduce additional risks, Renzo has strategically decided not to enable withdrawals for the M1 contract for now. Although the team is ready for withdrawals, we are still waiting for EigenLayer so that Renzo can start protecting AVS, after which we will enable withdrawals on both contracts. But there will be a cool-down period for withdrawals so that Renzo can identify if there are any vulnerabilities or malicious attackers. If there is a problem, the Renzo protocol, foundation, and DAO will be able to suspend withdrawals.
3. “We believe everything will return to Ethereum”
Foresight News: What is Renzo’s roadmap and future plans for 2024?
Lucas Kozinski: First, we will integrate more DeFi on the mainnet. Renzo is the first LRT protocol, and lending protocols such as Compound, Aave, and Morpho have proposed governance proposals to use ezETH as collateral. Renzo will also work with MakerDAO to use ezETH as a collateral asset for DAI.
At the same time, ezETH will also expand to the public chains of exchanges such as X Layer and BNB Chain, and integrate with CEX. Users will eventually be able to buy and hold ezETH on Coinbase, OKX, and Binance. This is our goal, starting from the Ethereum mainnet, expanding to L2, and then entering decentralized exchanges from L2. This will not only open up many new products and integrations for retail investors on centralized exchanges, but Coinbase Prime, OKX, and Binance will also support Renzo. In the future, Renzo will also integrate with Fireblocks, Ankr, Ledger, Metamask, Binance Web3 Wallet, OKX Web3 Wallet, Coinbase Wallet, etc.
Secondly, Renzo started to provide protection for AVS, and currently about 60 AVS are preparing to launch on EigenLayer. Whether you hold ezETH in a self-custodial wallet, exchange, or elsewhere, you will benefit from EigenLayer and airdrops. After AVS launches various points systems, ezETH will be everywhere, and airdrops and real rewards will form a permanent incentive cycle as ezETH continues to accumulate.
Third, Renzo will really focus on EigenLayer governance, portfolio, and risk management, which may continue until the end of the year. We will look for new L2 opportunities and work with ecosystem projects to ensure that ezETH is settled on different chains as a Gas token. For users, you can deposit wrapped ETH on the Renzo application without worrying about becoming an LP on a DEX or lending protocol, and you can get new income opportunities with one click.
Foresight News: Renzo has not yet announced any information about the token. Can you reveal some information? For example, how long will the current points activity last? What functions will the Renzo token have?
Lucas Kozinski: I can't reveal too much here. We try not to set expectations for the community. As I just said, ezETH will be everywhere and there will be many uses. The overall goal of Renzo is to make ezETH available to everyone and stake ezETH for free. I can't put a time limit on the duration of the event, but Web3 changes too fast. I think a common mistake made by project parties is to mislead community members and do something that they may not be able to achieve.
Foresight News: What risks and opportunities does the emergence of modular blockchains such as Celestia bring to Ethereum?
Lucas Kozinski: We are seeing more narratives around restaking and modularity and getting more attention. I think they will have higher adoption and greater potential for future use cases. As Renzo matures, DAOs will have a chance to figure out what this actually means and what risks they are willing to take, and that this is not fundamentally a zero-sum game. The bigger the restaking narrative, the more opportunities there are for everyone in the ecosystem to get a piece of the pie.
Foresight News: Where do you think the value of Restaking lies? What innovations and challenges will the Restaking track have in the future?
Lucas Kozinski: Let's talk about the challenges first. First of all, it's a very complex ecosystem. As more and more projects are built in the Restaking space, there will be more fragmentation and changes, and Renzo is working closely with EigenLayer operators and AVS to solve these problems. For Renzo, this means more opportunities to improve efficiency and capture value for stakers. So the biggest challenge is how do you make things simple? And how do you abstract all the complexity for users, because that's where the value is and what we're excited about.
I think the next cycle is still Ethereum, and of course when you talk about Ethereum now you think of Rollup, Base, or a large DeFi ecosystem. But what we haven't seen in Web3 is the explosion of real applications that users want to use. People usually don't use blockchain as the underlying settlement layer for transactions because the cost is too high, but Restaking or Rollup can solve this problem. We will bring a lot of innovation, even though we don't even know what kind of services or applications people want to launch. But fundamentally, they will be easy to launch on L2 and L3, and very cheap. The new cycle will see a lot of customized application launches, and they will require new AVS services. The applications that AVS is launching will not only bring additional income and reward opportunities to Renzo holders, but will also expand to other ecosystems.
We believe that everything will return to Ethereum. Right now, the transaction cost of Base is lower than Solana, and it is completely decentralized. But I think there is one thing you have to solve, and that is user experience. If you are an Ethereum developer, you don't need to invest tens of millions of dollars in infrastructure in the future, just focus on making a good user-facing product.
